AMERICAN AIRLINES, British Airways and Spain’s Iberia said yesterday they were applying for antitrust immunity from the US and European competition authorities to form a transatlantic joint venture to create one of the most powerful forces in the Atlantic aviation market.
Eventual approval by Washington and Brussels would allow the carriers to form a revenue-sharing joint venture for their transatlantic routes in which they could jointly arrange capacity, networks, pricing and sales, in particular to corporate customers.
The move was immediately attacked by Virgin Atlantic, the rival UK long-haul carrier, controlled by Sir Richard Branson.
Sir Richard said a BA tie-up with American would “create a monster monopoly that would push up ticket prices and substantially reduce competition on the busiest air corridor in the world”.
He said BA/AA and Iberia would be “unacceptably dominant, with nearly half of all of the slots at Heathrow, leaving competitors powerless to take them on”.
The current economic slowdown was “no justification for agreeing to this alliance”.
The three airlines said they had signed a “joint business agreement” covering flights between North America and Europe. They would share revenues but not profits.
They planned to co-operate commercially on flights between the US, Mexico and Canada, and the European Union, Switzerland and Norway while continuing to operate as separate legal entities.
In parallel BA and Iberia have recently begun negotiations to merge to form one of Europe’s biggest airlines.
This is the third attempt in 11 years by BA and American to gain antitrust immunity for their alliance after failed efforts begun in 1997 and 2001, but BA chief executive Willie Walsh said yesterday the airline industry and the competitive environment had “changed radically” since the last applications.
Most importantly Heathrow airport, BA’s global hub and the key gateway in Europe for travellers from the US, had been opened to full competition for EU and US carriers since the end of March, when the “open skies” treaty between the EU and US came into force.
The three carriers, already leading members of the Oneworld airline alliance, said the deal would allow Oneworld to compete more effectively with the rival global alliances SkyTeam and Star, in which the core carriers already had transatlantic antitrust immunity.
Currently six airlines in SkyTeam, led by Air France-KLM and Delta Air Lines, and nine in Star, led by Lufthansa and United Airlines, had such immunity. – (Financial Times service)
