Continental Airlines’ bid for antitrust-immunity with United hits snag at Justice Department

New snag for Continental antitrust-immunity bid

DALLAS — Continental Airlines’ bid to work closely with United Airlines and others on trans-Atlantic service has hit a new snag, with the Justice Department seeking to review the plan.

The Transportation Department gave preliminary approval in April to Continental’s request for antitrust immunity so it could coordinate prices and schedules with United.

But on Wednesday, Attorney General Eric Holder indicated his department wants a say in the matter.

“We have reached out to the Department of Transportation,” Holder said. “I’ve had conversations with (Transportation Secretary Ray LaHood), and they have said they will work with us in making a determination in how this particular alliance should be viewed.”

Holder made the comment during a Senate Judiciary Committee hearing.

Sen. John Cornyn, a Republican from Texas, where Continental is based, told Holder he was concerned that a May 31 deadline from reviewing the antitrust-immunity bid had passed with no decision.

“We did ask the Transportation Department to allow our antitrust division to have some input,” Holder said. He added that the issue should be settled in a matter of weeks.

Continental announced last year it would leave one alliance of global airlines and join another — jumping from Delta Air Lines Inc.’s team to United’s Star Alliance — and seek to be included under Star’s antitrust exemption.

Without immunity, U.S. antitrust laws would prevent Continental from coordinating pricing and scheduling with Star Alliance members United, Lufthansa and Air Canada. Delta’s SkyTeam, which includes Air France, already has antitrust immunity.

The Financial Times, citing unnamed sources, reported that the Justice Department wants to prevent the antitrust immunity for Star Alliance from including some routes already dominated by those airlines, perhaps including flights between Newark, N.J., and Frankfurt.

American Airlines is waiting behind Continental with a request for antitrust immunity so it can cooperate with British Airways and Spain’s Iberia on trans-Atlantic service. American CEO Gerard Arpey said last week he was optimistic about getting immunity approved by year end.

American, a unit of Texas-based AMR Corp., and its partners are in a third alliance called oneworld.

Critics complain that the collapsing of many global airlines into three teams, with interlocking frequent-flier programs, will reduce competition and raise prices on consumers. A bill pending in the House would raise the standards for approving airline alliances and require that they get frequent renewals to stay in effect.