In an effort to enhance competition and provide lower fares for consumers flying internationally, the U.S. Department of Transportation (DOT) proposed to withdraw antitrust immunity from the…
In an effort to enhance competition and provide lower fares for consumers flying internationally, the U.S. Department of Transportation (DOT) proposed to withdraw antitrust immunity from the tariff-coordination meetings held by the International Air Transport Association (IATA) that discuss and set passenger fares and cargo rates for U.S.-Europe and U.S.-Australia flights.
In its show-cause order, the Department tentatively concluded that changes in international aviation services, such as the growth of international airline alliances, have made the pricing conferences unnecessary. The Department tentatively found that airlines can establish interline fares without IATA conferences and that international alliances have made it even easier for passengers to make trips using more than one carrier without IATA’s involvement.
The Department also noted that European Union and Australian competition authorities have tentatively determined to end or reduce the IATA conferences’ immunity from their own competition laws.
Under law, DOT has authority to approve agreements involving international air transportation and to grant them antitrust immunity. In addition to the IATA conferences, DOT has granted antitrust immunity to a number of alliances between U.S. and foreign airlines.
The Department intends to make its final decision by the end of this year.
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