When global airlines announce alliance plans, the caveat "pending
government approval" often feels like a mere formality. Late this year,
however, two decisions by the U.S. Department of Transportation, headed by
Foxx, put one major alliance plan on ice and sent another into a tailspin.
American Airlines and Qantas waited nearly 18 months for
antitrust immunity to expand their joint-venture agreement allowing
coordination of schedules, cross-selling and revenue sharing. Regulators in
Australia and New Zealand gave their approval, and both American and Qantas
built up service in anticipation of a transpacific network.
On Nov. 18, however, the DOT denied the application, saying
it would create a "potentially anticompetitive environment," as the
two carriers would control about 60 percent of capacity between the United
States and Australia. The DOT gave the carriers two weeks to raise an
objection, and deciding that was not sufficient time, American and Qantas
withdrew their application. Now each is forced to reevaluate its transpacific
strategy.
Just a few weeks prior, the DOT similarly disrupted Delta
Air Lines' plan for a JV with Aeromexico. While the DOT did give tentative
approval for antitrust immunity to the carriers, it did so with the stipulation
that they give up 24 landing slots in Mexico City and six at New York's John F.
Kennedy International Airport. In its objection filing, Delta called the
stipulations "unprecedented" and indicated the carriers would have to
reconsider the alliance if forced to comply. The DOT maintained its requirement to remove 24 Mexico City slots but reduced the number the JV would have to remove at JFK to four. On Dec. 21, Delta and Aeromexico agreed to those stipulations.
Also this year, the DOT under Foxx opened up daytime service
for U.S. carriers at Tokyo's downtown Haneda airport for the first time since
1978. Foxx said the move fit the DOT's "mission to promote competition and
encourage enhanced air service options in the U.S. and abroad."
While the agreement opened up only five slots—four of those
shifted from current nighttime slots—it was enough to shake up U.S. carriers'
transpacific strategy. Even though Delta received two of the five slots, the
carrier also ended service on three routes from Tokyo's more remote Narita
Airport. Delta reasoned it would be too tough to compete with daytime Narita
flights newly available to American and United Airlines, both of which also
have JVs with Japanese airlines. The transpacific strategy revisit also
prompted Delta to thaw its frosty relationship with SkyTeam partner Korean Air,
with whom Delta announced expanded codeshare cooperation in September.