American's Arpey Decries Antitrust Disadvantage

American Airlines president and CEO Gerard Arpey during the airline's second-quarter earnings call yesterday said AA remains at a "significant competitive disadvantage" against alliance competitors that recently bolstered antitrust immunity across the Atlantic.

With Continental jumping from SkyTeam to Star Alliance—outlining a plan to seek immunity with United and other transatlantic carriers—and DOT recently granting SkyTeam carriers Delta, Northwest, KLM and Air France antitrust immunity to build their transatlantic muscle, Arpey said American would not want to maintain such a disadvantage.

"That allows those companies to participate in a wide range of marketing, sales and pricing activities and frequent flyer activities that we are prevented from doing," Arpey said of AA's competitors. Though Arpey wouldn't detail the financial advantages of striking a similar alliance with British Airways, he said, "I would acknowledge we are at a significant competitive disadvantage today and that's not a place that we want to stay."

While American executives declined to comment directly on when and if it would file for antitrust immunity with longtime partner British Airways—a deal rumored to be in the works—Arpey said the regulatory environment in light of the Open Skies deal would ease regulatory hurdles for Oneworld to bolster competition against the strengthened SkyTeam and Star alliances across the Atlantic.

"It's no secret that we and British Airways have applied for antitrust immunity in years past," Arpey said. "We've not been successful. I think everyone on the call knows that the aviation treaty and environment between the U.K., E.U. and the U.S. is very different today than it was the last time that we applied for immunity, and the obstacles that we've had in the past were the fact that the U.K. was not in Open Skies, Heathrow was congested, etc. Today we have an Open Skies agreement there. All the U.S. carriers that wanted to get in to Heathrow have in fact gotten slots and have accessed that market, so it's a very different regulatory environment than it's been in the past."

Delta Air Lines CEO Richard Anderson during the carrier's second-quarter earnings call yesterday noted that the immunized joint venture between Northwest, Air France and KLM gives them 30 percent of the transatlantic market.

American CFO Thomas Horton said, "I think the regulators are more apt to look at competing alliances now that Star and SkyTeam have become quite strong. I think there is an argument that a strong Oneworld is pro-competitive against those two very strong alliances."