Now that British Airways, American Airlines and three other carriers have announced their merger-which-isn't a merger, Virgin Atlantic is making a serious stink. After all, Richard Branson's baby holds just three percent of the slots at Heathrow, while BA and its newest pals control 47 percent of the landing rights at the airport.
This is actually the third time that British has tried to link up with American, but it's the first such attempt since the latest Open Skies provision was enacted, ostensibly to improve competition in the transatlantic market. But Branson says that hasn't yet happened--and won't if a tie-up between BA and AA is approved:
Open Skies has not delivered the greater competition
that was promised because Heathrow is full. BA/AA and Iberia would still be unacceptably
dominant, with nearly half of all of the slots at Heathrow, leaving competitors powerless
to take them on.
For his part, British Airways CEO Willie Walsh says his airline doesn't plan to give up any market share to appease regulators. The UK Times asked him if he'd consider giving up any slots, which can sell for as much as £20 million ($37 million) a pair. His response?
American Airlines, British Airways, Iberia, Finnair and Royal Jordanian have formally announced their intent to merge, and they've put together a website to hype the tie-up. The spin-tastically named MoreTravelChoices.com even goes so far as to ask passengers to write to the Department of Transportation asking regulators to approve the deal.
The "joint business agreement" the five airlines have signed will have them cooperating on flights between North America and Europe. They also plan to expand their code sharing so you can earn even more increasingly worthless frequent flier miles. Though the agreement is being called a merger, all five carriers will remain legally separate and maintain their own identities--at least for now.
The deal still needs to be approved by the US government, which might be concerned not just with competition but also rules on foreign ownership of airlines. Predictably, Virgin Atlantic is opposed to the deal.
Despite our best guess, British Airwaysis getting hot and heavy with Iberia--though there's no word yet on shacking up with American. Most news outlets say the European duo is "holding talks," citing a news release posted on BA's website:
British Airways and Iberia are holding talks with a view to an all-share merger between the two companies. The negotiations are supported unanimously by the boards of both companies.
The British Airways and Iberia brands would be retained as part of a combined group.
It is expected that it will take several months to reach agreement on the terms of the merger and to finalise a joint business and integration plan for the combined group.
But the British Press Association says the deal is done, a pretty bold statement given how mergers tend to fall apart as talks proceed. Perhaps they know something everyone else doesn't?
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