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U.S. Clears Continental for Alliance

Stocks in this article: CAL UAUA

United (UAUA) and Continental (CAL) have won approval of their bid for Continental to join nine other carriers in a global alliance immunized against antitrust enforcement, meaning the carriers can jointly discuss fares and scheduling on a variety of international routes.

Approval came Friday in a Transportation Department ruling that largely disregards a Justice Department analysis that concluded the protections the two carriers sought were too broad, although DOT made some adjustments in the tentative approval it announced in April. Chiefly, it delayed antitrust immunity on several routes, including two to Beijing, until a third carrier besides Continental and United begins U.S.-Beijing service.

Top 10 Airlines

The dispute between the two departments highlights the contentiousness in Washington regarding international aviation alliances. Despite widespread approval throughout the airline industry, alliances are viewed in certain corners of the government as monopolistic concoctions by fare-gouging airlines. But the Transportation Department has final authority in this case.

In general, alliances make it easier to book international flights, because a passenger can interact with a single airline. Travel time is often reduced, because the alliances encourage time-saving connections between carriers. Needless to say, this stimulates international travel and creates associated jobs.

Later this year, Continental intends to join United in the Star Alliance, one of three international airline alliances, in which members can write tickets on each others' flights and share frequent flier benefits, baggage handling and other amenities.

Now, Continental is also free to join United, Lufthansa, Air Canada and six European carriers in an existing trans-Atlantic alliance that has anti-trust immunity (extending even beyond the Atlantic).

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