A ten-year marketing alliance between three of America’s leading airlines can go ahead after the trio agreed to regulatory conditions.
Delta Air Lines, Northwest Airlines and Continental Airlines are embarking on a huge code-sharing agreement – the biggest in the industry to date – under which they will sell seats on each other’s flights.
The deal initially received the green light from US watchdogs in January [WAMN: 21-Jan-03], but the three operators objected to the conditions imposed on them. They insisted the tie-up was lawful and decided to implement it as originally proposed, effectively inviting a lawsuit from the Department of Transportation.
Three months later, the dismal state of the airline industry makes the prospect of a drawn-out court battle particularly unappealing.
As a result, the three carriers have accepted the regulator’s conditions – namely, to relinquish certain gates in Boston and New York; to restrict the number of code-sharing flights involving Delta to 2,600 in the first year of the partnership and 5,200 in the second; and to limit joint offers made to businesses and travel agents.
The Department of Transportation has consequently cleared the deal, but warned it would take the trio to court “if and when the airlines' implementation of their joint venture appeared to be having an adverse affect on competition.”
Data sourced from: Financial Times; additional content by WARC staff