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Transatlantic Wars

Airline trio hit at rival claims  Sep 03, 2008

British Airways, American Airlines and Spain’s Iberia, which are seeking regulatory approval to forge a transcontinental venture, have challenged claims that the alliance would dominate key transatlantic routes between London and the US.

The three airlines aim to persuade US officials to grant their venture immunity from antitrust rules that limit their ability to co-ordinate schedules and fares, and share revenue. The planned alliance drew fire from Virgin, run by Sir Richard Branson.

In a response filed on Wednesday to US Transport officials, the airlines said they “strongly object to Virgin Atlantic’s erroneous and unsupported allegations about the lack of competitiveness of overlap city pairs”.

Virgin noted in an August 25 motion that BA and American carry two-thirds of all US-Heathrow traffic, including 74 per cent of passengers to and from New York’s John F Kennedy International Airport. In their response, the carriers said BA and American hold just a 44 per cent share of US-Heathrow bookings.

European Union officials said last week they were investigating the venture to see if it violates antitrust laws.

BA and American launched attempts to co-ordinate their activities in 1997 and 2001, but regulators required them to divest a large number of take-off and landing slots at Heathrow, a price they deemed too high.

The companies now argue that the competitive landscape has changed since the the landmark “open skies” accord opened Heathrow to additional airlines. In addition, they say, transport officials recently granted immunity to transatlantic allies Delta Air Lines, Northwest Airlines and Air France-KLM without forcing the carriers to surrender slots.

Sir Richard has said a BA tie-up with AA would “create a monster monopoly” and has lobbied US presidential candidates Barack Obama and John McCain to denounce the planned venture as bad for consumers.

“They seem to be trotting out the same arguments they did in 2001,” Don Casey, American’s managing director of international planning, said of Virgin. “Maybe they’re trying to use the same statistics.”

But Sir Richard may stand alone in protesting against the BA/AA/Iberia partnership, at least publicly. Other opponents, such as Continental Airlines, are likely to tone down their lobbying efforts, as they await regulatory approval for their own proposed partnerships.

● British Airways passenger traffic fell in August in spite of the airline increasing its capacity year-on-year. BA filled only 77.3 per cent of its available seats last month, down from 80 per cent in the same month a year ago.

It said on Wednesday that market conditions remained “very difficult with the strong dollar largely offsetting the benefit of the recent fall in oil prices”. The outlook for premium bookings, which generate the lion’s share of profits, was “uncertain”.

Airline trio hit at rival claims

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