An Institutional Defense of Antitrust Immunity for International Airline Alliances
36 Pages Posted: 7 Dec 2013
Date Written: April 5, 2012
The concept of antitrust immunity for industrial sectors may appear antiquated in the “post-deregulation” era, but it remains a hallmark of U.S. international aviation law and policy. Unlike almost every other global industry, airlines remain subject to treaty-based restrictions which limit their ability to access global capital markets and consummate crossborder mergers. As such, U.S. airlines must forge alliances with foreign partners that operate under the cloak of antitrust immunity in order to build global route networks while allowing them to behave like fully merged entities. In response, the Department of Transportation — the agency vested with antitrust immunization powers for alliances — has leveraged the commercial appeal of the alliance system into expanded foreign market opportunities for U.S. airlines by requiring the home countries of immunity-seeking carriers to first enter into liberal aviation trade accords known as “Open Skies” agreements. But this de facto policy and the DOT’s immunization grants have come under conceptual fire from industry stakeholders and academics, mainly along economic and legalist lines. In response, I offer a fresh defense of antitrust immunity for alliances by highlighting the DOT’s institutional advantages in setting and executing international aviation trade policy, and arguing that the common criticisms of immunized alliances produces tracks for reform which are found wanting from an institutional perspective and are thus normatively unattractive.
Keywords: airline, airline alliances, antitrust, antitrust immunity, international law, department of transportation, aviation trade, regulation, deregulation
Suggested Citation: Suggested Citation