DOT CONDITIONALLY APPROVES UNITED AND AIR CANADA’S TRANSBORDER JOINT BUSINESS AGREEMENT
August 12, 2022
On July 19, 2022, DOT published a letter conditionally approving United Airlines’ request for prior approval of a Transborder Joint Business Agreement (the “Agreement”) between it and Air Canada (the “Parties”). DOT’s approval means that antitrust immunity from an existing antitrust immunized alliance previously approved by DOT will now be extended to the Agreement.
DOT originally granted antitrust immunity to the Parties in 1997 and took subsequent actions in 2007 and 2009 to extend antitrust immunity to the carriers as the A++ alliance expanded to include additional airlines and geographic regions such as key U.S.-European markets. However, since all material implementing agreements between the Parties must be submitted to the Department’s Director of the Office of Aviation Analysis for review, the Parties submitted a request to DOT on February 10, 2022, to have antitrust immunity extended to the new Agreement. In their request, the Parties noted prolonged market recovery challenges and argued that a new cooperative structure is necessary and will incentivize more coordinated network planning, enhance optimization, and reduce inefficiencies, thus benefiting consumers. DOT seemingly agreed with this argument and in adjudicating the Parties’ request recognized that distressed conditions regarding the transborder market continue to persist.
DOT stated however that permanent approval of the Agreement would not be in the public interest and elected to extend the grant of antitrust immunity for a temporary period of five (5) years subject to certain conditions. DOT also stipulated that the Parties must submit annual reports detailing their alliance as well as inquiries made by third-party carriers to access either carrier’s network within the geographic scope of the joint ventures and an explanation on how those inquiries were resolved, remove exclusivity clauses involving transborder origin and destination travel, and provide interline access and enter into interline agreements with Canadian and U.S. carriers respectively when specific conditions are met.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com 202-659-6622) or Drew Derco (dderco@eckertseamans.com 202-659-6665).
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