Order 2013

- 9

- 14

Served: September 23, 2013

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 23 rd day of September , 2013

Application of

VIRGIN ATLANTIC AIRWAYS, LTD.

DELTA AIR LINES, INC. SOCIÉTÉ AIR FRANCE

KONINKLIJKE LUCHTVAART MAATSCHAPPIJ N.V.

ALITALIA COMPAGNIA AEREA ITALIANA S.P.A.

under 49 U.S.C. §§ 41308 and 41309 for approval of and antitrust immunity for alliance agreements Docket DOT

- OST

- 2013

- 0068



### FINAL ORDER

I. SUMMARY

By t his order, the Department of Tra nsportation (the “ Department ”) grants approval of

, and antitrust immunity for

, the application of Virgin Atlantic Airways, Ltd. (“ Virgin Atlantic ”), Delta Air Lines, Inc. (“ Delta ”), Société Air France (“ Air France ”), Koninklijke Luchtvaart Maatschappij N.V. (“ KLM ”), and Alitalia Compagnia Aerea Italiana S.P.A. (“ Alitalia ”). 1

The applicants (collectively, the “ ATI Applicants ”) have requested a grant of immunity

from the U.S. antitrust laws to al low Delta and Virgin Atlantic to operate a joint v enture (“ Joint

Venture ” or “ Delta

- Virgin Atlantic Joint Venture ” ) between North America and the United Kingdom . We have concluded that, overall, the alliance and Joint Venture will be procompetitive and ar e likely to generate substantial public benefits to the traveling public.



### II. SUMMARY OF THE RECORD

On April 8, 2013, Virgin Atlantic, Delta, Air France, KLM, and Alitalia filed a joint application requesting approval of and antitrust immunity for allia nce agreements covering foreign air transportation between North America and t he United Kingdom. The ATI Applicants argued that a grant of antitrust immunity would not reduce competition in any relevant market

and would lead to substantial consumer benefi ts through new services and increased competition.

1 See Docket DOT

- OST

- 2013

- 0068, “Joint Application for Approval of and Antitrust Immunity for Alliance Agreements,” hereinafter “ Joint Ap plication

. ”2 O n August 30, 2013, we issued a Show Cause Order with our tentative decision to grant the request for antitrust immunity, subject to conditions, and provided an opportunity for public

comments. 2 Comment s were due o n August 13, 2013 , and replies on August 20, 2013. The

Show Cause O rder indicated that , in the event that no objections were filed by August 13, 2013, all further procedural steps would be deemed waived , and we would enter an order making fina l our tentative findings and conclusions

. Because t he re were no responsive pleadings filed after the issuance of the Show Cause Order, we are proceeding to make final our tentative findings

and conclusions.



### III. DECISION

The underlying request for anti trust immunity covers a series of alliance agreements between Virgin Atlantic, Delta, Air France, KLM, and Alitalia (the “ ATI Alliance Agreements ”). The ATI Alliance Agreements include a Joint Venture Agreement between Delta and Virgin Atlantic,

a five

- wa y Coordination Agreement among Virgin Atlantic, Delta, Air France, KLM, and

Alitalia , and several implementing agreements between Delta and Virgin Atlantic, including a Codeshare Agreement, a Special Prorate Agreement, a Lounge Agreement, and a F requent Fl ier Program Agreement. 3

We have decided to approve the application, permitting the ATI Applicants to implement the ATI Alliance Agreements, subject to conditions. As explained in detail in the Show Cause Order, we have applied the relevant legal and poli cy stand ards carefully . N o party has opposed the ATI Applicants’ re quest during the proceeding , and the facts and circumstances remain unchanged since the issuance of the Show Cause Order.

Against this background, we are today making final our tentative findings and conclusions.



### ACCORDINGLY:

1

. We approve and grant antitrust immunity to the ATI Alliance Agreements between Virgin Atlantic Airways, Ltd., Delta Air Lines, Inc., Société Air France, Koninklijke Luchtvaart Maatschappij N.V., Alitalia Compagn ia Aerea Italiana S.P.A., and the majority

- owned corporate

affiliates of the aforementioned carriers, in so far as such agreements relate to foreign air transportation. Subject to the terms and conditions described in the ordering paragraphs below, the ap proval and grant of antitrust immunity shall remain in effect indefinitely, p rovided that the ATI Applicants:

a. Submit for prior approval subsequent subsidiary agreements implementing their most recent ATI Alliance Agreements 4 ;

2 See DOT Order 2013

- 8

- 21.

