aa777jr
Posts: 2269
Joined: Tue Feb 17, 2004 12:03 pm

AA And BA Merger?

Sat Oct 16, 2004 5:29 pm

I read that AA and BA once tried to merge in the mid 90s. VS was very much opposed to this, and had a "NO AA / BA campaign." Why did the AA/BA merger never happen? Were anti-trust issues already a huge factor pre 9/11? I would have thought with the market as strong as it was in the mid 90's, it would have increase competition to see a merger of this magnitude.

Any comments on why it didn't happen would help me.

AA777jr
A liberal is a man who is right most of the time, but he's right too soon.
 
tekelberry
Posts: 1309
Joined: Tue May 13, 2003 6:37 am

RE: AA And BA Merger?

Sat Oct 16, 2004 5:37 pm

They tried to codeshare on transatlantic flights (to/from US) but were unsuccessful.
 
aa777jr
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RE: AA And BA Merger?

Sat Oct 16, 2004 5:39 pm

So there was no merger or buy out talks? Why did VS through such a fit? They only operate 30 planes. Doesn't seem like it would effect their revenues.

AA777jr
A liberal is a man who is right most of the time, but he's right too soon.
 
Leskova
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Joined: Wed Oct 08, 2003 3:39 pm

RE: AA And BA Merger?

Sat Oct 16, 2004 5:41 pm

As far as I recall, the "NO WAY AA/BA" slogan on VS's aircraft wasn't their opinion about an AA/BA merger, but actually their opposition to AA/BA's alliance accross the Atlantic (or, for that much, their alliance in general).

AA and BA have such a high market share from LHR to the US that VS, at the time, said that they'd completely dominate all traffic between the UK and the US, shutting out competition and hurting the consumer (although I always have to smile when I read this line coming from an airline, or any other company - it's not as if airlines were out there to only give the consumer what's best: they're out there to make money).

Keep in mind that BA has quite a hold on it's fortress LHR, and AA doesn't just fly there two or three times a day: if they had been allowed to merge (although I don't recall them actually wanting to merge), that merger would have had to include such high sanctions in the form of giving up slots and routes to the competition to avoid them squeezing out anyone else from LHR that the merger, in turn, would have lost quite a bit of it's value.

Regards,
Frank
Smile - it confuses people!
 
tekelberry
Posts: 1309
Joined: Tue May 13, 2003 6:37 am

RE: AA And BA Merger?

Sat Oct 16, 2004 5:47 pm

No merger or buy out talks. A codeshare agreement for flights between the US and LHR would give AA/BA the majority of market share (about 60%) for those routes as there are only 4 carriers allowed to serve the US from LHR.
 
aa777jr
Posts: 2269
Joined: Tue Feb 17, 2004 12:03 pm

RE: AA And BA Merger?

Sat Oct 16, 2004 5:47 pm

Leskova,

I had no idea the "NO WAY AA / BA" was tatooed on any VS a/c. That is hilarious if true. I though that was just proganda that VS was pumping into the industry.

AA777jr
A liberal is a man who is right most of the time, but he's right too soon.
 
Leskova
Posts: 5547
Joined: Wed Oct 08, 2003 3:39 pm

RE: AA And BA Merger?

Sat Oct 16, 2004 5:54 pm

Aa777jr, here are some examples:


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Photo © Gregory Bajor



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Photo © Ky Cheng



Regards,
Frank
Smile - it confuses people!
 
aa777jr
Posts: 2269
Joined: Tue Feb 17, 2004 12:03 pm

RE: AA And BA Merger?

Sat Oct 16, 2004 6:02 pm

Leskova,

That is freaking nuts! Why would VS go that low and mud sling? That had to cost them something? They only have 30 planes, but still...gimme a break!

AA777jr
A liberal is a man who is right most of the time, but he's right too soon.
 
Leskova
Posts: 5547
Joined: Wed Oct 08, 2003 3:39 pm

RE: AA And BA Merger?

