Three Airlines Propose Transatlantic Venture

Statements are indicating that the proposed transatlantic venture between British Airways, American Airlines and Iberia and has moved closer to securing regulatory approval in Europe.

Both BA and the European Commission have confirmed that competition officials had started consulting with rival airlines, such as Virgin Atlantic, about the concessions that the three carriers had proposed to tackle the potential anti-competitive implications of the venture.

The consultation by Brussels on the proposed concessions is the clearest indication yet that discussions between the three carriers and the EC have been productive in recent months. In October, the EC sent formal charges to the airlines in October in connection with the proposed deal, following complaints from rival airlines that it would stifle competition on routes between London and several cities in the United States.

BA, Iberia and American are seeking to share revenue and make joint marketing and scheduling decisions on flights between the United States, Mexico, Canada, and the 27-member E.U., as well as Switzerland and Norway.

The commission said it had received a proposal from the partners, and now was sending the offer to other airlines for comments. The “proposal requires further investigation before the commission reaches any conclusion as to the next steps,” it said in a statement.

British Airways has said it need greater cooperation with American Airlines and Iberia to compete with similar trans-Atlantic partnerships that already operate between four members of the Star Alliance—Lufthansa, Continental Airlines, United Air Lines and Air Canada—and Skyteam members Air France-KLM, Delta Airlines and its Northwest unit.

However, there is no guarantee that the deal will be given the green light as a result of the comments received in the current consultation. The Commission could either seek additional commitments or changes to the current proposals. If all goes to plan, Brussels will make the pledges legally binding in return for approval of the deal. They would also need regulatory approval from Washington, D.C. The application is the third BA and AA have made since 1996.

European Commission officials sent a confidential “statement of objections” to the three carriers in September. According to the Financial Times, the proposed tie-up was “likely to result in appreciable competitive harm” on seven Europe-US routes, and that the airlines might have to give up valuable take-off and landing slots to address this.

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