IATA FEES AND COMMISSION PROCESSES CALLED INTO QUESTION IN AA-LATAM JOINT VENTURE DOT PROCEEDING
June 21, 2019
On May 13, 2019 as part of an antitrust immunity proceeding for a proposed joint business venture between American Airlines (AA) and LATAM Airlines, the U.S. Department of Transportation published an ex parte letter from Assistant Secretary for Aviation and International Affairs Joel Szabat to Ms. Lorena Arriagada, Secretary General of the Asociación Chilena de Empresas de Turismo (Chilean Association of Tourism Businesses, or ACHET). ACHET is a Santiago-based trade organization representing the interests of Chilean travel agencies and tour operators. The organization had written to the DOT Secretary on January 23, 2019, to express serious doubts about the proposed joint venture’s effect on competition in Latin American air serve and to critique IATA processes for commissions and fees.
ACHET argued that even with some pro-competitive conditions imposed, an immunized alliance would produce “a dominance over South America and its connections with North America and Europe unprecedented in air transportation markets . . . to the detriment of consumers [who would] face a consolidated oligopoly with an antitrust immunity to coordinate prices, quantities and the sharing of profits.” ACHET alleged that structural characteristics of IATA and market power in certain airlines tended to lead to undue control by carriers over fees and commissions affecting the business of ACHET’s travel agent members. ACHET called for U.S. and European regulators to increase their antitrust scrutiny of the aviation sector and cited with favor the European Commission’s recent competition enforcement action against Google for anticompetitive conduct in the search results market.
The Department’s May 13, 2019 letter requested that ACHET resubmit its letter in the upcoming public comment period for the AA-LATAM joint venture proceeding, which was opened on April 3, 2019, and promised the Department’s full consideration.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com or 202-659-6622); Drew Derco (dderco@eckertseamans.com or 202-659-6665), or Alexander Matthews (amatthews@eckertseamans.com or 202-659-6633).
Share This Post
Authors
