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BA/AA Alliance: US Antitrust Officials Oppose Deal  
User currently offlineSingapore_Air From United Kingdom, joined Nov 2000, 13745 posts, RR: 19
Posted (13 years 1 week 3 days 11 hours ago) and read 1769 times:

Fantastic! I am over the moon! Competition reigns  Big thumbs up

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US antitrust officials oppose BA-American plan
By Peter Spiegel in Washington
Published: December 18 2001 00:31 | Last Updated: December 18 2001 01:24



The plan by American Airlines and British Airways to operate as a single airline across the Atlantic was dealt a serious blow on Monday when US antitrust officials recommended that the Bush administration reject it.

However, Justice Department lawyers held out hope that the carriers could gain approval for the alliance if they shed dozens of landing slots at London's Heathrow airport.

American and BA, however, indicated on Monday night they would be unwilling to meet such a condition.

In a recommendation to the US Transportation Department, which has final authority over the deal, Justice Department lawyers argued that the reduced competition on six routes - Heathrow to New York, Boston, Miami, Chicago, Los Angeles and Dallas - would lead to higher prices and poorer service.

Antitrust officials said they might support the deal if American and BA shed enough take-off and landing slots to allow competitors to offer seven daily round-trips to Heathrow from New York and two from Boston.

The divestiture of 126 weekly slots is at the low end of what American's domestic competitors have called for and is significantly lower than the numbers suggested by regulators in 1996, when the carriers first attempted to join up. But American and BA on Monday described the number as "inappropriate," saying it only established an "outer limit" of potential remedies.

The Justice Department also called on the Transportation Department to "carve out" the Dallas and Chicago markets from the alliance, as even divesting slots would not restore enough competition to the cities, where American has large hubs.

The Transportation Department is not obliged to follow the Justice Department's recommendation, but it is expected to carry great weight in the agency's deliberations, which could conclude as early as next month. Transportation rejected the 1996 application from American and BA largely because of stiff Justice Department objections.

The White House has appeared eager to approve the deal, both because of British assistance in the war in Afghanistan and hopes of gaining a new, liberalised "open skies" aviation treaty with the UK.

Currently, only two US airlines, United and American, can fly into Heathrow. The British government has signalled it is ready to accept most American demands in a new "open skies" deal, but only if American-BA is given immunity from US antitrust laws so it can operate as a single airline.

----


Anyone can fly, only the best Soar.
41 replies: All unread, showing first 25:
 
User currently offlineThe777Man From United States of America, joined Jul 1999, 6675 posts, RR: 55
Reply 1, posted (13 years 1 week 3 days 9 hours ago) and read 1648 times:

Great News !! I hope DOT come to the same conclusion. I'm still very amazed that they only asked for 126 weekly slots; they should have asked for more. The777Man


Need a Boeing 777 Firing Order....Further to fly....CI, MU, LX and LH 777s
User currently offlineBanco From United Kingdom, joined Oct 2001, 14752 posts, RR: 53
Reply 2, posted (13 years 1 week 3 days 9 hours ago) and read 1642 times:

So why haven't they asked for similar divestiture of slots at FRA and CDG where the home carriers are far more dominant than BA at LHR?


She's as nervous as a very small nun at a penguin shoot.
User currently offline2cn From United States of America, joined Aug 2001, 648 posts, RR: 0
Reply 3, posted (13 years 1 week 3 days 9 hours ago) and read 1634 times:

So why haven't they asked for similar divestiture of slots at FRA and CDG where the home carriers are far more dominant than BA at LHR?

At CDG and FRA you do not have the problems with getting slots that you do at LHR.


User currently offlineBanco From United Kingdom, joined Oct 2001, 14752 posts, RR: 53
Reply 4, posted (13 years 1 week 3 days 8 hours ago) and read 1631 times:

Of course you do, particularly at FRA. It is one of the most slot constrained airports around.


She's as nervous as a very small nun at a penguin shoot.
User currently offlineKeesje From , joined Dec 1969, posts, RR:
Reply 5, posted (13 years 1 week 3 days 8 hours ago) and read 1627 times:

"FRA. It is one of the most slot constrained airports around."

True Banco. But you don't have government supported, legal barriers opposing new airlines starting flying to LHR.

Continental, Northwest and Delta flying directly into LHR from their US Hubs x times a day would turn BA's dominant position from LHR (and high fares) up side down.

They will try to block that by all means. (misleading communication included).




User currently offlineBobnwa From United States of America, joined Dec 2000, 6537 posts, RR: 9
Reply 6, posted (13 years 1 week 3 days 5 hours ago) and read 1607 times:

The 777Man,
They asked for 126 slots from BOS and NYC plus "many" more from other cities.


User currently offlineDCA-ROCguy From United States of America, joined Apr 2000, 4528 posts, RR: 34
Reply 7, posted (13 years 1 week 3 days 5 hours ago) and read 1606 times:

Good for DOJ! This ruling is proof that big campaign contribution$ do not necessAArily overcome the rule of law. BA-AA without massive Heathrow slot divestitures--at least several hundred, by Delta's count--would have been terribly anti-competitive.

Unless DL, NW, CO, and US *all* get enough competitive slots into Heathrow, NO BA/AA!

Jim



Need a new airline paint scheme? Better call Saul! (Bass that is)
User currently offlineJAL From Canada, joined Apr 2000, 5093 posts, RR: 8
Reply 8, posted (13 years 1 week 3 days 5 hours ago) and read 1598 times:

This is ridiculous! If they approved the United/Lufthansa ; Delta/Air France and NW/KLM alliance they should also allow AA/BA to form an alliance.


Work Hard But Play Harder
User currently offlineBanco From United Kingdom, joined Oct 2001, 14752 posts, RR: 53
Reply 9, posted (13 years 1 week 3 days 4 hours ago) and read 1586 times:

Keesje, are you then saying that when open skies comes along, and all legal barriers are removed, that you would then agree that there is no need for BA/AA to divest slots? Because that's exactly what they're saying. When there is open skies all US/UK carriers will have the right to fly from LHR, so it will be the same situation as with FRA, AMS and CDG. None of those agreements have resulted in the home carrier losing slots why should LHR be different?

Don't forget that Bermuda II was agreed by both sides, it isn't a British restriction held over the US.



She's as nervous as a very small nun at a penguin shoot.
User currently offlineSingapore_Air From United Kingdom, joined Nov 2000, 13745 posts, RR: 19
Reply 10, posted (13 years 1 week 3 days 4 hours ago) and read 1586 times:

Press Releases

AMERICAN AIRLINES AND BRITISH AIRWAYS RESPOND TO DOJ FILING

Washington, DC, December 17, 2001 – American Airlines and British Airways today issued the following statement regarding the Department of Justice (DOJ) filing to the U.S.-U.K. Alliance Case.

"The first round of governmental comment in either the U.S. or Europe, today's U.S. DOJ announcement is not unexpected from an agency that has traditionally taken the hardest line in previous airline competition matters. Importantly, DOJ establishes an outer limit of potential remedies that is far improved from those it advised in the 1996 application. Only an advisory opinion, the DOJ filing also endorses a U.S.-U.K. open skies agreement and recognizes more competition and less consolidation in the transatlantic aviation market since 1996.

However, we believe the DOJ proposed divestiture of 126 weekly slots is inappropriate. DOJ underestimated the commercial availability of slots at Heathrow and the competitive advantages already being enjoyed by other global alliance networks. Most significantly, DOJ did not consider the potential benefits of a new U.S.-U.K. open skies agreement.

The DOJ filing is only an advisory opinion. DOT is the agency with the decision-making authority in the U.S. We are confident that DOT and the decision making authorities in Europe will consider the complete record in reaching a fully informed decision on the application among the most extensively documented and deliberated ever considered.

We intend to file additional materials with DOT later this week that elaborate further on the potential benefits of open skies, the reality of network-to-network competition and the Heathrow slot situation."

Neither American Airlines nor British Airways will comment further beyond this statement.



Anyone can fly, only the best Soar.
User currently offlineDCA-ROCguy From United States of America, joined Apr 2000, 4528 posts, RR: 34
Reply 11, posted (13 years 1 week 3 days 3 hours ago) and read 1574 times:

DOJ's opinion may be officially advisory, but it's death to the deal as-is in practice. This press release is lot of hot air. BA and AA will have to give up lots and lots of Heathrow slots in order to get their deal approved.

Jim



Need a new airline paint scheme? Better call Saul! (Bass that is)
User currently offlineLindy field From United States of America, joined Mar 2001, 3131 posts, RR: 13
Reply 12, posted (13 years 1 week 3 days 3 hours ago) and read 1570 times:
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Some competition reigns in Frankfurt. The EU approved the Lufthansa/Austrian cooperation provided that the two airlines opened slots for competitors to fly between Germany and Austria. This is why Air Alps and Adria are now flying between the two countries.

