US to deny antitrust immunity for proposed Delta/Virgin Blue alliance?

In a statement released overnight, the US Department of Transport said it proposed to deny an application for antitrust immunity made by Delta Air Lines and affiliates of the Virgin Blue Group with respect to joint services between the United States and Australia.

Antitrust immunity allows airlines to closely coordinate their international operations.

In a show-cause order, the DOT tentatively concluded that Delta and the Virgin Blue Group had not demonstrated that the alliance would produce sufficient public benefits to justify a grant of antitrust immunity.

In reaching its draft decision, the Department noted that Delta and its proposed partner have only recently entered the US-Australia market, have not shown developed plans to operate as commercial partners, and have limited their cooperation to a handful of routes, thereby limiting the public benefits their alliance might produce.

The Department also said that Delta and the Virgin Blue Group had failed to show that their alliance would have positive effects for consumers, such as lower fares or increased capacity.

The DOT has invited interested parties to show cause why the proposed decision should not be made final.

Objections are due in 14 calendar days, and answers to objections seven days afterward.

Following the comment period, the Department will review all filings and then issue a final decision.

The initiative to establish the alliance on the trans-Pacific route preceded John Borghetti's time at the helm of the Australian carrier, but it is likely that he would have valued the proposal as it would have provided similar benefits in the US market to those that will flow in Europe and elsewhere from the recently announced tie up with Etihad.

There's always Virgin America of course, but that's a carrier that's still building a network. It only flies to 14 ports on the North American continent so far.