AA/BA

[Raas767]

The Department of Justice has recommended against antitrust immunity in the AA/BA alliance due to the market power of the two combined airlines. Even though the DOT has final say in the matter it is tough for them to go against a DOJ recommendation. Now what?

[crewrest]

Fair competition?

[jumbodriver]

lufthansa-united(70+%slotownership fra)
air france-delta
klm-northwest
ba-????
fair? i really don't think so.

[dallas dude]

What the DoJ is really saying is "Folks, we don't feel obliged to support the AA/BA alliance in it's present form but if you figure out "the price (in slot reductions) you're prepared to pay, we may change our mind".

As you correctly state, the DoT has jurisdiction over this alliance.

It's difficult to believe the claims of Delta, Continental and Northwest that they absolutely need access to LHR. It's not as if they have a connecting hub they need to plug in to. And as everyone knows, LHR is about as bad as LGA was until the Port Authority stepped in.

Smart folks go to Gatwick and jump on the express train to Victoria.

Why would DAL, CAL and NWA not have a problem with their euro hubs but have a fundamental problem with AA/BA?

It's called competition, And DAL,CAL and NWA don't want it if they can avoid it.

[Aerostar6]

Hey Dude! Any chance that you might be elected to the DoJ in the new year? First bit of clear thinking I've read for a while.

[Raas767]

AA/BA is the only big alliance yet to recieve antitrust immunity. In the interest of fairness, the fact that Don is freinds with George, and that Tony is putting pressure on to let the alliance go through, I think it will probably go.
We are moving toward a world where eventually we will have one airline, one phone company, one insurance company,etc,etc. Thats what they call globilization I suppose.

[LGW Vulture]

I remember some while back, when the BA / AA alliance was always held back by the Bermuda II agreement and its restrictions. More importantly, the UK's cargo carriers were adamant that the UK should not yield to a US version of Open Skies until the Fly America policy, cabotage et al was lifted.

Is there still a strong anti BA / AA sentiment from the UK as a whole, or is this simply now restricted to "wails" of protest from Virgin. The cargo lobby has been quiet for some considerable time.

Come on everyone, we don't need a US version of Open Skies, we need full, free and open competition.

[dallas dude]

LGW Vulture,

The real "timing" driver behind the present UK/US open sky discussion is the likelihood that the UK will shortly lose all ability to negotiate between itself and the US, or any other international party. Once (as expected sometime early 2002) the EU assumes the sole right to negotiate these types of treaties the UK is along for the ride.

Therefore, as far as the UK government, and AA and BA are concerned, the "best before date" is rapidly approaching. Beyond that, who knows (except for guv, maybe)?

This shelf life could expire as early as Jan 31st, 2002.

[partyreptile]

Bienvenuto Dallas Dude!
I always read your comments with a grin on my face, your position on competition is self-serving to be fair. Why did American need to reconfigure their F-100's to a 56 seat configuration and fly out of Dallas Love except to preclude competition which American fights at DFW and anywhere else that it might rear its ugly head. Now that American has run its competition at Love out of business ( Legend Airlines ), I see that American has pulled out of Love field, and discontinued its 56 seat service's. I don't think that a little above board opposition to the BA/AA alliance is a crime, we have too much consolidation going on in the business already, much to the detriment of the flying public, which I see are all bringing their shoes with them. PR

[dallas dude]

Party Reptile,

As you're aware AA didn't reconfigure it's airplanes to compete with Legend, AA was required to comply with Love Field's Wright Ammendment (no relation to Orville or Wilbur). This mandates that only airplanes with 56 seats or less may fly beyond the states whose borders "touch" Texas, plus AL,MS,KS.

The fact that Legend also flew to some of these places was merely a coincidence.

(How's that for spin? I don't think even an Indian bowler could touch that!)

Now, back to the scheduled programming...
the open skies deal has been something the UK has been reluctant to discuss previously because in their estimation the restrictions in Bermuda II had greater value than the hand across the table the US was holding.

With the EU's imminent interference, the UK's royal flush is reduced to aces and eights.

AA, by grace of fortunate timing and their existing relationship with BA (remember UAL and US Air were both previously involved with BA but withdrew from their partnerships) presently stands to gain more than DAL,CAL,NWA.