3 See Joint Application, at 12 and 19.

4 Regarding this requirement, we do not expect the ATI Applicants to provide the Department with minor technical understandings that are necessary to implement fully their day

- to

- day operations but that have no additional substantive significance. We do, however, expect and direct them to provide the Department with all unredacted contractual instruments that implement or materially alter, modify, or amend the cooperation

agre ements, joint ventures, or confiden tiality/antitrust guidelines.3 b. Resubmit the ATI Alliance Agreements, including the Joint Venture Agreement

and the five

- way Coordination Agreement, before five years from the date of

issuance of this order ; and

c. Obtain prior approval if they choose to hold out service under a common name or

use common brands ;

2

. We direct Virgin Atlantic Airways, Ltd., Delta Air Lines, Inc., Société Air France, Koninklijke Luchtvaart Maatschappij N.V., and Alitalia Compagnia Aerea Italiana S.P.A. to file with the Director, Office of Aviation Analysis, v erified statements by Virgin Atlantic Airways, Ltd. and Delta Air Lines, Inc. attesting that the Joint Venture Agreement has been implemented pursuant to the terms described in the Joint Application, and a complete and unredacted copy of

the most recent Joint Ventur e Agreement and any appendices. We determine that, unless the ATI Applicants make the filings d escribed in this ordering p aragraph within twelve months from

the date of issuance of this order , the authority herein shall expire and the grant of antitrust immunity shal l be automatically withdrawn from the non

- compliant ATI Applicants;

3

. We direct Virgin Atlantic Airways, Ltd., Delta Air Lines, Inc., Société Air France, Koninklijke Luchtvaart Maatschappij N.V., and Alitalia Compagnia Aerea Italiana S.P.A. to
submit ann ual progress reports to the Office of Aviation Analysis, beginning one year from the

date of issuance of this order , and continuing each year thereafter while their respective ATI

Al liance Agreements are effective 5 ;

4

. We direct Virgin Atlantic Airways, L td., Delta Air Lines, Inc., Société Air France, Koninklijke Luchtvaart Maatschappij N.V., and Alitalia Compagnia Aerea Italiana S.P.A. to withdraw, or to remain withdrawn, from participation in any International Air Transport

Association tariff coordinatio n activities that discuss any proposed through fares, rates, or charges applicable between the United States and any countries whose airlines have been or are subsequently granted antitrust immunity, or renewal thereof, to participate in similar alliance

a ctivities with a U.S. airline(s);

5

. We delegate to the Director, Office of International Aviation, the authority to determine the applicability of the directive set forth in Ordering Paragraph 4 as to specific prices, markets,

and tariff coordination act ivities, consistent with the scope and purpose of the condition, as previously described;

6

. We direct Virgin Atlantic Airways, Ltd., Delta Air Lines, Inc., Société Air France, Koninklijke Luchtvaart Maatschappij N.V., and Alitalia Compagnia Aerea Italian a S.P.A. to begin or to continue to report full

- itinerary Origin

- Destination Survey of Airline Passenger Traffic for all passenger itineraries that include a U.S. point 6 ;

5 We expect the ATI Applicants to deliver the progress report by the close of business on the anniversary date. If that date falls on a weekend or federal holiday, the ATI Applicants may de liver the report by the close of business on the following business day.

6 We treat the foreign airlines’ O&D data as confidential, do not allow U.S. airlines any access to the data, and do not allow foreign airlines any access to U.S. airline O&D Survey data. We use these data only for internal analytical

purposes.4 7

. We may amend, modify, or revoke this authority at any time without hearing;

8. We will not entertain petitions for reconsideration of this O rder ; and

9

. We will serve this Order on all parties on the service list in this docket.

By:

SUSAN L. KURLAND Assistant Secretary for Aviation

and International Affairs

(SEAL)

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