DOT and DOJ bicker about airline alliances

The battle of airline alliances within the federal bureaucracy is heating up. The Senate committee responsible for transportation and aviation issues is lining up against their opposite in the House. The Department of Transportation (DOT) has squared off against the Department of Justice (DOJ).

Earlier this month I covered the face-off between Senate Committee on Commerce, Science and Technology and the House Committee on Transportation and Infrastructure.

Clearly the Senate and House visions of airline antitrust immunity are on a collision course. The House feels it is putting consumers first by encouraging more competition. The Senate approach, in the words of Sen. Kay Bailey Hutchison, is “the more airlines we keep whole, the better off consumers are.”

And over the summer, the differences between the DOJ and the DOT when it comes to antitrust immunity have been stewing. It started back in December when the Senate Judiciary Committee sent a letter to the DOT suggesting that they take into account DOJ considerations and the results of a DOT study on alliances.

The Department of Justice (DOJ) has come out in opposition to the planned addition of Continental to the Star Alliance that includes United Airlines. Their objections are focused on the antitrust immunity provisions that would be applied to international routes.

This finding by the DOJ stands in opposition to a Department of Transportation (DOT) initial approval of the alliance issued back earlier this year. Finally, a “go slow” approach seems to be taking hold in Washington when it comes to considering antitrust provisions of these airline alliances.

The results of these tete-a-tetes was a continuation of the current DOT alliance-friendly findings. Continental and United were given antitrust immunity as part of the Star Alliance in spite of the DOJ misgivings.

Justice feels strongly that DOT should stick with taking care of transportation and let DOJ deal with the antitrust stuff. Though that may make logical sense, Washington is not known for strict logic.

Precedent and history hold strong positions in any squabble. So, since DOJ relinquished this antitrust immunity oversight to DOT 20 years ago, there is going to be a battle to retrieve any say in the matter.

The letter from the Judiciary Committee was the first shot across the bow of the DOT. Then the DOJ official finding of fault with the antitrust arrangements in the alliances agreements, was another shot.

DOT has ignored both, basically dissing the DOJ.

Now the House Judiciary Committee is going to hold full hearings with Richard Branson, head of Virgin Atlantic, to make sure that the DOT gets the message.

Will anything change? I’m not sure, but airline alliances will certainly be studied far more closely than has been the case in the past. And if the Oberstar bill (H.R. 831), embedded in the current FAA Reauthorizaton bill, sees the light of day, the world of airline alliances will be turned upside down.