Timing is everything, so I'll get you a watch for your birthday.

BTW-maybe now they'll let us fly in flip flops!

[partyreptile]

As Kevin Kline once said: "the pilot say there is a crack in the engine, but we take-off anyway!"

[vtmsch]

[quote] It's difficult to believe the claims of Delta, Continental and Northwest that they absolutely need access to LHR. It's not as if they have a connecting hub they need to plug in to. And as everyone knows, LHR is about as bad as LGA was until the Port Authority stepped in.

Smart folks go to Gatwick and jump on the express train to Victoria.

Why would DAL, CAL and NWA not have a problem with their euro hubs but have a fundamental problem with AA/BA?

It's called competition, And DAL,CAL and NWA don't want it if they can avoid it.
<hr></blockquote>

Sorry, Dude, it won't wash. There are bilaterals allowing US carriers unfettered access to Paris, Frankfurt and Amsterdam - and Paris and Amsterdam actually have the runway capacity to make the promise of competition more realistic.

Heathrow is slot limited and destination limited. British Airways has had to resort to stopping at Washington Dulles to provide direct service from Heathrow to Houston, because the bilateral will not allow nonstops. Allowing BA and AA to corner the market to Heathrow does not foster competition; it stifles competition. And Gatwick is not Heathrow. It is not a good substitution for Heathrow; if it were, then Stansted would be a substitute for Gatwick.

Bottom line - competition will only be fostered with a new Bermuda agreement and 9 slots being transferred to carriers who by law have no rights to Heathrow.

[G.Khan]

How right you are Toxteth, EGKK does not bear comparison with EGLL.

EGKK : Aicraft to baggage, 20mins.
Baggage wait 15mins
Baggage to Train 15mins (max wait
15mins too)
Time to central London 30mins.
TOTAL 1hr20mins.

EGLL : Aircraft to baggage 20mins
Baggage wait 30 to 45 mins
Baggage to Train/bus 15mins.
Time to central London 45 to 60mins.
TOTAL 1hr50min/2hr20min.

No comparison at all! <img src="wink.gif" border="0">

[ 31 December 2001: Message edited by: G.Khan ]

[ 31 December 2001: Message edited by: G.Khan ]</p>

[Right Way Up]

Not forgetting 20 mins holding at LHR. Then 10 mins waiting for a stand!

[The Guvnor]

Don't forget that the American version of Open Skies is one tilted 90 degrees in their favour.

They expect - nay, demand access to LHR for their carriers (LHR being the world's premier intercontinental hub) and in return are NOT prepared to provide the following:

1) Cabotage or derived fifth freedom rights

2) Wetlease of UK aircraft to US carriers for operation within the US (despite the fact that there are many N registered aircraft flying over here - including for BA)

3) Abolition of the 'Fly America' policy

The only company to gain from this travesty would be BA, and we know how much they care about competition (hence why they are trying to push Tone to expedite this through).

Sod 'em.

[Confirmed Must Ride]

Can i just add that although the arguments for EGKK vs EGLL are all logical. EGLL still for some reason remains the choice for business travel, something to do with image of EGKK as a charter airport.

Both BA and VS pulled flights and moved them to EGLL after Sept 11th. These flights were mainly higher revenue business flights.

[dallas dude]

Toxteth o'g (great handle BTW),

I don't believe the real fight's about Heathrow.

Once BA and AA cement their "friendship" KLM may become a takeover opportunity for BA. When and if that happens, NWA and CAL are out in the cold as far as Europe is concerned.

I guess we'll see.

