British Airways, American Airlines, Iberia Warned on Alliance

The European Commission has informed British Airways, American Airlines and Iberia that they may have to give up take-off and landing slots to continue with a transatlantic alliance. BA, however, says that it is ready to refute antitrust concerns

Reports in this morning’s press suggest that the EC said an agreement between the three groups was “likely to result in appreciable competitive harm” on seven Europe-U.S. transatlantic routes.

The EU’s competition regulator “envisages issuing a decision finding that the series of agreements signed have been in breach” of competition laws and would order that the “infringements” are ended, according to documents obtained by the FT. “Remedies may include ... the transfer of airport slots” to rival airlines, the EC added.

But BA says the three-way tie up won’t dominate transatlantic markets and that the EU review is no different to ongoing probes of the rival Star grouping, which includes Deutsche Lufthansa AG, and Air France-KLM Group’s SkyTeam.

The three airlines announced on August 14 of last year that they had signed an agreement to cooperate on flights between North America and Europe to help them to overcome rising fuel costs and falling demand.

British Airways said in its statement that the opening up of Heathrow to new entrants on U.S. routes via a so-called Open Skies treaty introduced last year means slots shouldn’t have to be surrendered. It also cited growing capacity at Madrid airport as encouraging competition from the Spanish capital.

Meanwhile, thousands of British Airways cabin crew will soon decide whether they should strike in a dispute over new contracts. Unions and management have been in talks since the announcement of cost-cutting measures earlier this month. BA wants to cut 1,700 jobs and a two-year freeze on pay for current staff.