By James Pilcher
The Cincinnati Enquirer

The lineup of airlines and where they operate locally could face a shakeup at the Cincinnati/Northern Kentucky International Airport as a result of the ongoing battle between pitting Delta Air Lines and two potential partners against the federal government.

Tuesday, Delta, Northwest and Continental rejected restrictions handed down last week by the federal Transportation Department on their proposed "codeshare" alliance and instead imposed watered-down versions of those restrictions.

The alliance would allow each airline to sell seats on the other's flights, while keeping its own "code" on the ticket. It prohibits the partners from sharing information on fares or when flight schedules might change.

One of the conditions the airlines said they would impose on themselves was to give up the five gates at the Cincinnati airport where Continental and Northwest operate. According to Delta officials, those two airlines would move to Delta's Terminal 3 - where it operates its second-largest hub - to keep all three partners in the same building and make transitions easier for passengers.

The three airlines, which represent 35 percent of the domestic market, did say they would adhere to requirements made by the Department of Justice. That agency ruled that the agreement could not be applied to competing non-stop flights, which prohibits it from applying to local flights since Northwest and Continental only serve their hubs from Cincinnati.

But Delta's senior vice president for governmental affairs, Scott Yohe, said there is still a major impact to hub cities such as Cincinnati.

"All this goes to benefit Delta and its hubs like Cincinnati and would build more traffic through there," Mr. Yohe said. "If we don't do this, we lose business from the spoke cities to United and US Airways. And that would weaken the hub, and that's why this is so important."

But the Transportation Department, which last year approved a similar deal between United and US Airways without the new restrictions, vowed to fight. In a statement, the agency said it would set up a hearing process, the first time that this has been done for such proposed alliances between airlines. Such a hearing would be presided over by an administrative law judge, and any appeal of the final ruling could be taken to the U.S. Court of Appeals.

"DOT will not abandon our statutory responsibility to consumers," department spokesman Chet Lunner said in the release. "The DOT intends aggressively to enforce its statutory authority to challenge the transaction and require such conditions as it deems necessary to preserve competition."

No dates of a possible hearing were given, and Mr. Yohe said actual implementation of the deal would wait until a final ruling was issued.

"We plan to push forward with our plan to get it implemented," Mr. Yohe said.

The airlines have pursued the deal for six months, saying it was a way to build more revenue and streamline customer service. Atlanta-based Delta had previously said it expects to see an additional $150 million to $200 million in revenue from the deal. The impending battle comes at a time when all three airlines continue to struggle financially - Delta reported a fourth-quarter 2002 $363 million loss Thursday; Northwest reported a $488 million loss Tuesday; and Continental reported Wednesday a $109 million loss.

Local airport officials would not comment on the possibility that Continental or Northwest would move to Terminal 3, nor would they comment on what would happen if such moves occurred. The airport already has four gates not assigned to individual airlines that can be used by any carrier.

"We are not going to get involved in this while they continue to negotiate," airport spokesman Ted Bushelman said.

E-mail jpilcher@enquirer.com