THREE AIRLINES DEFY GOVERNMENT ON MARKETING PACT

Continental, Delta and Northwest Will Ignore Some Limits

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WASHINGTON (AdAge.com) -- Defying antitrust regulators, Continental Airlines, Delta Air Lines and Northwest Airlines today said they will implement a joint marketing agreement without regard to several of the conditions the government last week imposed on the pact.

In a statement today, the companies said some of the conditions sought by the departments of Justice and Transportation on the marketing pact, including limits on code sharing and corporate travel discounts and requirements to give up gates, would put them "at a competitive disadvantage" and go beyond restrictions imposed on a similar agreement between United Airlines and U.S. Airways.

Continental and Northwest already have a similar deal in place, but the new pact approved last week by the Justice Department allows the three airlines to credit each others frequent flyers, share airport lounges and to jointly sell some flights. In giving antitrust approval, the Justice Department imposed some limits.

Some federal limits
Among them: The three airlines would have to give up some "underutilized" airport gates to competitors; limit the amount of code sharing or joint selling of flights; and limit selling of corporate travel contracts that benefit the three at the expense of competitors.

At the time the Justice Department in a statement said the limits "prohibit conduct the alliance carriers could use to collude on fares or otherwise reduce competition among themselves."

It said the conditions also prevent sharing or pooling of revenues, so each carrier will have to continue to compete for passengers.

Went too far
The airlines today said that while they are willing to accept certain conditions and even give up some gates, the government went too far.

"Should [the government] bring an enforcement action, the carriers intend to defend their marketing agreement vigorously while continuing to implement it, in order to protect the pro-competitive, pro-consumer benefits identified by the Justice Department, and to prevent [the Transportation Department] from placing Continental, Delta and Northwest at a competitive disadvantage during a time of unprecedented crisis in the airline industry," the airlines said.

The Transportation Department today said it would ask an administrative judge to enforce the limits.

The department "will not abandon our statutory responsibility to consumers nor ignore the clear intent of Congress, which has specifically directed the [department] to review such matters for anti-competitive effects," spokesman Chet Lunner said.

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