Department of Justice opens skies for transpacific air cargo

The U.S. Department of Transportation (DOT) proposal to grant antitrust immunity to two air carrier alliances for services between the United States and Japan was greeted warmly by shippers yesterday.

“This is a welcome development,” said Richard Macomber, chairman of the National Industrial Transportation League’s (NITL) air transportation committee. “Capacity has been extremely tight lately, particularly for eastbound high-tech products. This can only help.”

While the proposal is subject to the Open-Skies aviation agreement between the two countries, analysts expect it to be signed.

According to DOT spokesmen, the department’s tentative decision would grant immunity to “oneworld” alliance members American Airlines and Japan Airlines, and separately to “Star Alliance” members United Airlines, Continental Airlines and All Nippon Airways. If the decision is made final, the members of each alliance would be able to more closely coordinate international operations in transpacific markets.

In yesterday’s show-cause order, the Department tentatively found that granting antitrust immunity to each alliance would provide passengers and cargo with a variety of benefits, including lower fares on more routes, increased services, better schedules, and reduced travel and connection times.  Each proposed alliance would enhance competition, particularly in transpacific markets.

On Dec. 11, 2009, the United States and Japan initialed an agreement that would establish an Open-Skies aviation relationship between the two countries once it is signed.  Under the new agreement, airlines from both countries would be allowed to select routes and destinations based on consumer demand for both passenger and cargo services, without limitations on the number of U.S. or Japanese carriers that can fly between the two countries or the number of flights they can operate.

Parties have 20 calendar days to comment and seven business days to file answers.  After this period ends, the Department will review all filings and then issue a final decision.