02-32195. Review Under 49 U.S.C. 41720 of Delta/Northwest/Continental Agreements

AGENCY:

Office of the Secretary, Department of Transportation.

ACTION:

Extension of waiting period.

SUMMARY:

As required by 49 U.S.C. 41720, Delta Air Lines, Northwest Airlines, and Continental Airlines have submitted code-sharing and frequent-flyer program reciprocity agreements to the Department for review. That statute requires the submission of such agreements between major U.S. passenger airlines at least thirty days before the agreements' proposed effective date. The statute empowers the Department to extend the waiting period for these agreements at the end of the thirty-day period. The Department has determined to extend the waiting period for the Delta/Northwest/Continental code-share agreements for an additional 30 days, from December 21, 2002, to January 20, 2003.

FOR FURTHER INFORMATION CONTACT:

Thomas Ray, Office of the General Counsel, 400 Seventh St., SW., Washington, DC 20590, [phone].

SUPPLEMENTARY INFORMATION:

On August 23, Delta, Northwest, and Continental submitted code-sharing and frequent-flyer program reciprocity agreements to us for review under 49 U.S.C. 41720. That statute requires such agreements between major U.S. airlines to be submitted to us more than 30 days before their planned implementation. We may extend that waiting period by up to 150 days for code-sharing agreements and 60 days for other types of agreements. We have previously extended the waiting period for the code-sharing agreement for a total of 90 days, and we extended the waiting period for the frequent flyer agreement for 60 days, the maximum period authorized by the statute. 67 FR 59328 (September 20, 2002); 67 FR 64960 (October 22, 2002); 67 FR 69804 (November 19, 2002). We have determined to extend the waiting period for the code-sharing agreement for an additional 30 days to give us time to complete our review of the Delta/Continental/Northwest agreements.

As we have stated earlier, the purpose of our review of the agreements is to see whether they may reduce competition. Our governing statute specifically requires us to consider, in the public interest, the objectives of “avoiding unreasonable industry concentration, excessive market domination, monopoly powers, and other conditions that would tend to allow at least one air carrier * * * unreasonably to increase prices, reduce services, or exclude competition in air transportation.” 49 U.S.C. 40101(a)(10). If we were to determine that, separately or in combination, aspects of the agreements constitute unfair methods of competition under 49 U.S.C. 41712, we could bar the airlines from implementing them. Unfair methods of competition are airline agreements and other practices that violate the antitrust laws or antitrust principles. See United Air Lines v. CAB, 766 F.2d 1101 (7th Cir. 1985). The purpose of our current review is to determine whether we should institute a formal proceeding to determine whether the agreements and the three airlines' proposed relationship violate section 41712.

We have informally reviewed the agreements submitted by Delta, Continental, and Northwest, discussed the competitive issues with the Justice Department, and given outside parties the opportunity to review unredacted copies of the agreements and to submit comments based on that review and other information available to such commenters. 67 FR 69804. We have received comments on the proposed agreements from interested parties as recently as today. We have also received complaints that the three airlines have allegedly engaged in anti-competitive conduct in the recent past. We have met with Delta, Continental, and Northwest, and with other interested parties. In their written comments, a number of parties have requested that we extend the waiting period to allow additional time for consideration. See, e.g., the November 15, 2002, letter from AirTran, America West, Frontier, JetBlue, Midwest Express, Southwest, and Spirit; the November 12, 2002, letter from Tom Miller, the Attorney General of Iowa, written on behalf of himself and the Attorneys General of Connecticut, the District of Columbia, Florida, Maine, Minnesota, New York, and Vermont; the November 13, 2002, letter from Senator John Ensign; the November 4, 2002, letter from Senator James M. Inhofe; and the October 29, 2002, letter from Senator Russell D. Feingold.

While we have not made any final decision, we have advised the three airlines that we believe the agreements as presented to us raise competitive issues. We have discussed our concerns in detail with the three airlines. Because we need additional time to complete our review of the agreements and to complete further discussions with interested parties, we are extending the waiting period to January 20, 2003.

Issued in Washington, DC on December 16, 2002.

Read C. Van de Water,

Assistant Secretary for Aviation and International Affairs.