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International News>British Airways, American Airlines, Iberia ink revenue-sharing deal-AP |
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British Airways PLC, American Airlines and Spain's Iberia SA said Thursday they have signed a revenue-sharing deal that - if approved by regulators - will see the trio set prices together and share seat capacity on transatlantic flights.
The airlines said that they planned to file for worldwide antitrust immunity from United States authorities for the deal later Thursday.
They will also notify European regulatory authorities.
The agreement is the closest alliance the trio can form under strict US airline ownership laws that all but rule out a full merger.
Rival carrier Virgin Atlantic Airways has already made a pre-emptive strike against the proposal, claiming it will seriously damage competitiveness of the lucrative transatlantic route and increase fares for passengers.
Customers To Benefit
However, BA chief executive officer Willie Walsh argued that customers would benefit from improved connections and flight schedules. He added that current high ticket prices were being driven by surging oil prices, and discounted claims that fares would rise as a result of the deal.
Walsh also said that closer cooperation would also help the airlines cut costs in the current difficult economic conditions.
"I believe this is also good news for the industry," he said. "It's another small step towards consolidation."
The antitrust filing to the US Department of Transportation also includes the trio's 'oneworld' alliance members Finnair and Royal Jordanian.
BA and American have failed in the past to win an exemption from US competition laws to work more closely together because of their dominance at London's Heathrow, where the pair have more than half the capacity to and from the United States.
However, Walsh argued that the competitive situation has changed since the 'open skies' agreement between the US and the European Union came into force in March, allowing airlines to fly to and from any point in the US and any point in the EU.
Confident
Walsh said that he did not expect regulators to again insist that the carriers give up landing and take-off slots at Heathrow - as they did in 2002 when the pair sought antitrust immunity - and said he was confident the deal would pass muster.
"I think the environment has significantly changed," he said.
Under the agreement, the three airlines will cooperate commercially on flights between the United States, Mexico and Canada, and the European Union, Switzerland and Norway while continuing to operate as separate legal entities.
They will expand their code-share arrangements on flights within and beyond the EU and United States, significantly increasing the number of destination choices that the airlines can offer customers.
"We believe our proposed cooperation is an important step towards ensuring that we can compete effectively with rival alliances and manage through the challenges of record fuel prices and growing economic concerns," said AMR Corp chairman and Chief Executive Gerard Arpey.
"In addition, we believe we will be more effective competitors with greater ability to invest in our products and services."
- AP