After twice failing to convince regulators to approve a far-reaching immunized transatlantic alliance, American Airlines and British Airways yesterday received a tentative green light from the U.S. Department of Transportation for a scaled-down codeshare relationship involving beyond-hub flights on both sides of the pond. DOT, rejecting claims by the likes of Continental, Delta, United and British Midland, said American-BA, on more even footing with other immunized alliances, "should provide substantial pro-competitive service benefits to passengers and shippers."
Both airlines said code sharing will begin as soon as possible if DOT finalizes its approval. Flights covered under the alliance would include BA services from American's U.K. gateways to destinations in Africa, Asia, Europe and the Middle East, as well as American's services from BA's U.S. gateways to points throughout the United States, Mexico, the Caribbean and Latin America. Importantly, and unlike previous proposals, flights between U.S. gateways and London are excluded.
"Although we do not have the antitrust immunity that other global alliances enjoy on the North Atlantic, this move is clearly a step in the right direction," said American CEO Don Carty and BA CEO Rod Eddington in a joint statement.
DOT, noting that American and BA expect to use capacity more efficiently while independently pricing their services, said, "The record indicates that there will be public benefits flowing from the services proposed by the joint applicants."
Steve Shook, vice president of strategic sourcing at Carlson Wagonlit Travel, agreed and expects "inherent" advantages for both buyers and travelers. "There are several routes where the beyond-hub code sharing will be a benefit, from both a financial and a service standpoint, for many corporate clients," he said. "Plus, if you look at what has happened with United-US Airways and Continental-Delta-Northwest, government regulators are saying, 'We know it is difficult times so we'll let some of these alliances go through.' They opened the can of worms and American-BA are just trying to catch up."
The carriers first filed this latest, non-immunized proposal last November. They were unable to secure acceptable terms for antitrust immunity in 1999
(BTN, Aug. 2, 1999) and again in 2002
(BTN, Jan, 25), objecting in both cases to the number of slots at London Heathrow Airport that they would be required to surrender.
In its announcement, DOT noted that it remains "dissatisfied with the status quo of our aviation relationship with the United Kingdom" and added that it "does not agree with the view of several of the respondents that our tentative decision in this proceeding, if finalized, would in any way hamper our attempts to reach such an Open Skies agreement."
DOT is accepting comments on the conditional approval of the two-year codeshare authority until April 16 and replies to those comments until April 21. Objections should be filed in Docket OST-2002-13861 at the U.S. Department of Transportation, 400 Seventh St., S.W., Room PL-401, Washington, D.C. 20590.