Published: June 29, 2009 06:11 pm      

DOJ opposes antitrust immunity for Continental

WASHINGTON (AP) — The Justice Department opposes Continental Airlines Inc.'s broad request for antitrust immunity to work more closely with United Airlines and other carriers on international service.

The department says the airlines should get more limited immunity. It argues that broader immunity could hurt competition on other routes including between the U.S. and China and even raise fares within the United States.

The impact of the Justice Department stance, disclosed in a regulatory filing late Friday, was unclear. The final decision on Continental's request for immunity to join United's alliance of other airlines rests with the Transportation Department.

The Transportation Department gave preliminary approval to the request several weeks ago, but soon after that the Justice Department signaled that it wanted a chance to study the proposal.

Continental spokesman Dave Messing said the airline is still confident that the Transportation Department will approve its request.

Messing said Continental needs the approval to compete fairly with airlines that already have antitrust immunity.

"In this economic crisis, it is more important than ever for the U.S. government not to hamper our industry's and company's efforts to remain competitive and serve our consumers and communities," he said.

Continental, the nation's fourth-largest airline, wants antitrust immunity to cooperate with United and other Star Alliance airlines in setting prices and schedules for international service.

Other members of the Star Alliance include US Airways, Lufthansa and Air Canada.

The Justice Department said the benefits that Continental claimed from antitrust immunity could be achieved without immunity.

At the same, the department cautioned that immunity for Continental and United to work more closely could hurt competition on U.S.-Beijing routes. The department said letting Continental cooperate with Air Canada and European SkyTeam members could leave consumers with fewer choices and higher fares on travel between the U.S. and Canada and on some routes to Europe, including New York-Geneva and Chicago-Frankfurt.

The department also said closer ties between United, the No. 3 U.S. carrier, and Continental "raises significant concerns" about hurting competition within the United States.

The Justice Department's opposition to immunity for Continental could effect AMR Corp.'s American Airlines, which wants immunity to work closely with British Airways and Spain's Iberia on trans-Atlantic routes. American, BA and Iberia belong to an alliance called oneworld.

American said it still expects to win immunity from the Transportation Department by the end of October, said spokesman Andrew Backover.

"The sooner that our application is approved, the quicker it will lead to healthier and more robust competition by allowing oneworld to compete on the same playing field" against two other alliances that already have immunity, Backover said.

SkyTeam, including Delta and Air France, already has antitrust immunity on trans-Atlantic routes, as do the Star Alliance members other than Continental.

Houston-based Continental expects to leave SkyTeam on Oct. 24 and join Star quickly.