Two recent airline antitrust-immunity decisions by the Department of Transportation (DOT),
coupled with the continued delay in the Department of Justice's (DOJ) decision
on the proposed Alaska Airlines acquisition of Virgin America, raise the
question of whether the Obama administration is taking an especially tough
stand on air-service consolidation in its waning days.
"They're clearly trying to make some noise before going
away," Brett Snyder, who runs the aviation blog Cranky Flier, said of the
The DOT's latest salvo came on Nov. 18, when it
blocked a request from American and Qantas to jointly market, plan and operate
flights between the U.S., Australia and New Zealand.
The denial of that request for antitrust immunity came even
though Delta-Virgin Australia and United-Air New Zealand already operate
competing immunized joint ventures.
But in announcing its
decision, the DOT cited the fact that American and Qantas together control
60% of the U.S.-Australia market.
That decision came just two weeks after the DOT requested
concessions from Delta and Aeromexico as a condition for a proposed approval of
those carriers' application to jointly operate flights between the U.S. and
Specifically, the department said it would grant approval of
the joint venture only if the partners agreed to turn over to low-cost carriers
24 daily departure and landing rights at Mexico City's capacity-constrained
Benito Juarez Airport and six such daily slots at New York JFK.
Diana Moss, president of the American Antitrust Institute, a
nonprofit that said its mission is to promote competition that protects
consumers, business and society, said the relatively aggressive stance taken by
the DOT in these recent cases isn't necessarily related to the coming end of
the Obama administration.
Rather, she said, regulators have generally looked with more
scrutiny over the last few years at proposals that would further reduce
consumers' choice of airlines.
Since 2006, the U.S. airline industry has seen the number of
primary carriers shrink from 11 to four. American, Delta, Southwest and United
now control approximately 80% of domestic passenger traffic, according to
"Anything that happens now against this backdrop where
we have so much consolidation is going to be given a harder look," Moss
That theory could help explain the difficulty that Alaska is
having in gaining DOJ approval of its proposed $4 billion acquisition of Virgin
America, even though the merger would be much smaller than the ones undertaken
in recent years by American and US Airways, United and Continental, Delta and
Northwest and Southwest and AirTran.
In September, Alaska and Virgin told the Justice Department
that they wouldn't close the deal until at least Oct. 17, instead of Sept. 30
as had been planned, in order to give regulators more time to review the deal.
The acquisition still has not received antitrust
approval, leading to widespread speculation that the DOJ is negotiating with
Alaska about giving up select gate rights at key airports and about potentially
ending or curtailing codesharing with Delta and American.
Moss said that one likely reason the DOJ appears to be
concerned with the deal is that Virgin America is a disruptive player in the
U.S. airline industry, offering a low-cost and innovative product.
"Those disruptive players keep everybody on their toes,"
Still, Snyder said he expects that regulators will reach a
deal with Alaska-Virgin before Inauguration Day on Jan. 20.
"My assumption is they would have abandoned it by now
if it wasn't going to be resolvable," he said of Alaska.