Happy, and safe, new year

[Donkey Duke]

Dallas Dude,

Sounds like you and AA are afraid of competition. Why not let DL, NW, US, and CO have
the opportunity to buy slots (or obtain slots) at Heathrow? Every other major European Airport is open to AA. Yes, DL and AF have a "hub" at Paris CDG, but AA can start service from CDG to where ever they want, and DL doesn't mind. If AA wants to compete with DL on CDG-CVG--great. (DL would win because it has a large base there) How about CDG to ATL? They probably wouldn't try. But, when it comes to cash cows like JFK and BOS---AA
might not win--and that is what they (and you) are afraid of. DL wouldn't try LHR to ORD or LGW to DFW---because it doesn't make sense. And if you think LGW is comparable to LHR---you are wrong. Taking a train to Victoria from LGW after a long trans-atlantic flight is NOT fun---because I did it last month and hated it. For the business traveler ($$$cash cow), LHR is preferred.
DL wants a total of 11 roundtrips a day from LHR
eventually (4 to JFK, 2 to BOS, 2 to CVG, and 3 to ATL) and they will eventually get it. And I'm sure AA will operate a NY-BOS-DC shuttle, and Airtran will operate into DCA. And then everyone will be happy.

Thanks. Donkey Duke <img src="cool.gif" border="0"> <img src="cool.gif" border="0"> <img src="cool.gif" border="0">

[Hand Solo]

Yeah but CDG has 4 runways, AMS has lots (though they only use two), FRA has 3, etc etc, and none of them are as close to saturation point as LHR. DL may only want 11 slots per day, but if NW want 11, CO want 11 then thats 33 slots that have to come from somewhere, and they're all wanted at the busiest time of the day. The only way you can get them is to take them from BA and AA, and is that really fair?

[Raas767]

Guv.
If I didn't think that you were writing alot of your postings just to get a rise out of people then I would wholeheartedly suspect that you are smoking some of the most beutifully refined crack this planet has ever seen!

[dallas dude]

Donkey duke,

Welcome to the party.

Couple of points to clarify first, although Hand Solo may have muddied the water just a little bit.

If Delta, CAL or NWA wish to PURCHASE slots once the open skies treaty is approved, they may. Of course, slots aren't exactly available at Woolworth's prices so they want some for free. (If one doesn't ask, one doesn't receive). Slots are also routinely "traded" among partners for seasonal and other reasons. Air France "could" lend some slots to Delta for the advancement of Skyteam, NWA "could" borrow some slots from KLM etc, post open skies.

If Delta wants to operate 11 round trips I believe they'll need 22 slots.

If CAL and NWA have the same wishlist, that becomes an additional 44 (total 66).

For all the competition you speak of remember AA and United BOUGHT the rights, on the open market, to fly to Heathrow (AA from TWA and UAL's as part of their Pan Am purchase-which Delta COULD have matched if they'd wanted to at the time).

If anyone thinks that the Gatwick Express is intolerable, they've obviously NOT ridden the Piccadilly line at rush hour or sat in a black cab for an hour and paid $100 for the "guess who I just 'ad in my cab" pleasure!

The real irony here is that AA is more than likely going to transfer most of its US/UK flying to BA.

Here in the US, LGA (La Guardia,NY) became a complete cluster because too many airlines felt the compelling need to use this "convenient" airport. What the airlines didn't foresee was the typical one hour ground hold incurred on a regular basis because the world and his dog showed up and literally jammed the pavement. What the passengers didn't expect was the opportunity to stare longingly out of the window at Manhattan for the usual 60 minutes when, if they'd gone to JFK (NOT capacity constrained) they'd probably already be in their office etc. LGA is a 15/20 minute cab ride, JFK's about 35 mins to midtown.

The real problem though was that although EVERY AIRLINE wished to pare down its operation at LGA NOBODY wanted to be the first. Hence, when the Port Authority finally held a meeting among all the airlines and said "this is crazy, we're going to go back to our previous slot allocations" they received a round of applause and the airlines collectively sighed in relief.

The same thing will happen at Heathrow.

One can't plan a schedule, and optimise aircraft use, AND pad the schedule effeciently.

If one assumes NWA,CAL or DAL allocates one aircraft for the daily roundtrip (i.e. in a 24 hour period this aircraft flies to the UK and returns , is cleaned and serviced in between and then repats the trip) when the total cycle creeps up OVER 24 hours "part" of an additional 1/24th aircraft comes in to the mix for each hour.

When the ground jam results in this requiring 1.5 aircraft available in order to cover the service, the planners start looking at their other options. In Delta's case they could choose to fly to Paris and connect pax more effeciently on an AF hop to London. Same for NWA,CAL. Fly to Amsterdam and KLM it to London. Oh wait a minute, they already do that!

