MaxQ2351 From , joined Dec 1969, posts, RR:
Reply 6, posted (9 years 5 months 4 weeks 1 day 2 hours ago) and read 9627 times:
A "trust" is like a monopoly. Most countries have laws in place to prevent corporate monopolies. Why I'd almost be certain a AA-BA merger would not be allowed is because AA and AA Eagle are almost as large as all of the other oneworld alliance members combined. If AA and BA merged, they'd be unstoppable. It's not like AA hasn't been able to pull this off in the past before....where did they get the nickname of the "sky nazis"?!?! They're ruthlessly and exceedingly efficient at eliminating competition. Everyone who had a good life and career at Air Cal, Reno Air, TWA (the list goes on), found themselves on the streets after AA set their sights on them. If AA and BA merged, only the government could stop them......so the government prevents such monopolies in advance with the "anti-trust" laws as mentioned above.
BA787 From United Kingdom, joined Jun 2006, 2596 posts, RR: 6
Reply 7, posted (9 years 5 months 4 weeks 1 day 2 hours ago) and read 9611 times:
Quoting MaxQ2351 (Reply 6): so the government prevents such monopolies in advance with the "anti-trust" laws as mentioned above.
Dont ya just love Tony Blair and George Bush for being so awkward. I think mergers are the right way to go to prevent bankruptcies. Seing as Britain ajnd American are all ready in bed together why wont they let the airlines merge i wonder. lol
I don't think it will happen soon, they just aren't compatable, the American company won't want to be controled, they'd want to be the one making the big decisions.
Their are also some other things that I can't think of right now
Always stand up for what is right, even if it means standing alone..
ORDPIA From United States of America, joined Jan 2006, 140 posts, RR: 1
Reply 12, posted (9 years 5 months 4 weeks 1 day 1 hour ago) and read 9568 times:
Quoting BA787 (Reply 7): Dont ya just love Tony Blair and George Bush for being so awkward. I think mergers are the right way to go to prevent bankruptcies. Seing as Britain ajnd American are all ready in bed together why wont they let the airlines merge i wonder. lol
It has nothing to do with George Bush or Tony Blair. The US has had "The Sherman Antitrust Act" in place since 1890 when it was enacted because the Standard Oil Company had a majority control of the oil in the US thus allowing them to control prices (this might be a bit confusing given the current situation with OPEC but, as OPEC is a cartel, made up of several companies and countries they are legal). And as far as the whole Bush thing goes his policy is quite pro-business, which is why I like him as my company has gone through record profits since his election and my stock options make me smile, Its not simply up to him to allow such an action to take place, it would require the other two branches of the government (judicial and legislative) along the same lines as the UA - US merger, also there is one larger problem besides it creating an antitrust issue and that is the fact that the US does not allow for foreign ownership above a certain percentage of a US carrier, a la the current Virgin America situation. Sorry if this is a bit wordy but hopefully it helps.
Lincoln From United States of America, joined Nov 2004, 3887 posts, RR: 8
Reply 15, posted (9 years 5 months 4 weeks 1 day 1 hour ago) and read 9509 times:
Quoting BA787 (Reply 7): Dont ya just love Tony Blair and George Bush for being so awkward.
At least in the US, antitrust laws date to the early 1900s, and it can be argued that antitrust laws are a very un-Republican (the US political party that President Bush belongs to, not the mode of governent) regulation on and interference with business.
I'm not totally convinced that an AA-BA merger would raise antitrust concerns... there may be a few aspects and the combined airline may be forced to divest certain assets (LHR landing slots, routes, etc) to preserve compensation, but I think on the antitrust front it could happen.
I DON'T think it could happen, however, because of the laws in the US preventing foreign ownership of a domestic airline... Unless AA purchased BA (assuming the UK doesn't have similar laws)... and even then there are regulatory hurdles.
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M180up From El Salvador, joined May 2006, 403 posts, RR: 5
Reply 17, posted (9 years 5 months 4 weeks 1 day 1 hour ago) and read 9494 times:
Quoting ORDPIA (Reply 12): US does not allow for foreign ownership above a certain percentage of a US carrier
So they will definitely have to find a way to overcome this, but I don't think it will be allowed, does anyone knows the rules on great britain, let's say AA takes over BA, what are the rules of ownership of an airline in hte UK?
EddieDude From Mexico, joined Nov 2003, 7945 posts, RR: 41
Reply 18, posted (9 years 5 months 4 weeks 1 day 1 hour ago) and read 9450 times:
Quoting SP90 (Reply 5): Why would BA and AA merging bring up anti-trust charges? There are lots of other airlines out there.
The North Atlantic market, specifically the U.S.-U.K. market would be dominated by the resulting company to such an extent that rivals such as UA, VS, etc. would be de facto displaced from it.
Quoting BA787 (Reply 7): mergers are the right way to go to prevent bankruptcies
U.S. regulators may allow a merger that would otherwise concentrate the market beyond the acceptable thresholds if one of the parties is in imminent risk of bankruptcy or winding-up in case the merger is not accomplished. But that is a different story.
