This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

U.S. Clears Continental for Alliance

The Justice Department had objected to the request that Continental receive "global immunity," which it viewed as "unprecedented in scope and breadth, sanctioning collusion by United and Continental on all international service, eliminating or significantly reducing competition." It said fares would likely increase by 15% on some routes and advocates that the DOT grant more limited immunity.

In particular, the Justice Department said United and Continental are the only two U.S. carriers offering nonstop service to Beijing (Air China also offers nonstop service). They are also the only two U.S. carriers flying nonstop to Hong Kong, but foreign carriers control 72% of that nonstop market.

On Friday, the DOT said that after reviewing the objections, it found "the purported risks to competition from granting unrestricted 'global' scope are insignificant and unsubstantiated" and that "DOJ's prediction of adverse price effects is flawed and contradicted by previous empirical analysis." It said little change is likely in the U.S. Beijing and U.S.-Hong Kong markets.

However, the department added new conditions requiring that the joint venture be implemented within 18 months, bringing benefits to passengers quickly, and that certain routes including the Beijing routes, four routes between Newark and Europe, and several routes to Canada be exempted from the immunity.

Currently, Delta (DAL), Northwest, AirFrance and KLM also have an immunized alliance for transatlantic flights, which benefits passengers by providing more frequent flights to hubs in Amsterdam and Paris, where faster connections are available.

Aviation consultant Mike Boyd says the advent of a Democratic administration may have prompted a more critical view of alliances in some quarters. "Up to now, alliances up to now have been obscenely beneficial to the consumer," Boyd says. "You cannot argue that. They mean more choices and faster travel, like being able to fly Delta to Paris and then connect, seamlessly, to Air France to go to Marseille. But now we have a new DOJ. The former DOJ would have approved any alliance of any kind. Now, it is being a lot more doctrinaire."

2 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,947.16 +27.57 0.16%
S&P 500 1,982.05 +0.45 0.02%
NASDAQ 4,524.0050 -3.5090 -0.08%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs