March 3, 2009
The Honorable James L. Oberstar
Chairman, Committee on
Transportation and Infrastructure
U.S. House of Representatives
2165 Rayburn House Office Building
Washington, DC 20510
Dear Mr. Chairman:
HR 831 calls for the comptroller general to conduct a study of the legal requirements and policies used by the secretary of transportation to decide whether to approve proposed international airline alliances and to grant them antitrust immunity. The bill also automatically invalidates any prior grant of immunity three years after the bill’s effective date and prohibits renewal unless the secretary determines whether to adopt any recommendations by the comptroller general regarding new standards for authorizing international airline alliances and granting antitrust immunity.
While ATA does not oppose the proposed study, we strongly oppose using legislative fiat to terminate existing grants of antitrust immunity based on long established law and policy. The traveling and shipping public will suffer from a withdrawal of the immunity, which fosters the development of seamless networks of service so beneficial to airline customers. Doing so also would be tremendously unfair to the airlines who, in good faith reliance on a valid exercise of DOT authority, have invested millions of dollars in developing and integrating alliance operations. The affected carriers, their employees, shareholders and other investors have a legitimate expectation that alliance operations will remain immunized unless and until the department determines that circumstances have changed to warrant a reexamination or compliance questions arise, and that the same standards used to award antitrust immunity will apply to any future review.
Arbitrarily terminating antitrust immunity will have a harsh impact on airline employees and cause a ripple effect across the travel and tourism industry at a time when U.S. unemployment is escalating rapidly. Based on data from our members, we estimate that this bill could cost as many as 15,000 airline jobs. This is because parties to a prospective alliance often will not go forward without antitrust immunity. However justifiably confident as they may be to the legality of an alliance under antitrust laws, they simply cannot incur the uncertainty and risk associated with a potential legal challenge after an alliance has begun operations. Antitrust cases are disruptive and very costly to defend, even when completely without merit, and raise the specter of catastrophic damage claims. Thus, unless immunized, the parties likely would be forced to abandon an alliance, even if immunity is revoked only temporarily. For an industry that lost 28,000 jobs last year and employs 150,000 (28 percent) fewer people than it did in mid-2001, with thousands of more cuts slated for 2009, this bill could not come at a worse time. It is antithetical to the aims of the Obama administration economic stimulus objectives.
Closely integrated, immunized alliances provide a lawful means for U.S. airlines to achieve significant consumer benefits, optimizing the utilization of both U.S. and foreign carrier networks to mutual advantage. DOT has approved international airline alliances because they produce numerous and substantial benefits both to the public and the participating carriers. Public benefits include new on-line service and more frequent and convenient on-line service options, more connecting options across alliances and enhanced inter-alliance competition. More options and greater competition translates into more competitive fares for consumers. Carrier benefits include strengthened ability to compete, efficient use of assets and enhanced financial performance. The public will lose these important benefits if antitrust immunity is withdrawn – even temporarily – and carriers are forced to demonstrate that an alliance satisfies new and different standards.
We urge you to revise HR 831 to make it just a study bill, and to await the outcome of the study before proposing additional measures. Thank you for considering our views.