There is one more reason why a BA-AA merger has many obstacles. U.S. laws have restrictions on foreign investment in the airline industry. Therefore, BA shareholders would have to be happy with a small percentage of the surviving entity's capital stock or a very complicated ownership structure would have to be implemented.
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MaxQ2351 From , joined Dec 1969, posts, RR:
Reply 20, posted (9 years 5 months 4 weeks 1 day 1 hour ago) and read 9394 times:
Quoting BA787 (Reply 19): I like that idea Richard Branson irritates me
Haha me too...... I'm personally diehard pro-AA, they're my fave airline by a long margin, and I rather like BA too, so I would be all for a merger between the two even though that would be rather unlikely, as deliniated by everyone above. It would be a glorious day though if BA and AA could team up against Branson and systematically eradicate him from the market!!!
Now, for all you pro-VS people out there, bring on the !!!
Ken777 From United States of America, joined Mar 2004, 9003 posts, RR: 10
Reply 21, posted (9 years 5 months 4 weeks 1 day 1 hour ago) and read 9394 times:
I doubt if a merger is in the interests of either company. BA is doing far better than AA financially and won't want the burden. Neither company will want to give up LHR slots for it to happen.
What I do see is an anti-trust relief that will allow code sharing on flights over the Atlantic as well as both working together in areas of purchasing, maintenance, etc. In this area I think the governments have a responsibility to ensure that AA & BA are not disadvantaged when compared to the competition and the Bush Administration has been rather poor in this regard - as well as other issues.
ORDPIA From United States of America, joined Jan 2006, 140 posts, RR: 1
Reply 22, posted (9 years 5 months 4 weeks 1 day 1 hour ago) and read 9394 times:
Quoting BA787 (Reply 16): coul the airlines not purchase 50% of each other or is that not allowed either Will oneworld ever encourage merging of its airlines
Unfortunatly even this would be impossible as the current law which dates to 1940 only allows for 25% foreign investment in a US airline. There are also similar laws in the UK, as well as the say that the E.U. would have. The E.U. has been making themselves somewhat protected recently in regards to foreign investment.
If anyone knows the actual %age in the UK law it would be much appreciated.
Joost From Netherlands, joined Apr 2005, 3228 posts, RR: 4
Reply 23, posted (9 years 5 months 4 weeks 1 day 1 hour ago) and read 9377 times:
To answer in a bit more detail: in the current agreements, a BA-AA merger will not happen.
Have you heard of the Bermude II treaty? In a nutshell, it means that only 2 American and 2 British carriers can fly from Heathrow to the USA. Currently, these are American Airlines and United Airlines, and British Airways and Virgin Atlantic. This is also the reason why BMI or Continental don't serve LHR.
BA and AA together would have considerably more than 50% of the USA-London Heathrow market when merged, with very limited options for competition (only US and VS).
The American an European governments forbid AA and BA to do codesharing / revenue sharing on LHR-USA. You can see that even as they are both in OneWorld, they can not codeshare: yes, BA and AA compete with each other on LHR-ORD, whilst working together on MAN-JFK. Strange situation, I agree, but that's how it works.
SA7700 From South Africa, joined Dec 2003, 3431 posts, RR: 25
Reply 24, posted (9 years 5 months 4 weeks 1 day ago) and read 9312 times:
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Quoting BA787 (Reply 2): dont understand my friend am new to this and only 14 yrs of age
I'm sorry that I did not clarify the concept of anti-trust at first. As Max pointed out, a BA-AA merger would become an unstoppable "beast".
Quoting SP90 (Reply 5): Why would BA and SA)">AA merging bring up anti-trust charges? There are lots of other airlines out there.
Taking it a step further, why merge the airlines within Oneworld, Skyteam and Star Alliance? So instead of having all these smaller airlines, you would have three big ones.
If I remember correctly, BA and American alone have about 40% of the UK-USA market share; which is quite significant in my humble opinion. Should BA-AA be allowed to merge, their sheer economies of scale would crush the "competition" in no time.
Simply merging airlines, within the big three alliances would be catastrophic. Should it ever be allowed, basically an oligopoly would be created. An oligopoly is a market which is dominated by a small number of sellers (oligopolists). Oligopolistic competition can give rise to a wide range of different outcomes. In some situations, the firms may collude to raise prices and restrict production in the same way as a monopoly.
Less airlines = less competition = higher fares
As matter of interest - SA and LH has recently been fined $8.24 and $1.27 million respectively, by the Competitions Commission of South Africa, for anti-competitive behavior.
The Competition Commission has fined South Africa's national carrier, SA R55m. Only five months ago, SA paid another fine of R45m for competition irregularities.
The latest fine came after the commission and SAA concluded a consent agreement concerning a number of complaints against the airline.
An investigation was conducted by the commission into various bilateral agreements between SAA and Lufthansa that deal with their relationship in respect of code share flights, which they both operate between Cape Town, Johannesburg and Frankfurt.
The commission found that the bilateral agreements created a platform for SAA and Lufthansa to collude and that the airlines had used the opportunity to fix the selling price of air tickets on these flights