I'm very pleased by the DOJ ruling. I'm waiting to see Delta, Continental, and British Midland flying transatlantic from LHR.


User currently offlineStormin From United States of America, joined Sep 2001, 60 posts, RR: 0
Reply 13, posted (13 years 1 week 3 days 3 hours ago) and read 1565 times:

Slightly off-topic...
I flew into Newark on Monday and saw a Virgin A340 at the gates with a "No Way BA/AA" slogan painted on the fuselage near the tail.

Later


User currently offlineGo Canada! From United Kingdom, joined Jun 2001, 2955 posts, RR: 11
Reply 14, posted (13 years 1 week 3 days 3 hours ago) and read 1554 times:

"I'm very pleased by the DOJ ruling. I'm waiting to see Delta, Continental, and British Midland flying transatlantic from LHR."

Your be lucky.

You wont get open skies with BA/AA. The two governments do NOT want two airlines going to the wall over this. The uk government will move heaven and earth for British Airways who will argue that open skies will lead to massive job losses by BA.

Read the article, it says the white house seems eager, do you expect them to just sit there and say no, especially since the survivaul of Britains flag carrier is at stake?

BA/AA is the same as unted/bmi, if those two can have an alliance andso can delta/af and klm/northwest then why not BA/AA?

if there is open skies then what are people afraid of, a bit of competition?



It is amazing what can be accomplised when nobody takes the credit
User currently offlineKeesje From , joined Dec 1969, posts, RR:
Reply 15, posted (13 years 1 week 3 days 2 hours ago) and read 1558 times:

LHR has a max number of slots. BA/AA/UA own lots because they are the only ones allowed so. Unfair !

Every North Atlantic Carrier is free to start flying to Amsterdam/CDG. The dominant position of KLM/NWA on AMS is market driven, not by protective regulations.

KLM has direct competition on almost all of its long haul flights to US (& Asia). That's healthy. Could BA hold up it's pants in that situation ? I guess they don't want to try out .....

Imagine KLM providing some of their LHR slots to start a LHR-EWR, four times a day B777/747 KLM/CO/NWA codeshare service, that would be healthy for the market ...


User currently offlineSingapore_Air From United Kingdom, joined Nov 2000, 13745 posts, RR: 19
Reply 16, posted (13 years 1 week 3 days 2 hours ago) and read 1532 times:

Look at this!...

Virgin requests slots for charity money
Publicity hungry Virgin Atlantic boss Sir Richard Branson rekindled his debate with British Airways over slots at Heathrow by offering to give £20 million to charity in exchange for 10 pairs of slots at the airport.
In a letter sent to BA chairman Lord Marsall, Branson challenged BA to release some of its unused slots at Heathrow. In typical fashion Branson spiced up the request by offering to donate £2 million to charity for each pair of slots Virgin received.
BA has refused to rise to the challenge, saying: “It is not true that competitors can’t get into Heathrow. United Airlines has massively increased its services out of Heathrow. Virgin Atlantic also now has a very significant service.”
Sir Richard Branson said: “I am saddened but certainly not surprised that, having reached the end of the challenge period, BA has not been able to supply Virgin Atlantic with even one pair of slots at Heathrow.
“Both BA and American Airlines have disingenuously claimed that competitors can easily find slots at Heathrow for services to and from the US,” he continued. “The truth is that slots are not available at Heathrow for transatlantic services. Having failed to rise to this challenge I do not expect to hear BA or AA repeating this claim ever again.”
Published 17 December 2001
---

Think of the charities!



Anyone can fly, only the best Soar.
User currently offlineLadevale From , joined Dec 1969, posts, RR:
Reply 17, posted (13 years 1 week 3 days 1 hour ago) and read 1522 times:

First of all, the deal will happen.

Political forces, even more powerful than those at the DOJ, have already made the decision. Or, didn't anyone read Novak's article in the Chicago-Sun Times.

The President wants this deal to happen because it is a test of his personal, working relationship with Tony Blair.

The DOJ is simply posturing. They did not want to appear to be acting in collusion with the DOT and the White House. The Novak article made it seem as if they were.

In general, Delta, Continental and Northwest continue to act as if this deal would mean the end of the world to them. When will they stop whining and start competing?

