An Institutional Defense of Antitrust Immunity for International Airline Alliances

The ongoing international political and legal dispute concerning the European Union’s Emissions Trading Scheme appears to have diverted the public’s attention from the last “great” aviation regulatory controversy: antitrust immunity (ATI) for international airline alliances. Even so, the matter has not been closed among academics, aviation lawyers, and government officials. While some continue to defend alliances on pure economic grounds, arguing that their network benefits far outweigh the alleged cost of shielding them from U.S. antitrust law, many voices continue to condemn these joint ventures, and the Department of Transportation (DOT) immunization authority which makes them possible, on highly conceptual grounds. The first, and perhaps most prevalent track, is to argue that immunized alliances are contrary to a theoretical construct of efficiency, and thus ought to be condemned. The second, and more obscure, track is the legalist critique, i.e., the argument that the DOT has failed to properly interpret and apply the statutory authority which undergirds its immunization powers when reviewing alliance applications. The often unstated premise of this attack is that the DOT, as an administrative agency, ought to be tethered to thick concept of the rule of law which demands interpretive consistency and, perhaps, other canonical reverences when wielding its authority.
In a forthcoming article, An Institutional Defense of Antitrust Immunity for International Airline Alliances, 56 Cath. Univ. Law Review __ (2012), the International Aviation Law Institute’s Senior Research Fellow, Gabriel Sanchez, argues that these conceptual critiques of the DOT’s immunization practices fail to account for institutional variables such as the Department’s epistemic advantages in setting and executing international aviation trade policy; as such they promote an unrealistic (and normatively undesirable) belief that the DOT ought to forego these policy goals in order to maintain some proposed notion of conceptual fidelity—economic or legalistic. Further, the article considers possible reforms to the DOT’s immunization powers and procedures which emanate from these aforementioned critiques and highlights their institutional deficiencies. For example, the idea that the Department of Justice’s Antitrust Division ought to share joint custody over alliance immunization is unattractive because it injects greater uncertainty into the procedures while placing additional drags on aviation trade negations by potentially comprising the longstanding practice of trading ATI for liberal Open Skies accords.
None of this means that ATI is a permanent phenomenon of international air services trade. Should the political winds change radically in the U.S. and public tolerance for immunized alliances change, Congressional reforms to the DOT’s powers would not only be expected, but democratically legitimate as well. However, the chances of this occurring are slim. In the post-World War II era, Congress has consistently demonstrated great deference to the Executive and its agencies in trade matters, furnishing various forms of “fast track” authority to conclude international trade agreements and set sectoral trade policy; public opposition to this political “outsourcing” has been slight. Given that ATI is part and parcel of U.S. aviation trade, the chances of legislative interference in this area remains, for better or worse, slim.
source: ALPB