Tulsa World: American argues for immunity for alliance

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American argues for immunity for alliance
Meanwhile, Delta is trying to lure Japan Airlines to its group.

Japan Airlines Corp. planes taxi at Haneda Airport in Tokyo. American Airlines wants JAL to stay in its oneworld alliance rather than switch to the rival SkyTeam. Haruyoshi Yamaguchi / Bloomberg

By D.R. STEWART World Staff Writer
Published: 11/17/2009 2:22 AM
Last Modified: 11/17/2009 8:29 AM

American Airlines is pleading its case with U.S. and European governments for a level playing field and antitrust immunity for its global airline alliance, oneworld.

But although the U.S. Department of Transportation has delayed its final ruling on antitrust immunity for oneworld, American finds itself in two transoceanic battles as its rival Delta Air Lines is making a pitch for a oneworld member, Japan Airlines, to defect to Delta's alliance, SkyTeam.

JAL, Asia's largest airline, reported a $356.7 million loss in its second quarter last week, and it is seeking government assistance to hold off creditors.

Delta has pledged financial support to JAL if it joins SkyTeam, whose partners would funnel traffic from Delta's North American and European hubs.

American executives, however, said JAL would receive more value by staying with oneworld. Its costs would mount if it switches to SkyTeam, they said.

"We are convinced we can deliver the most meaningful alliance value to JAL — by a wide margin — and without any of the regulatory risk a change in alliance strategy would mean for them, not to mention the financial costs JAL would incur if it changed alliances at such a critical phase in its restructuring," American Chairman and CEO Gerard Arpey said.

"JAL is a highly valued member of oneworld. The alliance and its other member airlines have deep and long-standing partnerships with JAL that produce hundreds of millions of dollars of value for JAL, and we are committed to maintaining and strengthening that partnership."

Oneworld's members are American, British Airways, Cathay Pacific Airways, Finnair, Iberia Airlines, JAL, LAN Airlines, Malev Hungarian Airlines, Qantas Airways, Royal Jordanian Airlines and Mexicana Airlines.

SkyTeam, which has received both U.S. and European antitrust immunity, has Aeroflot Russian Airlines, AeroMexico, Air France, Alitalia Airlines, China Southern Airlines, CSA Czech Airlines, KLM Royal Dutch Airlines and Korean Air.

The Star Alliance, which also has acquired worldwide antitrust immunity, consists of United Airlines, Air Canada, Air China, Lufthansa, US Airways and 16 other airlines.

If JAL were to join SkyTeam, a Delta-JAL combination would account for nearly 60 percent of U.S.-Tokyo passengers, leaving oneworld with only 6 percent of the market, American executives said.

U.S. and European authorities are scrutinizing oneworld's antitrust immunity application because the American-British Airways combination would account for a 40 percent share of U.S.-London passengers.

American executives say significant competition will remain should American and British Airways receive antitrust immunity, because 78 percent of travelers on U.S.-Europe city pairs — in which American and British Airways both provide nonstop service — would continue to have three or more competitive options.

If JAL joined SkyTeam, just 27 percent of passengers on city pairs served by Delta and JAL would still have three or more competitors for transpacific service, the executives said.

"We're trying to make sure we're getting a level playing field," American's spokesman Ryan Mikolasik said. "In contrast, in the Pacific, we don't want to see a duopoly evolve with Delta and JAL."

The European Commission said in October that it was investigating oneworld and the Star Alliance for possible illegal conduct.

American's employees are divided over the oneworld alliance.

American's Association of Professional Flight Attendants union supports the antitrust immunity application, saying it will create more economic activity and jobs. American's Allied Pilots Association opposes the application.

"We consider both alliances — with JAL and oneworld — to be an outsourcing threat for all American Airlines employees," said an APA spokesman, Scott Shankland.

D.R. Stewart 581-8451
don.stewart@tulsaworld.com By D.R. STEWART World Staff Writer

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planespotter, (11/17/2009 1:47:26 PM)

As I have said before, the case to grant AA and BA immunity is self-evident. They have had to compete against "immune" alliances like Star and Skyteam for years. Where is the recourse for keeping the playing field uneven for so long? And why is it that all the other big players continue to enjoy antitrust immunity but the feds are dragging out AA's application?

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