UA and AA gained their rights to fly to Heathrow not through any treaty, but through a commercial transaction involving in each case hundreds and hundreds of millions of dollars. What galls me is that now Delta, Continental, and Northwest are trying to take advantage of the situation to gain as much access to Heathrow as AA and UA have, all for free. Why should one treaty wipe out years of competitive gains made by these two carriers, AA in particular? Ours is a capitalist economy, not a social welfare system. Someone tell that to Delta, Continental and Northwest.

Unfortunately, the DOT has often reinforced and promoted this kind of thinking. It has, for instance, shown a preference in the past for allocating new service rights and slots to carriers simply on the basis that the carrier has no current rights to operate in those markets. In doing so, it has often compromised our free market system and in particular the competitive actions of carriers like United and AA to gain entry into new markets through acquisition. Why compete, why use any of your own cash to acquire new assets, if you can simply wait till the DOT gets more slots to restricted markets?

In the other sectors of our economy, there is no mechanism, no government agency that exists to undo years of competitive gains. Could you imagine if there were? What would that do to our economy? Let's say Disney wanted to buy a cable company? Could you imagine some agency asking them to divest themselves of some of their Disney properties, like Mickey Mouse or Goofy? It just doesn't happen. Even in the most recent Microsoft vs. the US anti-trust trial in which the US accused Microsoft of acting as a monopolist, the final outcome will not call for Microsoft to divest itself of some of its software products. Against that background, how ridiculous does it seem that in the airline industry the DOT acts to manage competition?

Thankfully, in this deal, it looks like political forces will come out on the side of true capitalism. While that may mean that AA and BA will continue to be dominant at Heathrow, it will also mean that Delta, Continental, and Northwest will finally get the rights to fly to Heathrow. They will also probably get 2-3 flights a day each into Heathrow. Beyond that, they should be expected to use whatever commercial mechanisms at their disposal to acquire any new slots that they desire. Now, that would bring real competition to Heathrow.


User currently offlineAussiestu From Australia, joined Mar 2001, 780 posts, RR: 1
Reply 18, posted (13 years 1 week 3 days 1 hour ago) and read 1517 times:

Someone says there is no competition to BA/AA from LHR? What the hell is UA and VS then? Then of course there is AI and NZ but they are small fry compared to UA and VS. Does anybody else have rights thru LHR to the US? There is a long way to go before this is settled and I would like to see it happen.

Does KLM have another Dutch airline to compete on US routes and does LH have another German airline to compete on US routes and is there another French airline flying to the US against AF? BA has VS and if this happens then BM. 3 British carriers serving the same routes. Now that is competition. And then we will have all the US carriers there also if it happens. Does DL, US, CO, NW as well as AA and UA fly to KLM, AF and LH hubs? Thats 6 US carriers serving their hubs which is what will happen at LHR if open skies happens. True competition!


User currently offlineAzjubilee From United States of America, joined Apr 2000, 4030 posts, RR: 27
Reply 19, posted (13 years 1 week 3 days 1 hour ago) and read 1510 times:

Northwest, Continental, Delta and USAirways aren't against open skies. They're for open skies if it can be an equal playing field, and right now it isn't. If open skies were approved with out divesture of slots and facilities the above mentioned airlines wouldn't be able to provide service, therefore gaining nothing. This open skies agreement is different, when compared to AMS and FRA. AMS and FRA aren't dominated like LHR is. AA and BA combined would have 70% or more of the traffic in LHR with nobody else ALLOWED to compete, other than UA/BMI.

Ladevale says that NW etc... should sack up and spend the money to get to LHR? They can't. They aren't allowed at LHR per the treaty. Which by the way, the only reason why UA and AA are at LHR in such a great size, is that AA bought TWs LHR routes years ago and US bought Pan Ams routes, years ago. NW and company can spend all the money in the world to attempt to provide equal competing service to London via LGW, but it is obviously a mute point. They probably aren't doing too bad going into LGW, but could do way better at LHR financially and provide better service for the consumer.

I wouldn't call the deal dead all together, so wait and see what happens. We might be surprised. And, I would take all media articles written by reporters uneducated in the industry with a grain of salt.

AZJ


User currently offlineBobnwa From United States of America, joined Dec 2000, 6537 posts, RR: 9
Reply 20, posted (13 years 1 week 2 days 23 hours ago) and read 1495 times:

Aussiestu,
Yes DL,US,CO,AA,NW,and UA all fly from the U.S. to AMS,FRA,And CDG. Whats your point? DL,US,CO,and NW are not allowed to fly to LHR


User currently offlineDonder10 From Canada, joined Oct 2001, 6660 posts, RR: 21
Reply 21, posted (13 years 1 week 2 days 23 hours ago) and read 1489 times:

The advantage of flying into LHR instead of LGW is not as great as some of the companies make out.

