BA seals alliance with AA

[VAFFPAX]

BBC News reports that BA has closed its deal with AA, which also includes Iberia, subject to US and EU authority approval:

BBC NEWS | Business | BA seals alliance with American (http://news.bbc.co.uk/1/hi/business/7560790.stm)

S.

[Marcel_MPH]

With the EU-US open skies agreement in force, chances are in favor of both airlines.

Virgin not happy again...! Wonder how long it will take untill the "NO WAY BA/AA" titles are back... :}

DutchOps.com - Aviation Photography and Aircraft Information Database... (http://www.DutchOps.com)

[G-ROAR]

Branson has a cheek bleating to everyone who will listen that this deal is against the consumer's interest. This is the man who colluded with BA to fix fuel prices and thus fleece the customer. He would LOVE to have a monopoly on trans atlantic. Who does he think he is kidding. He is gutted because he isn't part of this deal or any other deal which would enable him to overcharge customers again.

[benish]

Can somebody explain how it is actually going to affect prices of the airlines?
Surely a merger will reduce costs?! But Im hearing that it will make the companies more money?!!

[BerksFlyer]

Can somebody explain how it is actually going to affect prices of the airlines?
Surely a merger will reduce costs?! But Im hearing that it will make the companies more money?!!

With reduced costs they can lower prices to be more competitive. Branson's just crying because he's not going to be able to match the competition. If he's whinging it's going to raise fares, why doesn't he keep his fares the same and take all of BA/AA's passengers? He's just doing what he does best, being a PR man and sadly the public will probably side with him.

[PAXboy]

I would say that Branson is simply doing what the responsible Chairman of any Group of companies would do - trying to stop the opposition gaining a lead. I recall some time ago when there was some other BA event or promotion that he was speaking against and the interviewer asked him: "But - if the situation was reversed, wouldn't you be doing the same as BA?" and he cheerfully replied, "Yes - of course! I would do anything to promote my company against the others."

You might not like the man but he is doing what he has to do for the company. Likewise, BA has had to pull off this alliance (and the IB merger) as they have to survive. In one interview on the radio today, a BA person was speaking about the need to compete against other alliances at EGLL. That is what this is about - the next stage of manoeuvres to draw the members of each alliance group closer together.

It will be another few years before the alliances actually become the airlines but the present fuel crisis has taken the process a very large and important step closer. People will want to retain some part of an airline in an alliance, rather than no airline at all and let the other alliances take all the business.

[icarus sun]

This alliance should be refered to he competition agency. As it will limit choices across the atlantic from lhr. So increasing ticket prices.:\

[BYALPHAINDIA]

And make 'Thousands' redundant.:hmm:

[BerksFlyer]

This alliance should be refered to he competition agency. As it will limit choices across the atlantic from lhr. So increasing ticket prices.

And why should this be dealt with differently to AF/KL/DL/NW?

[Marcel_MPH]

The cooperation between AA and BA is pretty much similar to that between AF and KLM. Though in my opinion the "merger" will create a much larger airline network and indeed might harm international competition. On the other side, what would you expect with the current fuel prices. Airlines are simply seeking for ways to reduce costs and deliver some black figures at the end of the year...

DutchOps.com - Aviation Photography and Aircraft Information Database... (http://www.dutchops.com)

[VAFFPAX]

And why should this be dealt with differently to AF/KL/DL/NW?
Because currently, AF/KL/NW/DL are not planning to cooperate to the degree that BA/AA appear to be planning to.

Considering that the report refers to specifically the "no foreign airline can own more than X amount in US airline" clause that gets the US authorities so hot under the collar whenever a Euro airline is interested in a US counterpart, this definitely smells of a lot more than just code-shares and route optimisation, but rather a merger of sorts.

And SRB is doing exactly what any other airline owner flying the same route would do, try to oppose any advantage that his competition gains by merging with another.

So yes, while it may look like he's moaning and complaining, and perhaps he is, he is safeguarding his revenue stream, which may or may not be threatened on four specific routes (some of which he only recently started).

S.

[Seat62K]

I'd have thought the fact that Air France owns KLM (and doesn't KLM own a chunk of Northwest?) makes all the difference. I haven't looked at the detail of what BA and American are proposing but from what I heard reported on BBC Radio 4 this evening it strikes me as a far from radical. I imagine that, for example, there'll be an integration of the two airlines' LHR-JFK schedules so that it looks similar to what now exists between BA and Iberia, say, on the London to Madrid route.

[Count von Altibar]

I don't how true it is but I keep hearing that Virgin Atlantic aren't doing so well. I suppose with the lack of an alliance, end of bermuda 2, 4 engines not for long haul etc. things ain't so good now.

[SR71]

Branson has a cheek bleating to everyone who will listen that this deal is against the consumer's interest.

Bloody hell.

I don't suppose WW is doing this in the consumers interest is he?

Although he'll claim it wasn't on his watch, this is the guy who presides over a company that appears to engage in dirty tricks at every opportunity it can...

[Seat62K]

I just caught part of an interview with Willie Walsh on BBC World Service radio in which he stated that the surrender of slots at LHR is not part of the proposal being put to the authorities for approval. I don't know if this is news but it's certainly the first time I'd seen or heard it mentioned.