Heathrow will become another LGA for DAL, CAL and NWA.

Here's an opportunity for DAL, CAL and NWA to push for "ownership" of Gatwick and build a little fortress there. There are multiple selling points for Gatwick as an O&D (origination and destination). I think they're so blinkered by LHR that they're collectively missing a golden opportunity.

[FL390]

Excellent post dallas dude.
<img src="cool.gif" border="0"> <img src="cool.gif" border="0">

[fadec_primary_channel]

Dallas dude, some excellent posts with thought provoking arguments. What is your opinion on the anti-trust approval for BMI/UA with respect to the present discussion? Will bmi operate UA's services to the UK?? Were does Lufthansa / SAS fit in to the equation? <img src="smile.gif" border="0">

[Donkey Duke]

Dallas Dude,

Nice post. I take back everything bad I ever said about people from Dallas. You do bring up some good points. But, the LGA anology only goes so far. Tell me an American passenger airline that CAN'T fly into LGA. (Obviously INTL airlines do not count because LGA's runways cannot handle or are not long enough for 777's or 744's with full fuel loads....) Vangaurd, Midex, Amwest, Colgan, Shuttle America, the ubiquitous
AA Eagle E135, all fly to LGA------it's just that the smaller airlines do NOT have a large presence---but do have a presence. Heathrow is building a new terminal---and it does have parallel runways
unlike LGA. With BA's large withdrawl from European routes from LHR---why give the slots to
Easyjet or some other low fare airline? Heathrow is the largest INTL airport in the world. There aren't 66 or so slots available throughout the morning and early afternoon available for DL, NW, CO, and US? Give me a break. And I am sure Delta could buy the slots with no problem---they have more cash available than AA or BA. If they want 11 roundtrips a day---they obviously want to make a big commitment with LHR. My point is that Delta wouldn't mind starting with a few slots at LHR (Hence my anology with Vanguard or Midex at LGA) and start from there. Eventually more slots would be aquired---thru Airfrance or other SKYTEAM partners. But AA and BA will not give up any---which is the problem. Easyjet might be starting Inverness to LHR service 5 times a day.
Does that sound more important than a DL service to ATL and JFK? Come on!
And as for the LGA cab ride vs the JFK cab ride----you know that that van ride from JFK to Manhattan is a lot worse than LGA to Manhattan.
On Sat nights at 11pm---it still takes 1 1/2 hours to go into town vs 45 mins from LGA. The same is probably true from LHR to the financial
district in London. And, you have to admit it, but there are probably more business people flying into LHR that can afford the $100 cab ride than those flying into LGW-----and that is why DL wants to fly there---more business pax. Thanks.

Donkey Duke <img src="cool.gif" border="0"> <img src="cool.gif" border="0">

[Donkey Duke]

Anology---is actually spelled analogy. sorry. <img src="cool.gif" border="0"> <img src="cool.gif" border="0">

[Raas767]

To validate some of what Dallas Dude said about slots and overcapacity at airports one can look at EWR as an example. Even though JFK was never slot controled a lot of Intl. carriers either switched their flying in to EWR altogether (SAS) or moved some of their flying in to that airport. This happened in the late Eightees and early nineties because of the long delays out of JFK on the afternoon push to Europe. The same will probably happen at Heathrow, and already has to a certain extent. Now EWR has the same delays, but that's another story.

[dallas dude]

Fadec_primary_channel

Don't really know too much inside detail about UAL/BMI's agreement as to who'll fly what/where etc. Unlike some posers(posters), I'll readily admit when I'm out of my league.

Have you tried the guvnor?

I do recognise that it's good timing for AA that UAL is applying for similar approval. One less "voice" to overcome.

Donkey Duke,

Hope you realise this is nothing personal here.

AA and BA know there'll be a slot "price" attached.

They obviously don't want to submit one more slot than they have to. For sure, DAL, CAL and NWA will get "something". I still think they would be better off pounding their chests for Gatwick but then, the negotiators probably know plenty more than I do.

When Gatwick gets its second real runway (and yes I do know about the government promises to the contrary) it'll be a jewel. It doesn't have to become all orange!

