British Airways, American Airlines and Iberia have received final regulatory approval from the European Commission to enter into a joint business agreement on transatlantic flights.
The airlines expect to receive the final decision on transatlantic anti-trust immunity from the U.S. Department of Transportation (DOT) shortly. Approval from the DOT is also required for the three airlines to begin their transatlantic joint business agreement (which would also involved fellow oneworld carriers Finnair and Royal Jordanian, though these two carriers do not require full anti-trust approval).
“We await the DOT’s final decision but welcome this important and vital step forward. The high number of new services on London to US routes since the Open Skies agreement demonstrates that Heathrow is open,” says Willie Walsh, British Airways’ chief executive. “Between us, we have agreed to make available Heathrow slot pairs for our competitors to use on services to the US. This is a pragmatic decision so that we can get the joint business up and running as soon as possible. The slot commitments provide a further guarantee that there will be no possible loss of competition as a result of our joint business”.
The slots will be made available if competitor airlines are unable to acquire them through the normal process. London-New York slots will only have to be made available if the number of services on the route drops below currently announced levels.
BA says its transatlantic joint business with American and Iberia will strengthen competition across the Atlantic by enabling the oneworld alliance to compete on a level playing field with the other global alliances that already have anti-trust immunity. The airline says customers will benefit from easier, seamless and convenient travel to more global destinations with better connections, improved flight schedules, and enhanced frequent-flyer benefits. (For example, members of any of the airlines’ frequent-flyer programs would be able to earn and redeem mileage points on any of the other carriers – something they have never been able to do so far.)
Simon Talling-Smith, British Airways’ top executive in the Americas, recently told www.AirlinesAndDestinations.com that BA is likely to launch new routes to the USA as a result of the joint business agreement and as a result of Boeing 787s joining its fleet from the airline’s 2012-13 financial year.
The airlines plan to launch the transatlantic joint business this autumn. British Airways also plans to complete a merger with Iberia in December.
Sir Richard Branson, president of Virgin Atlantic Airways, says consumers will lose out as a result of the deal, though Virgin Atlantic has consistently neglected to mention that its own concerns about losing business at Heathrow could quickly be allayed if it joined one of the three major global airline alliances – a step it appears unwilling to contemplate.
Speaking about the BA-American-Iberia joint business agreeement, Branson says, “We have fought this monster monopoly for the past thirteen years and are still resolute in our belief that this decision is shameful and consumers will suffer greatly as a result of this deal. The European Commission has let consumers down by agreeing to paltry remedies which are wholly inadequate. Luckily for the competition authorities, Virgin Atlantic will continue to compete to win passenger and corporate business despite this massively uneven playing field which we are forced to compete on.”
Virgin Atlantic claims the EU’s final decision and remedies package is “woefully inadequate”.
“The many shortcomings include too few slot remedies, no requirement for competitors to take up the remedies which means BA/AA can proceed regardless of whether competition is in place and slots which are only available on a limited-duration lease-hold basis thereby disincentivizing new entry. All of these factors combined mean that the remedies are unable to address the competitive harm caused by a combined BA/AA,” says Virgin Atlantic.