[PAXboy]

I'm sure that BA are doing their hardest to keep slots OUT of the discussion! They know that slots will have to be given up and their job is to lose as few as possible. As with RB, WW is just doing his job.

Will this affect pax? Will it be against pax interest? Probably - but does anyone have an alternative?

Let us take an extreme example: The merger is prevented and both BA + AA fail and go into receivership. Would the other Alliances on the route say: "Gosh, we are so pleased at the reduction in competition and halving of seat capacity - that we are going to buy up all their equipment and staff and make sure that seat prices stay nice and low."

Let us take a simple example: The merger goes ahead and both carriers shed some staff and rationalise their routes and capacity. Prices drift upwards slightly - masked by the fuel price. Then pax realise that they are going to have to pay a realistic price for crossing the North Atlantic.

Then ... other carriers see an opportunity to lower prices and try to grab some of the lower end of the market.

[icarus sun]

The reality of this is to make more money for BA. Who is going to pay this money the passenger of course. Do any of you expect ticket prices to fall as a result of this, Dream on.

[stormin norman]

RB dosn't like monopolies or mergers but dosn't SQ own 49% of virgin and he has expressed an interest in buying BMI and the national lottery (and how many of them are there!).

[PAXboy]

stormin The airline is only one part of the Virgin Group and has nothing to do with the Group's former interest in running the Lottery. When they did Tender for the Lottery, it was a separate company with zero overlap to any other parts of the Virgin Group.

However, after two attempts to win the Lottery franchise as a non-profit making company - and being defeated twice by first the Conservative and then the Labour government - with a commercial for profit company winning both times, Branson said that he would not waste more time and money on bidding a third time. Don not forget also, that between the two bids, he won a libel case against a senior director of the company runing the Lottery, Camelot owned by an American company, who are still making profits from the Lottery.

For the record, I do not work for any branch of the Virgin Group, never have and doubt I ever will.

[BerksFlyer]

The reality of this is to make more money for BA. Who is going to pay this money the passenger of course. Do any of you expect ticket prices to fall as a result of this, Dream on.

Obviously the idea is to make money. That's the aim of a company. Doesn't mean the passenger will suffer though.

Looking at your previous posts, any excuse for you isn't it.

[biddedout]

I understand that there is a sizeable group of politicians, regional leaders and business people forming to argue that if there is such a thing as slot ownership, then a proportion of LHR slots should in effect be “owned” by the regions so that LHR actually serves the taxpayers of the whole of UK rather than just the residents southeast and the rest of the world’s transit passengers.

Just like the old days.

[civil aviation]

Branson is a serial bull****ter and anti-competitive as anyone when it suits.
Virgin is already in a similar competitive alliance so he is, also, hypocritical.
The existing alliances have a much bigger share of slots at Amsterdam, Frankfurt and Paris than AA/BA/IA etc would have at Heathrow so seems like a no-brainer, except in Bransonbull****.
Not supporting alliances, which are inherently anti-competitive, but cannot see how regulators could deny to some what they have allowed for others.
BTW looking forward to Ryanair's Stansted to 'New York'- Godknowswhere- only 97 miles to Manhattan but it will be competition !

[raffele]

I believe that in the past, when this proposed BA/AA tie up has been on the tables, part this issue has been slots at LHR. Somewhere recently someone from BA has said that in the current market, with the Open Skies agreement, they have accepted that losing slots in order to get this alliance is worth it.

BA also have their party trick hiding behind the bushes remember - OpenSkies. They are now able to compete with Air France-KLM and Lufthansa in their own territories, without relying on LHR. Losing some slots here and there isn't going to make much of a difference if at the end of the day, they're going to be better off.

[Flying Hazard]

BA/IB/AA projected alliance has to be greenlighted by US and EU competition authorities before start functioninghttp://static.pprune.org/images/smilies/embarass.gif

[BOEING777X]

Given the anti-trust immunity granted to Star Alliance and Skyteam Alliance members, there is little ground for regulators to prohibit BA/AA/IB getting together (http://www.fleetbuzzeditorial.com/2008/09/22/oneworldpartners/).

In fact, it should be encouraged, given that it is solely the oneworld alliance that has been repeatedly stifled by EU bureaucrats.

[StbdD]

The Regulators may be the least of managements problems. AA management blithely entered into these discussions while completely ignoring the Scope clause in their own pilot union's collective bargaining agreement.

From the Allied Pilots Association (APA):
"APA’s current collective bargaining agreement precludes any joint business agreement between American Airlines and another carrier. The contract’s “Scope” clause explicitly states that “All flying performed by or on behalf of the Company or an Affiliate shall be performed by pilots on the American Airlines Pilots Seniority List.” The clause does contain a series of exceptions for code-sharing agreements, commuter affiliate operations and other situations, but does not include any exception for a joint business agreement.

“Thus far American Airlines management has not negotiated any agreement with APA that would permit the airline to enter into a joint venture with British Airways and Iberia."

Given the long-standing adversarial relationship between AA management and its unions a negotiated agreement isn't likely to happen quickly (vast understatement), if at all.