British Airways, American Airlines and Iberia Seek Anti-Trust Immunity for New Cooperative Venture
British Airways Plc, American Airlines and the Spanish carrier Iberia are seeking immunity from anti-trust laws in the United States and Europe on a proposed joint venture that is likely to involve revenue sharing, price fixing and intra-coordination of schedules, sales and capacities. If permitted, the collaboration will effect flights as far afield as Mexico and Norway.
Two of the three, BA and American, applied for immunity with a similar project in 2001 and were rejected. Despite the addition of a third carrier, executives express confidence in their plan because of changes in the market.
The trio’s initiative is coasting on the tail winds of a new arrangement between the United States and the European Union named “Open Skies.” US flights were previously required to land at London’s Heathrow airport, but the new program permits airlines to fly their planes from any city within the EU to any city in the US, as well as the converse. Executives say that, because carriers now have more fee choice, anti-trust regulators will exercise a lower level of scrutiny when reviewing cooperative ventures.
However, industry experts believe that BA’s current control of more than 40% of available slots at Heathrow will cause concern for market regulators. It is believed that anti-trust officials will require BA to surrender at least 10 pairs of slots per day in exchange for anti-trust immunity, but BA has publicly announced that it would refuse such a compromise.
BA and Iberia are also in private talks about an all-share merger between the two, although they have not made any plans public.
The British Competition Commission recently proposed the partial breakup of BAA, a monopolistic airport operator in the United Kingdom, which suggests that regulators will still scrutinize any operation that reduces competition among air carriers.
The carriers plan may prove well-grounded when considered in light of other inter-carrier alliances, including the Star Alliance (joining Lufthansa from Germany and United Airlines) and a joint operating agreement between Air France and Delta Air Lines. Industry experts predict that, despite anti-trust concerns, concentration among carriers is likely to continue in the near-term future.
Other airlines are also considering future alliances, including a cooperative agreement between Austrian Airlines and Turkish Airlines.
The proposed venture between BA, American and Iberia comes at a time when airlines are facing a myriad of changes in domestic and international markets. As consumers shop for increased convenience and travel options, governments insist on evolving security measures. In response to shareholder demands and the skyrocketing price of fuels, some carriers have begun to charge additional fees for carry-on and booked luggage. With increasing environmental concerns on the horizon, cooperative ventures that seek to cut cost and meet constituent demands may prove a profitable venture – if anti-trust regulators give their approval.
About the author: Jason Hardy is an avid writer on legal issues, including international writing about many subjects including european antitrust lawsuits. Eu competition law interests Jason particularly. He resides in Seattle, Washington.
Two of the three, BA and American, applied for immunity with a similar project in 2001 and were rejected. Despite the addition of a third carrier, executives express confidence in their plan because of changes in the market.
The trio’s initiative is coasting on the tail winds of a new arrangement between the United States and the European Union named “Open Skies.” US flights were previously required to land at London’s Heathrow airport, but the new program permits airlines to fly their planes from any city within the EU to any city in the US, as well as the converse. Executives say that, because carriers now have more fee choice, anti-trust regulators will exercise a lower level of scrutiny when reviewing cooperative ventures.
However, industry experts believe that BA’s current control of more than 40% of available slots at Heathrow will cause concern for market regulators. It is believed that anti-trust officials will require BA to surrender at least 10 pairs of slots per day in exchange for anti-trust immunity, but BA has publicly announced that it would refuse such a compromise.
BA and Iberia are also in private talks about an all-share merger between the two, although they have not made any plans public.
The British Competition Commission recently proposed the partial breakup of BAA, a monopolistic airport operator in the United Kingdom, which suggests that regulators will still scrutinize any operation that reduces competition among air carriers.
The carriers plan may prove well-grounded when considered in light of other inter-carrier alliances, including the Star Alliance (joining Lufthansa from Germany and United Airlines) and a joint operating agreement between Air France and Delta Air Lines. Industry experts predict that, despite anti-trust concerns, concentration among carriers is likely to continue in the near-term future.
Other airlines are also considering future alliances, including a cooperative agreement between Austrian Airlines and Turkish Airlines.
The proposed venture between BA, American and Iberia comes at a time when airlines are facing a myriad of changes in domestic and international markets. As consumers shop for increased convenience and travel options, governments insist on evolving security measures. In response to shareholder demands and the skyrocketing price of fuels, some carriers have begun to charge additional fees for carry-on and booked luggage. With increasing environmental concerns on the horizon, cooperative ventures that seek to cut cost and meet constituent demands may prove a profitable venture – if anti-trust regulators give their approval.
About the author: Jason Hardy is an avid writer on legal issues, including international writing about many subjects including european antitrust lawsuits. Eu competition law interests Jason particularly. He resides in Seattle, Washington.
Labels: eu competition law, eu law, european antitrust lawsuits
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