Continental Gets Nod To Join Star Alliance

April 7, 2009

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Continental Airlines won the US government's nod on Tuesday for its plans to join the Star Alliance, which allows airlines to cooperate in marketing their routes and pricing to the public.

The US Department of Transportation (DOT) said it would give Continental antitrust immunity for its participation in the alliance.

Continental also received approval for a joint venture with Air Canada, Lufthansa and United Airlines.

"Antitrust immunity allows airlines to coordinate their services and act as a single carrier for international air services covered by the immunity," the DOT said in a statement.

The DOT said the alliances would increase service in international markets, give consumers more options and shorter trip times, and reduce fares.

As a condition of the approval of the joint venture, the DOT proposed that the carriers implement it within 18 months and give regulators annual reports.

The public has three weeks to file objections to the DOT's actions.

Representative James Oberstar, chairman of the Transportation Committee in the House of Representatives, has co-authored a provision in aviation legislation that would launch a government study of whether the alliances serve the public interest, especially those with antitrust immunity.

US and overseas airlines have asked the Obama administration to oppose this.

Antitrust immunity widened this decade to meet world travel demand, allowing alliance members to operate as one flight on certain routes. Carriers are able to share pricing and scheduling information, ticketing and facilities.

Immunity is an easier way for carriers to build networks without running afoul of US law that discourages mergers between domestic and overseas airlines.

The arrangements can be lucrative and are inexpensive to carry out compared with a merger.