Airline marketing deal approved
WASHINGTON (AP) -- Federal regulators gave the go-ahead Monday for Delta, Northwest and Continental airlines to sell seats on each other's flights.
The Nos. 3, 4 and 5 airlines reached an agreement with Transportation Department officials after threatening in January to ignore conditions the government imposed on their original plan. Regulators were concerned the "code-share" plan would stifle competition.
"This was one that I was worried was going to end up in civil war," said Darryl Jenkins, head of George Washington University's Aviation Institute.
The airlines agreed to give up airport gates, but not as many as the Transportation Department originally wanted. They agreed to limits federal regulators imposed on the number of code-share flights, but only for two years. And they agreed to some, but not all, restrictions on how they can market joint contracts to travel agents and corporations.
In a statement, the Transportation Department said it will monitor the airlines to make sure the agreement doesn't reduce competition.
The code-sharing agreement among Delta, Continental and Northwest will allow them to reach more destinations without flying more planes and to offer reciprocal benefits such as frequent flier miles.
"This alliance will bring consumers lower fares, increased service levels and broader choices of destinations," the airlines said in a statement. They intend to implement the plan this summer.
Delta was the force behind the agreement because it wanted to protect its East Coast routes against US Airways and United Airlines, which entered into a similar agreement in October, Jenkins said.
The government required US Airways to code share with United as a condition of its obtaining a $900 million federal loan guarantee. The airline closed on the loan and emerged from bankruptcy on Monday.
Jenkins said the code-sharing agreement would at best minimize the damage the airlines are suffering because of poor management, overcapacity, high labor costs and fewer passengers due to the war in Iraq.
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