Cheers,

(ps. sorry about the spelling in the previous post)

[Hand Solo]

Donkey Duke

Yes, LHR is busiest international airport in the world, but it certainly isn't the largest. Everything, and I do mean everything, is bursting at the seems at LHR. The apron is congested, the terminals are groaning under the strain of way more pax than they were ever intended to handle and the runways are even worse!Yes LHR has two parallel runways, one for arrivals, one for departures, and I stand to be corrected by any LHR ATCOs here but I believe they're up to 40+ movements per hour on each runway at peak times. If you can find a way to squeeze more movements into that runway then there are some airport managers who'll be delighted to meet you. In short, there really aren't 66 slots per day free at LHR. BA aren't withdrawing from many European routes at LHR, and the few slots being freed up are being used by long haul services transferring from LGW. I doubt we'll really see EasyJet operating from LHR to Inverness, but then why should a DL service to ATL have a higher priority for a slot than a domestic service to one of the poorest served regions of the UK? I bet EasyJet could shift more passengers daily between Inverness and LHR than DL could move between LHR and ATL!

[Donkey Duke]

Dallas Dude,

Thanks for your prompt reply. I know it is not personal discussing this issue. Hey, a lot of airlines would love to use Heathrow, and that is a fact. It seems to be the airport of choice when it comes to business travelers and London. I am sure that if Delta or NW were the only ones to have the precious slots, they would hold on as long as possible, too. Look at Delta and the Delta Shuttle service out of LGA------I am sure that DL would not like another competitor other than USair on those lucrative routes. But, other airlines do fly to LGA, BOS, and DCA---just not between them. Why can't DL have a couple slots to fly to ATL and to CVG from LHR? BA does compete to ATL from LGW, but they probably could switch it to LHR if they wanted to. LGW seems to be the "Leisure" airport of London, rather than the "Business" airport with the higher and lucrative fares. An example could be why BA flies
almost all of it's Carribean flights out of LGW---
with the exception of 1 weekly Concorde flight from LHR to Barbados. Obviously BA considers the
routes from LHR to be the cash cows. AA, United, and BA all know this. Richard Branson is in favor of Open skies, and he would also like to have some more LHR slots, but atleast he has some.
If it is so important for AA and BA to combine some of their operations, I believe that it is only fair to give up some slots for good competition.


Hand Solo---There has always got to be some room for more planes. First of all, why are you getting a new terminal? Will the old one be trashed? I know LHR isn't the busiest INTL airport---ATL is. Have you ever flown into ATL?
I have for the past 7 years. There are only 4 total parallel runways--two outers for landings and two inners for departures. Everything runs like clockwork. The fog gets bad during the winter months, but things are still fairly smooth.
But in terms of size, ATL is very small. DFW in
Texas is a lot bigger. What I am trying to say is that "size doesn't matter" (except to my wife)
when it comes to airports. What matters is
efficiency. Fly them in, send them out.
And, why should DL not fly into LHR and Easyjet fly 737-700's to Inverness etc.? How about revenue for LHR? LHR makes more money with bigger planes---to pay for airport personel etc.
I'm sorry Hand Solo, but I know you're protecting what is yours, but if England wants Open Skies
which will benefit both countries, it must give up some slots. Fair is fair.

Thanks guys---Donkey Duke <img src="cool.gif" border="0"> <img src="cool.gif" border="0">

[Hand Solo]

The reason LHR is getting a new terminal is because all the other terminals are handling several times more pax than they were designed to cope with, to the extent that aircraft are now delayed off stand simply because there's no space for their passengers in the terminals. T5 isn't planned to permit an increase in aircraft numbers, it's purpose is to allow an increase in pax numbers through the use of larger aircraft. I've never flown into ATL, but 4 parallel runways is two more than we have at LHR. I agree efficiency is the key to good runway utilisation, but our ATCOs cram as many flights into those two runways as is humanly possible. There simply isn't time or space to squeeze another aircraft in at peak times, as the permanent delays into Heathrow indicate. The assertion that there must be some slots available at peaks times is simply false. If there were, Branson would have them. We'd quite like an open skies agreement with the USA but not at any price. From this side of the pond this whole business looks like the usual US muscle tactics in negotiation.