Served: June 6, 2011 

1 

UNITED STATES OF AMERICA 

DEPARTMENT OF TRANSPORTATION 

OFFICE OF THE SECRETARY 

WASHINGTON, D.C.

Joint Application of 

AIR CANADA 

THE AUSTRIAN GROUP 

BRITISH MIDLAND AIRWAYS LTD 

CONTINENTAL AIRLINES, INC. 

DEUTSCHE LUFTHANSA AG 

POLSKIE LINIE LOTNIECZE LOT S.A. 

SCANDINAVIAN AIRLINES SYSTEM 

SWISS INTERNATIONAL AIR LINES LTD. 

TAP AIR PORTUGAL 

UNITED AIR LINES, INC. 

for approval of, and a grant of antitrust immunity for, alliance agreements 

under 49 U.S.C. §§ 41308 and 41309 

Docket DOT-OST-2008-0234 

NOTICE 

This notice concerns the withdrawal of one “carve out” imposed upon the above-captioned 

carriers (the “Joint Applicants”) by Order 2009-7-10. 

The Joint Applicants are members of an alliance that was approved and granted antitrust 

immunity in July 2009. The final order in the case, Order 2009-7-10, imposed carve outs in a 

number of city-pair markets in which competitive concerns were identified.1 In those carve-out 

markets, immunity is limited to the coordination of fares and capacity for connecting traffic only, 

which protects the passengers in the local nonstop market who could, under certain 

 

1 See Order 2009-7-10 at 18-21, Ordering Paragraphs 5, 6, and 7, and Appendix A. The order and the appendix 

provide for carve outs in the following markets: New York-Geneva, New York-Lisbon, Cleveland-Toronto, 

Houston-Calgary, Houston-Toronto, New York-Ottawa, Chicago-Toronto, and San Francisco-Toronto. Carve outs 

in New York-Copenhagen, New York-Stockholm, U.S.-Beijing markets, Washington-Frankfurt, and ChicagoFrankfurt have been previously withdrawn.
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circumstances, be subject to higher prices or reduced quality of service if the airlines were to 

gain market power through the alliance. 

In our final order, we concluded that there could be some potential for adverse consumer 

consequences if competition were to be eliminated on the New-York Geneva route, among 

others.2 However, we have also “consistently found that where an integrated ‘metal-neutral’ 

joint venture is present, carve outs inhibit the realization of efficiencies and thereby the 

consumer benefits resulting from those efficiencies.”3 

On February 3, 2011, the Joint Applicants asked the Department to remove New-York Geneva 

from the list of carved-out city pairs.4 They assert that New York-Geneva was carved out from 

the full benefits of the antitrust immunity granted by Order 2009-7-10 because one of the two 

Star immunized carriers flying the route nonstop, Swiss International Air Lines, Ltd. (“Swiss”), 

was not then a party to the A++ metal neutral transatlantic joint venture agreement (“A++”). 

Subsequent to that order, Swiss has been designated as a participant in A++. Therefore, pursuant 

to Ordering Paragraph 8 of Order 2009-7-10, the Joint Applicants have petitioned for removal of 

this city-pair carve out. 

In Appendix A of Order 2009-7-10, we noted that “the Department may review the limitations 

on antitrust immunity set forth above to determine whether they should be discontinued or 

modified”5 in light of several conditions. In particular, we allowed for the possible removal of 

carve outs if “efficiencies to be achieved by the parties from further integration that would be 

made possible by discontinuation of the limitations on immunity [would be] balanced against 

any potential for harm to competition from such a discontinuation.”6

Accordingly, the Department concurs that the carve out in this subject market should be 

withdrawn. In addition to being a wholly owned subsidiary of the Lufthansa Group, which has 

ATI with Star, Swiss is also now a member of the A++ integrated joint venture. Membership in 

A++ will enable Swiss to achieve additional and significant efficiencies which can be expected 

to be passed on to consumers as public benefits. Thus, we find the efficiencies of removing the 

New York-Geneva carve out from the antitrust immunity granted to the Joint Applicants in 

Order 2009-7-10 will outweigh the potential adverse consumer consequences[2] we previously 

identified in Order 2009-7-10,[3] and the affected carve out in New York-Geneva will cease to 

apply immediately. We reserve the right to re-impose the carve out if warranted. 

 

 

2 See Order 2009-7-10 at 19.

3 See Order 2009-7-10 at 20 (footnote omitted).

4 See Joint Petition filed by Joint Applicants in Docket DOT-OST-2008-0234 (February 3, 2011). 

5 See Order 2009-7-10, Appendix A at 3.

6 See Order 2009-7-10, Appendix A at 3. [2] See Order 2009-7-10 at 19.

[3] See Order 2009-7-10 at 21-22 (July 9, 2009). 
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This notice does not affect any other carve outs. The Joint Applicants have separately petitioned 

to remove the carve outs in New York-Copenhagen, New York-Stockholm, and U.S.-Beijing; 

this request was separately addressed on April 13, 2011. 

We will serve this notice on interested parties. 

By: 

SUSAN L. KURLAND 

Assistant Secretary 

for Aviation and International Affairs 

Date: 

(SEAL) 

An electronic version of this document is available at: http://www.regulations.gov