Research On Legal Issues Of Antitrust Immunity For Airline Alliances

In the past ten years, airline alliances come into people's vision due to rapid development of international air transport. Airline alliances are greatly changing the competition structure of the air transport market. The tradional competition between airlines turns to the competition between airline alliances step by step. In order to adapt themselves to the fiercer competition, international carriers join an airline alliance one after another. Airline alliances promote the development of international air transport on the one hand, and result in anticompetitive effects that are causes for concern of antitrust agency in each state on the other hand.Chapter 1 expounds the concept, the essential features, the diferent models of the airline alliances and the influences that airline alliances exert on the international air transport market. And then the legal background of antitrust immunity for airline alliances is pointed out. Under the traditional system of international aviation management, many states impose restrictions on exchange of traffic rights and rule the benificial ownership and effective control that the air carriers have. Therefore, the international air carriers face heavy difficulties when they are engaged in cross-border transport. In order to evade the restrictions and expand the business of international air transport, airlines from different states form alliances. The states with developed air transport industry, headed by US and EU, actively grant antitrust immunity for airline alliances so that they can break the limitations of aviation management and develop their business abroad. But the precondition for the antitrust immunity in US is that there must be a bilateral air service agreement, for US is firmly convinced that the developement of international air transport service can be stimulated to the uttermost only if the air transport market is totally opened. This Amarican attitude exerts many states' national regulations and policies.Chapter 2 analyses the procedures and merits in examination for granting antitrust immunity for airline alliances. In terms of procedures, EU has already abolished the collective exemptions of airline alliances in 2007. The airline alliance has to apply for exemption in each state's antitrust agency if he hopes the antitrust immunity being granted to the alliance agreement. When each state's antitrust agency examines the alliance agreement, the relevant market in which the airline alliance engaged and the possible dominant position of the airline alliance will be identified. Based on the practice of the US Transport Department, the relevant market includes the US-EU market, the US-alliance partner's home country market, the city-pair market and the beyond and behind gateway market. Generally, the definition of the relevant market by US Transport Department is upon the routes of the hub airports in alliance's members. In EU, a route or a set of routes, direct and indirect route air transport, time-sensitive passengers and non-timesensitive passengers constitute the relevant market. For the differences in the definition of relevant market, the examination of antitrust review leads to different results. But as the routes in which the airline alliances engaged are increaed, recently, US and EU both tend to take the routes network of the alliance into account when they define the relevant market. Market share is an important factor for the determination of a dominant market position. Sometimes, a large market share itself is a key evidence for finding dominant market position. EU uses the approach of market share to determine dominant market position while US analyses market share and market forces comprehensively.Chapter 3 studies the requirements for granting antitrust immunity for airline alliances and the requested remedies. In US, the foundmental requirement is that the granting of antitrust immunity accords with the needs of public welfare. But as a vague notion, public welfare enables the antitrust agency to enjoy a wide discretion. Aimed at the ecomomic integration of the EU while putting the consumer welfare and efficiency in the second place, the European Commission also grants such. In US, the probable anticompetitive effects resulting from airline alliances must coinside with the regulation on concentration of business operators. But EU doesn't have a certain analysis approach to determine the anticompetitive effects resulting from airline alliances. As the alliance and depth cooperation of the airlines could lead to anticompetitive effects to a certain degree, the antitrust agency orders the airline alliance to take some remedies while granting antitrust immunity. Divestiture, a crutial remedy for concentration of business operators, is adopted in the antitrust immunity system for airline alliances. The airline alliance is ordered to renounce some flight schedules in hub airports. The flight schedule, as part of the aviation operation, has a certain nature of assets as it could turn to incomes through business transactions. For instance, US is planning an auction of the flight schedule in rush hour in some hub airports. Besides the renouncement of flight schedule, airline alliance is also required to make a few commitments, such as to sign combined transport agreements with the competitiors, to share the Frequent Flyer Programs, and so on.Chapter 4 discusses the diversity and conflicts of the antitrust immunity systems for airline alliances in the states and the endeavor that is made to reconciliate the conflicts at the international level. With the rapid development of airline alliances, carriers from states expand the market and reinforce market positions by means of cooperation. In order to acquire the antitrust immunity, airline alliance has to apply for exemption for the identical alliance agreement in different antitrust agencies. But the diversity of air policies and antitrust systems in states must lead to different legal results. This sort of conflict exerts heavily on airline alliance and makes it uncertain. Therefore, the international society seeks to find an appropriate solution but still with no success. By analysing the cases of antitrust immunity for airline alliance in various countries, chapter 4 gives some advices to resolve the conflicts.Chapter 5 explores the construction of China's antitrust immunity system for airline alliances. With regard to the air transport policy, air-traffic control should be released to build a free competitive aviation market. In respect of the substantive institutions, we should establish the criterion of determining the relevant market and dominant position, the requirements for antitrust immunity and the applicable remedies. Concerning the procedural problems, immunity on a case-by-case basis is an effective model. And CAAC (Civil Aviation Administration of China) will be responsible for the granting of antitrust immunity for airline alliances and the supervision within immunity period.