Continental Airlines gets DOT approval to join Star Alliance

The United States Department of Transportation (DOT) has tentatively approved the application of Continental Airlines to join the Star Alliance by giving the carrier antitrust immunity for its participation in the airline group.

The DOT’s approval allows Continental Airlines, based in Houston, Texas, the United States, to enter into an integrated worldwide alliance whose members cooperate on certain aspects of scheduling, ticketing and pricing.

The airline network Star Alliance, founded in 1997, collectively offers over 16,500 daily flights to 912 destinations in 159 countries.

Star Alliance includes United Airlines, Lufthansa, US Airways, and Air Canada.

In a statement, Continental Airlines said the decision by the US Department of Transportation also would let Continental Airlines and United Airlines to work with Lufthansa and Air Canada in a joint?venture known as Atlantic Plus-Plus. In the Atlantic Plus-Plus group, the four major airlines share capacity, sales and marketing as well as revenues on international services.

Larry Kellner, chairman and CEO of Continental Airlines, said in the statement that the approval by the Department of Transportation was a key step in the carrier’s plan to leave the SkyTeam alliance and join Star Alliance on October 24, 2009.

The DOT’s decision is expected to become final in May 2009 after a three-week period for comments and objections from the public ends, Kellner added.

For passengers of Continental Airlines, the statement explained, the alliance could mean common ticketing among member-airlines of Star Alliance and the chance to accumulate Continental’s frequent-flier miles on other airlines in the group. The member-airlines also can use resources like airport lounges and technology.

According to Kellner, joining Star alliance would let Continental Airlines ally with “those airlines with which it is in less direct competition” and would provide a good deal of benefits for consumers worldwide even while preserving domestic competition and jobs.

In early 2008, Continental Airlines and United Airlines, a subsidiary of UAL Corporation and based in Chicago, the United States, had considered merging, but Continental Airlines announced in April 2008 that it would remain independent.

Apart from Continental Airlines and United Airlines, the 8 members of Star Alliance which has received tentative approval from the US Department of
Transportation for antitrust immunity are Air Canada, Austrian Airlines, bmi, Lufthansa, LOT Polish Airlines, Scandinavian Airlines (SAS), SWISS, and TAP Air Portugal.

The antitrust immunity enables airlines to build networks without having to merge, and this arrangement is less expensive and more profitable compared to merger.