Air Tahiti Nui (TN, Papeete) along with Delta Air Lines (DL, Atlanta Hartsfield Jackson), KLM Royal Dutch Airlines (KL, Amsterdam Schiphol) and Alitalia (AZA, Rome Fiumicino) have had their application seeking a five-way antitrust immunity for a new alliance in the Europe-French Polynesia market rejected by the US Department of Transportation.
The airlines had applied to both create a joint venture on one trunk route (Los Angeles International to Paris CDG) for a series of coordination agreements and a codesharing agreement that would have given Air Tahiti Nui access to certain points on KLM partner's Air France (AF, Paris CDG) network beyond Paris.
"In addition, the two carriers propose to expand codesharing on select flights between Los Angeles and Paris and Air Tahiti Nui intends to codeshare on select Air France flights beyond Paris. The AF-TN Joint Venture entails close commercial cooperation among the ATI Applicants in marketing, promotion, distribution, procurement, information systems, and accounting data. It includes joint pricing and revenue sharing on the Joint Venture Route and the coordination of seating allocation, revenue management, and settlement of itineraries between Papeete and Europe for passengers travelling over the Joint Venture Route and connecting on certain Air France flights beyond Paris," the ruling noted.
However, in its ruling, the US DoT said the applicants had not demonstrated that their proposed alliance would provide sufficient public benefits to warrant the extraordinary grant of antitrust immunity.
It in fact said it was concerned the proposed joint venture would adversely impact the nature of the routes involved as it could affect economic incentives for the carriers leading to reduced competition. The DoT went on to argue that since the applicants are only looking at partnering on existing Papeete to Paris CDG and Los Angeles International to Paris CDG segments, it would not grant them exemption given that previous grants have helped spur new routes or significantly expand consumer choice. In addition, as Air France and Air Tahiti Nui already coordinate through their existing codeshares, the DoT said it would be unlikely that granting immunity would provide much additional public benefit.
