Big Slick
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- Oct 18, 2004
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American, Iberia and BA plan joint deal
American Airlines, British Airways and Spain’s Iberia are close to applying for antitrust immunity to form a joint venture that would be one of the most powerful forces in the transatlantic aviation market.
The airlines aim to reach an accord on profit and revenue sharing this month, according to executives at the three carriers.
Record fuel costs, weakening economies and the impact of the “open skies” treaty agreed last year between the US and the European Union have encouraged many of the largest carriers from both sides of the Atlantic to draw closer to old allies or to forge new partnerships.
American’s current bilateral agreement with BA excludes their transatlantic routes, where the relationship would offer most potential benefits.
Adding Iberia to the venture would give both American and BA a vital link between continental Europe and Latin America.
American and BA are expected to argue a case with US regulators that the competitive landscape has been changed by the “open skies” accord.
The two carriers filed applications for antitrust immunity in 1997 and 2001 but regulators required the airlines to divest a large number of take-off and landing slots at London’s Heathrow airport, a price both airlines deemed to be too high.
BA and American are also expected to say that the recent wave of mergers and new alliances has strengthened many of their biggest transatlantic rivals, which already have antitrust immunity with their partners across the North Atlantic.
Delta Air Lines and Northwest Airlines of the US, which have agreed to merge, won US antitrust immunity earlier this year for a transatlantic joint venture with Air France-KLM that will have combined revenues of about $12bn.
Continental Airlines of the US, which spurned United Airlines as a merger partner, agreed last month to form a marketing deal with its US rival and to swap global alliances by moving from SkyTeam, led by Air France-KLM and Delta, to Star, led by United and Germany’s Lufthansa.
American and BA also tried earlier this year to lure Continental to its alliance, but Continental eventually chose to forge closer ties with United, Lufthansa and Air Canada, all members of Star.
The previous UK/US bilateral treaty had allowed only four airlines, BA, American, United and Virgin Atlantic, to operate direct flights between Heathrow and the US, but competition has been transformed by the US/EU deal.
US carriers Continental, Delta, Northwest and US Airways have all entered the Heathrow market this summer and have proved in the process that they could acquire slots at the highly congested airport, a move they had previously said was impossible.
American, BA and Iberia are all members of Oneworld, one of the three major global airline groupings that allow passengers to earn frequent-flyer miles on the various member airlines.
American Airlines, British Airways and Spain’s Iberia are close to applying for antitrust immunity to form a joint venture that would be one of the most powerful forces in the transatlantic aviation market.
The airlines aim to reach an accord on profit and revenue sharing this month, according to executives at the three carriers.
Record fuel costs, weakening economies and the impact of the “open skies” treaty agreed last year between the US and the European Union have encouraged many of the largest carriers from both sides of the Atlantic to draw closer to old allies or to forge new partnerships.
American’s current bilateral agreement with BA excludes their transatlantic routes, where the relationship would offer most potential benefits.
Adding Iberia to the venture would give both American and BA a vital link between continental Europe and Latin America.
American and BA are expected to argue a case with US regulators that the competitive landscape has been changed by the “open skies” accord.
The two carriers filed applications for antitrust immunity in 1997 and 2001 but regulators required the airlines to divest a large number of take-off and landing slots at London’s Heathrow airport, a price both airlines deemed to be too high.
BA and American are also expected to say that the recent wave of mergers and new alliances has strengthened many of their biggest transatlantic rivals, which already have antitrust immunity with their partners across the North Atlantic.
Delta Air Lines and Northwest Airlines of the US, which have agreed to merge, won US antitrust immunity earlier this year for a transatlantic joint venture with Air France-KLM that will have combined revenues of about $12bn.
Continental Airlines of the US, which spurned United Airlines as a merger partner, agreed last month to form a marketing deal with its US rival and to swap global alliances by moving from SkyTeam, led by Air France-KLM and Delta, to Star, led by United and Germany’s Lufthansa.
American and BA also tried earlier this year to lure Continental to its alliance, but Continental eventually chose to forge closer ties with United, Lufthansa and Air Canada, all members of Star.
The previous UK/US bilateral treaty had allowed only four airlines, BA, American, United and Virgin Atlantic, to operate direct flights between Heathrow and the US, but competition has been transformed by the US/EU deal.
US carriers Continental, Delta, Northwest and US Airways have all entered the Heathrow market this summer and have proved in the process that they could acquire slots at the highly congested airport, a move they had previously said was impossible.
American, BA and Iberia are all members of Oneworld, one of the three major global airline groupings that allow passengers to earn frequent-flyer miles on the various member airlines.
