EC warning to oneworld carriers
The three oneworld carriers seeking anti-trust immunity (ATI) for a transatlantic joint venture have been warned they will have to give up airport slots if their application is to go through.
BA, American Airlines and Iberia have been told by the EC that the joint venture could damage competition on some transatlantic routes, a report in today's (October 26) Financial Times said.
The UK newspaper quoted an EC document in which it said that the existing deal between the three carriers is "likely to result in appreciable competitive harm" on seven Europe/US routes.
The EC warned the three airlines this month that it had reservations over competition issues about the ATI application.
The FT said that Brussels "envisages issuing a decision finding that the series of agreements signed have been in breach" of competition laws and would order the "infringements" ended.
"Remedies may include . . . the transfer of airport slots" to other carriers, it said.
The routes over which the EC is mainly concerned are the London-New York services where a joint venture would give BA and AA the power to raise fares on business and first class.
BA is the dominant carrier at Heathrow where it has 40% of the take off and landing slots.
The FT said Brussels "also has concerns about services between London and Dallas, Boston, Miami and Chicago, as well as the Madrid-Miami and Madrid-Chicago routes".
The three carriers and other members of the oneworld alliance have made their application to the US Department of Transportation (DoT).
The Department, which is due to give its initial view this week, has already granted similar ATI as sought by oneworld, to rival alliances, Star and SkyTeam.
Under such agreements, airlines can pool resources, including marketing and fares without risk of breaking ant-competition laws.
BA and AA have previously made two applications to the DoT for ATI but each has failed because of the perceived dominance it would give the two carriers on the London-New York route and their unwillingness to surrender slots.
A BA spokesperson told ABTN: "We don't believe that it's going to be necessary, given the number of airlines that already fly between the EU and the US, and the number of new entrants flying to the US from Heathrow post the open skies agreement, and the growing capacity of Madrid airport. We don't believe it's going to be of concern."
In a joint statement from Iberia, BA and AA, the airlines said: "We look forward to the opportunity to address and overcome the EU’s concerns, especially given the substantial benefits for consumers that would result from our transatlantic joint business.
"The EU’s thorough review of our plans and supporting evidence was anticipated and is similar to its continuing review of the Star and SkyTeam alliances, which already have anti trust immunity from the U.S. Department of Transportation.
"We believe the quickest way to robust competition and more travel choices for consumers is to ensure that all three global airline alliances can compete on an equal footing. Our joint business would benefit millions of customers with greater access to discounted fares, more convenient connections and better access to a global network of more than 500 destinations.
"It would also allow oneworld to compete on a level playing field with the Star and SkyTeam alliances, which have larger and increasing shares of transatlantic traffic and have been granted anti trust immunity. We merely want the same legal status to enable us to strengthen real competition for the benefit of consumers. "
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