US denies bid by Northwest, Delta for legal waiver

The US government has tentatively rejected a bid by Northwest Airlines and Delta Air Lines to substantially enhance their marketing ties with three European carriers.

The decision by the Transportation Department to deny the carriers an exemption from some competition laws would, if finalised, prevent Northwest and Delta and other members of the SkyTeam alliance from meshing key parts of their networks to maximize overseas revenues.

SkyTeam members also include Air France-KLM , Alitalia and CSA Czech Airlines.

Immunity from some US antitrust regulations would allow airlines to integrate sales, route planning, scheduling, cargo and marketing without actually merging. The agency proposed that the companies be allowed to code share, or sell seats on each others' flights.

But Northwest and Delta said code-sharing alone did not come close to what they wanted from regulators. Northwest said the decision also would "not help" its efforts to emerge from bankruptcy protection. Delta is also bankrupt.

"The decision is inconsistent with all of the (agency's) prior decisions wherein they have consistently granted antitrust immunity to other global alliances, especially when, as here, the proposal is pro-competitive and will greatly benefit consumers," said Andrea Fischer Newman, Northwest's senior vice president for government affairs.

But transportation regulators said in a proposed order that the airlines' did not prove a waiver would provide significant benefits to consumers, including lower fares. The Justice Department recommended in August that the government not approve the change.

Other US airlines opposed the Delta/Northwest proposal, arguing that the other three big international alliances include only one American carrier with an antitrust exemption.

Airline alliances are lucrative because they allow airlines to strengthen their international reach without committing planes or other assets and to attract overseas visitors to their domestic network.

Delta and Northwest for years have operated separate SkyTeam alliances with antitrust immunity. Delta was paired with KLM and Northwest with Air France. The two US companies sought the closer arrangement within SkyTeam after KLM and Air France merged last year.

- REUTERS