American Airlines British Airways Joint Business Agreement

The airlines plan to apply to the U.S. Department of Transportation for global antitrust immunity today and will notify the relevant regulatory authorities in the European Union. “As a first step, our three airlines – together with Finnair and Royal Jordanian, our transatlantic partners in the oneworld global alliance – are now considering a request for global antitrust immunity from the US Department of Transportation (DOT). Not only will this help us cooperate more closely for the benefit of our customers, employees and shareholders, but it will also allow the oneworld alliance to compete more effectively with SkyTeam and Star Alliance, which already enjoy broad immunity among their global Air Alliance members,” Garton added. “The Atlantic Joint Business offers our customers unprecedented choice and flexibility when travelling between North America and Europe,” said Ole Orvér, Chief Commercial Officer at Finnair. “Customers can combine flights from any of our AJB airlines, have access to other destinations and use our oneworld global support centers in some of the major U.S. and European platforms.” The CMA will not be able to conclude its investigation before the expiry of a number of agreements currently in place in line with the Commission`s 2010 commitments. This means that an “enforcement gap” (i.e. a situation where there are no remedies to address competition issues related to the AJBA) would have been created if urgent action had not been taken provisionally.

Such a gap in implementation would have a significant impact on the public interest (i.e. the interests of protecting competition and, therefore, consumers). Accordingly, the CMA decided to adopt interim measures. A quick search shows that there are currently 6 airlines flying directly from London to New York. There are 32 daily direct flights between New York and London; 3 flights with Norwegian, 5 with Virgin, 3 with Delta, 6 with United, 11 with BA and 4 with AA. It`s both between Newark and JFK in the US and Gatwick, Heathrow in the UK (flight BA001 London City no longer appears in the flight plans. This means that 17 flights will be operated by other competing airlines, compared to the 15 on BA/AA. So while BA is dominant, it`s not as dominant as I thought. Assuming virgin and Norwegian both disappear, so 2 other companies still compete directly against AA and BA.

I also think That Jet Blue would take the slots abandoned by Norwegian and delta would take care of all the slots lost by Virgin. Davy analyst Stephen Furlong said the new deal would give LATAM and IAG about a third of the capacity on routes between Europe and South America and will likely lead to cost and revenue synergies. . . .