BA, American tie-up finally gets green light
class="alignright size-full wp-image-29935" title="BA and AA flying high" src="http://news.cheapflights.co.uk/wp-content/uploads/2010/07/ba-aa-iberia.jpg" alt="BA and AA flying high" width="254" height="189" />The US Department of Transportation (DoT) has finally given its blessing to closer cooperation between
href="http://www.cheapflights.co.uk/airlines/British-Airways/">British Airways and
href="http://www.cheapflights.co.uk/airlines/American-Airlines/">American Airlines on their transatlantic route networks.
With American regulators no longer blocking the joint venture, BA stands to benefit from synergies of up £230 million each year by coordinating its pricing and flight schedules with AA.
The flag carrier successfully argued that those savings will be passed on to passengers in the form the lower fares, prompting the DoT to overturn its 14-year-old objection to a partnership.
href="http://www.cheapflights.co.uk/airlines/Virgin-Atlantic/">Virgin Atlantic boss Richard Branson immediately called the tie-up a “monster monopoly” which will stifle competition at href="http://www.cheapflights.co.uk/airports/Heathrow/">London Heathrow Airport and drive up ticket prices.
But few in the industry agree with his assessment, particularly in light of the 2008 Open Skies treaty which liberalised air travel across the Atlantic. Prior to that agreement access to Heathrow had been heavily restricted, with just four airlines running transatlantic flights from the hub.
Under Open Skies any airline is now free to purchase take-off and landing slots from Heathrow, though the DoT has recommended that BA and AA cede four pairs of slots as part of the deal.
It said: “We have concluded that the joint venture, as well as the overall alliance, is, on balance, pro-competitive and that it is likely to generate substantial public benefits to the travelling … public.”
Just last week BA also won EU backing for its merger with href="http://www.cheapflights.co.uk/airlines/Iberia/">Iberia, which is expected to save the flag carrier a further £330 million each year from 2015 onwards. Fellow oneworld members Finnair and Royal Jordanian Airlines also stand to benefit from closer cooperation with their alliance partners.
Proponents of BA’s consolidation drive have long complained that oneworld has been denied the anti-trust immunity enjoyed by rival alliances SkyTeam and the Star alliance.
BA boss Willie Walsh welcomed today’s news, saying: “This final approval is fantastic news for all three airlines and the oneworld alliance. We’ve waited 14 years to bring the benefits of the transatlantic joint business to our customers and level the playing field with the other two global alliances.”
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