dusk2dawn
12th Jan 2002, 03:56
Proposed Alliance Between American Airlines and British Airways Raises Competition Concerns and Public Interest Issues
<a href="http://www.gao.gov/new.items/d02293r.pdf" target="_blank">GAO-02-293R</a><a href="http://www.gao.gov/new.items/d02293r.pdf" target="_blank">Report in .pdf: GAO-02-293R</a>, January 7.
American Airlines (AA) and British Airways (BA) announced in August 2001, their intention to form an international alliance and applied for immunity from antitrust laws in the United States and Europe.
Without some regulatory remedy, the AA/BA alliance could dominate markets between major U.S. cities and London, especially in those that originate or terminate at London's Heathrow airport. The extent to which the AA/BA alliance may be able to exert market power will depend on whether other airlines can enter these markets under an open skies agreement. Some passengers may benefit from the larger network created by the AA/BA alliance, including travelers who would have additional service on certain routes. However, potential benefits from the AA/BA alliance may be limited. First, continuing constraints in slots, gates, and terminal facilities at London's Heathrow airport and BA's corporate strategy of reducing its overall capacity would limit potential benefits. Second, several carriers are already serving many of the markets that the AA/BA alliance plans to serve. Third, neither AA nor BA claim that the alliance would generate substantial operational savings that could be passed on to stockholders, employees, and customers. The AA/BA alliance raises a number of important public interest issues. Because GAO's analysis suggests that a grant of antitrust immunity could provide an opportunity for the alliance to enhance its market power on some routes, a full review of the competitive effects of this and other alliances is important. Also, the United States and United Kingdom may have differing interests in expediting a bilateral open skies agreement and a decision on the alliance.
<a href="http://www.gao.gov/new.items/d02293r.pdf" target="_blank">GAO-02-293R</a><a href="http://www.gao.gov/new.items/d02293r.pdf" target="_blank">Report in .pdf: GAO-02-293R</a>, January 7.
American Airlines (AA) and British Airways (BA) announced in August 2001, their intention to form an international alliance and applied for immunity from antitrust laws in the United States and Europe.
Without some regulatory remedy, the AA/BA alliance could dominate markets between major U.S. cities and London, especially in those that originate or terminate at London's Heathrow airport. The extent to which the AA/BA alliance may be able to exert market power will depend on whether other airlines can enter these markets under an open skies agreement. Some passengers may benefit from the larger network created by the AA/BA alliance, including travelers who would have additional service on certain routes. However, potential benefits from the AA/BA alliance may be limited. First, continuing constraints in slots, gates, and terminal facilities at London's Heathrow airport and BA's corporate strategy of reducing its overall capacity would limit potential benefits. Second, several carriers are already serving many of the markets that the AA/BA alliance plans to serve. Third, neither AA nor BA claim that the alliance would generate substantial operational savings that could be passed on to stockholders, employees, and customers. The AA/BA alliance raises a number of important public interest issues. Because GAO's analysis suggests that a grant of antitrust immunity could provide an opportunity for the alliance to enhance its market power on some routes, a full review of the competitive effects of this and other alliances is important. Also, the United States and United Kingdom may have differing interests in expediting a bilateral open skies agreement and a decision on the alliance.