Money Matters, Simplified.
British Airways, American Airlines alliance wins US approval
by Jaspreet Virk - February 14, 2010 - comments
In return for the antitrust immunity, the Oneworld would have to give up some slots at London’s Heathrow airport.
In a move that will deepen their transatlantic alliance, American Airlines and British Airways have received tentative approval from the U.S. regulators to co-operate on transatlantic flights.
The antitrust immunity approval by the Department of Transportation (DOT), which is subject to 90 day comment period, will allow the two carriers--part of Oneworld alliance that consists of eleven of the world's biggest airlines--to jointly price, market, and schedule flights without the fear of infringing the anti-trust law.
Hailing the approval, Will Ris, American Airlines’ senior vice president said in a statement, “We are pleased that DOT has agreed that it is in the best interest of the traveling public.”
British Airways stated that the “order is a key step in the process towards allowing Oneworld alliance members to cooperate more effectively.”
Alliance comes at a cost
Though Oneworld has been given the nod to expand their transatlantic alliance, the anti-trust approval has not come cheap. In return for the antitrust immunity, the Oneworld would have to give up some slots at London’s Heathrow airport.
As per the DOT requirement, the alliance will have to give up at least four slots daily, far less than 16 slots proposed by the Department in 2002.
Explaining the reasons behind this, the department stated that the alliance has the potential to harm competition on select routes between United States and London’s Heathrow airport, which is one of the world’s busiest airports in terms of total passenger traffic and has limited landing and takeoff slots.
Even last year the Department of Justice (DOJ) had raised objection to the American Airlines and British Airways' alliance saying that it “would result in competitive harm on certain transatlantic routes serving 2.5 million passengers annually.”
Considering this, the Justice Department had recommended that DOT should impose conditions “to protect the public interest in competition."
Partners to review tentative order
Though American Airlines and British Airways have accepted DOT’s terms of approval, other members of the alliance like Iberia Aereas de Espana SA have raised objection saying that no conditions should be imposed on the alliance.
The partners said that they will evaluate the “DOT’s [decision] and will respond according to the timeframe established for comments."
If Oneworld is granted the final approval, the agreement will allow the members to offer reciprocal frequent-flyer benefits to the customers, like low fares, more routes, reducing travel and connection time etc.
It will also enable the alliance to remain in the competition and match its rivals like SkyTeam and Star alliance on transatlantic routes.