BA is in talks over the coordination of fares, schedules, marketing and possibly profit-sharing with AA if it is given the go-ahead for a deal by Brussels and Washington in the next few months.
The two carriers are making their third attempt to form a partnership. Both previous deals in 1997 and 2001 were stopped by regulators concerned about the dominance they would have across the Atlantic from Heathrow. BA offers eight flights a day to JFK and AA five, and BA also has three a day to Newark. In addition, AA flies four times a day to its hub at Chicago from Heathrow and BA three times. To Boston, BA has two a day and AA three.
Some believe regulators will take a more relaxed view this time.
”A lot has changed since 2001, we have seen Open Skies and genuine competition,” said a source close to the carriers.
The penalty for BA in forging alliances has previously been the requirement to give up slots at Heathrow to competitors. However, the Open Skies treaty lifted the restriction in March which meant only two UK and two US carriers, BA, AA, Virgin Atlantic and United Airlines, could fly transatlantic from Heathrow.
Now, BA can argue that Delta and Continental Airlines have, since March, provide new competition from Heathrow to JFK and Newark respectively and that Skyteam has already got permission for a similar deal.
Virgin will object on competition grounds, but will do so as it prepares to cut its New York frequency from six a day to five in October.
The alliance will also potentially include Iberia, with which BA has announced merger plans. If so, the three carriers would have a very strong position in both North and South America.
”There will be benefits in how we look at the network schedules and coordination and we will offer a global travel solution for many people,” said a BA spokesman.
If a deal goes ahead, BA and AA will face the problem that their premium cabins are dissimilar, with AA”s using an inferior inclined flatbed.