User currently offlineRayChuang From United States of America, joined Jun 2000, 8041 posts, RR: 5
Reply 22, posted (13 years 1 week 2 days 23 hours ago) and read 1489 times:

I think the possibility of other US-based airlines flying into LHR really depends on the status of LHR's Terminal 5.

If T5 is built (even with the slot restrictions in place), this will allow BA to move all of their operations into a single terminal, which will free up space in the older LHR terminals. This will allow airlines like AA, CO, DL, NW, UA and US to fly into LHR (probably into one of the older LHR terminals dedicated to US based airlines only), and because of slot restrictions you'll likely see:

AA flying 777-200ER's from DFW, ORD, MIA and JFK
CO flying 777-200ER's and 767-400ER's from IAH and EWR
DL flying 777-200ER's and 767-400ER's from ATL and JFK
NW flying 747-400's and A330-300's from MSP and DTW
UA flying 747-400's from SFO, LAX, ORD, IAD and JFK
US flying A330-300's from CLT, PIT and PHL

I think the primary concern at LHR currently is not enough gates to accommodate everyone. With T5, that issue is mostly alleviated.


User currently offlineDonder10 From Canada, joined Oct 2001, 6660 posts, RR: 21
Reply 23, posted (13 years 1 week 2 days 23 hours ago) and read 1487 times:

Raychung,
DL cant fly 767-400's across the Atlantic.


User currently offlineGo Canada! From United Kingdom, joined Jun 2001, 2955 posts, RR: 11
Reply 24, posted (13 years 1 week 2 days 22 hours ago) and read 1477 times:

excellent points Ladevale!


It is amazing what can be accomplised when nobody takes the credit
25 Blink182 : UA/LH, DL/AF(likely to get immunity), KL/NW, why no BA/AA? If I were on a neutral side, I would admit that BA/AA's arguments are pretty valid. Accordi
26 Singapore_Air : US move gives BA hope for AA venture By Kevin Done, Aerospace Correspondent, in London Published: December 18 2001 22:03 | Last Updated: December 19 2
27 2cn : This is ridiculous! If they approved the United/Lufthansa ; Delta/Air France and NW/KLM alliance they should also allow AA/BA to form an alliance. Non
28 Donder10 : If Bermuda 2 is removed then shouldnt UA and AA be given compensation as they paid for the right to fly into LHR?An alternative way of looking at it.
29 Banco : 2cn, As opposed to FRA for example where LH/UA have got the transatlantic market totally sewn up, with bugger all slots for others to get hold of and
30 Aussiestu : Bobnwa There was no point. I was asking a question. If and when Openskies happens and these carriers all move to LHR then the competition will begin.
31 Donder10 : London has the most flights to the US than any other Euro City-that is competition
32 Redraider : 60% is not a monopoly
33 Tango-Bravo : Some honest questions of mine, to which knowledgeable replies will be appreciated: 1) Why is it that access to London Heathrow seems to be the focal p
34 OA412 : To answer you first question, DL, CO, US, NW are not asking for broader access to LHR. They are asking for access, plain and simple, as none of these
35 OA412 : You are not seriously arguing that the deal will go through because Bob Novak said so are you? Last I checked Novak does not have final say in the cra
36 Lj : In fact, the EU Commission is currently looking into all "open skies" agreements except for the "open skies" agreemement between the USA and The Nethe
37 Air Malta : Well , I have to say this decision amazed ... Why is it not possible for BA and AA to ally... Why did they allow UA and LH to cooperate on the US and
38 Go Canada! : so people on here cat seem to accept that routes between london and america do have other carriers except for BA/AA. They dont seem to accept that the
39 Singapore_Air : "if BA goes bankrupt people will be happy..if air france goes it would be a tradgery..i am sick of this anti-BA spin" - Get used to it. I know I have!
40 Blink182 : Redraider said it pretty well "60 percent is not a monopoly". I would love to see the percentage of LH/UA on FRA-USA routes, DL/AF CDG-USA, KL/NW AMS-
41 Mah4546 : This is ridiculous. All AA and BA want is a joint-operation similar to NW/KL, DL/AF, and UA/LH. If the other airlines don't like the fact that AA/BA w
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