DOT turns down Delta-Virgin Blue linkup

The U.S. Department of Transportation, which hardly ever turns down a request for antitrust immunity, said Wednesday it's proposing to reject the application from Delta Air Lines and the affiliates of Virgin Blue Group.

The two had proposed a close relationship on flights between the United States and Australia.

"The tentative decision is based upon our assessment that the proposed alliance would not produce sufficient public benefits to justify a grant of immunity from the antitrust laws at this time," the department said in its order.

Delta issued this statement after the DOT's announcement: ""We strongly believe our proposed alliance with the Virgin Blue Group will be good for consumers. We are reviewing the DOT's tentative order and will respond within the comment period."

Usually, if DOT doesn't like a proposal, it approves the alliance with conditions to make it acceptable. In this case, the department didn't even offer that option.

"In reaching its tentative decision, the Department noted that Delta and its partners have only recently entered the U.S.-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," DOT said in its announcement.

"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 Virgin Blue carriers include V Australia, which began flying from Australia to the United States in 2009. Its other carriers are Virgin Blue Airlines and Pacific Blue Airlines. Delta began its first Australia service with Los Angeles-Sydney flights in July 2009.

In its order, DOT pointed to a 2005 SkyTeam decision as another example in which the department tentatively rejected antitrust immunity because of changing market conditions and insufficient information to show public benefits.

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