Sat Oct 16, 2004 6:41 pm

Aa777jr, it really depends on the perspective: VS, with it's 30-or-so planes is, on some routes, giving BA quite a run for it's money, with BA undoubtedly being the much larger of the two: yet here they were suddenly in the situation of having a much larger airline with more routes than they've got getting even more - in other word, all the routes that AA offers out of London, which would have increased their dominance to unprecedented levels.

If the choice is between VS and BA, the choice is still somewhat balanced... look at Chicago as an example - I'm not sure if VS was flying there at the time (I know they did for a short time, but I think this was just prior to 9/11), but at the time (and today) there were several flights a day by AA, by BA and by UA - with UA being the only direct competitor (or does AI also offer that route from LHR?)... even if the number of flights and seats were evenly spread throughout these three airlines (BA, AA, UA), then BA & AA would have had two thirds of the market - but BA also flew B747s to ORD and, I think, AA had (and has) more flights between LHR and ORD than UA does, so on this market, AA & BA would have had an overwhelming market power: combine that with the flights that AA has out of ORD and the flights that BA has out of LHR and compare that with VS was able to offer with one or two flights from LHR/LGW to ORD: practically nothing to connect to on either end, so they'd have to rely on o/d-traffic to fill the planes.

But filling your planes with o/d-traffic is also easier of you've got two or three times the flights on a route - there's just so much more flexibility, especially important for premium traffic.

In other words, VS would have gone from being the (somewhat) underdog to being completely overpowered by the competition on a lot of their important routes, with the chances to grow further (to get back to the number of thirty planes) being seriously hampered...

Actually, I considered that slogan to be - in light of other VS marketing campaigns - somewhat tame...

Regards,
Frank
Smile - it confuses people!
 
blink182
Posts: 5272
Joined: Mon Oct 18, 1999 3:09 am

RE: AA And BA Merger?

Sun Oct 17, 2004 4:18 am

As stated before it was never a full, all out merger.
In the mid-90s as a way to compete with LH/UA, NW/KL, and too an extent, DL/OS/SR/SN (this was before DL/AF), AA and BA wanted to form an alliance that involved full codesharing between the USA and England(LGW/LHR/MAN etc.) and points beyond.

As stated above, VS heavily objected to this, as did just about every other airline that had to compete across the Atlantic with AA and BA. If I am not mistaken, parliament agreed to the alliance, but the US Government ordered a huge slot payment and more US airline access to LHR. AA and BA decided that they would have to give up too much in order to cooperate.

I believe in 1998-2000 the two airlines tried again, and the same result came about. This time AA and BA had a stronger case as by then, DL and AF had formed, or were in the process, of forming the extensive alliance they have today. Nevertheless, the same result as before happened.

Then in 2002-2003, AA and BA requested codesharing out of MAN, GLA, and non-London airports, and this time were granted permission without penalty. Also, codesharing beyond LHR/LGW and US Gateways was given approval, provided that those flights did not cross the Atlantic Ocean. MAN transatlantic codesharign is why AA has started to add 1 or 2 extra flights into MAN.

What I never fully understood, and to this day, don't understand, is why no transatlantic codesharing out of LGW is allowed. True, there would be an AA/BA dominance, but NW/KL dominate out of AMS, DL/AF dominate out of CDG, and LH/UA/US dominate out of FRA. And with NW/CO/DL tying up with KL/AF, is that not a bit of a monopoly? Don't/didn't CO and VS codeshare out of LGW on transatlantics?

LHR I'm not sure should be allowed for transatlantics, but nevertheless, LGW is roughly fair game. As it is, AA only has 3-4 dailies into LGW, which is actually DOWN from what they used to have. I doubt you can say that about UA at FRA, or most certainly, NW at AMS. Nevertheless though, BA has a sizeable US operation, and this may be why LGW is not allowed as AA would be allowed to codeshare on roughly 20 new transatlantic routes. Or, a bunch of those routes would be dropped with BA adding capacity to DFW, start LGW-ORD, LGW-MIA, restart LGW-JFK flights.

The former americanbritishairways.com (now some sight talkign about an all out merger) offered some really good(albeit biased) insight onto the issue. It was a website set up by both airlines to argue their case. Unfortuantely somebody else owns the domain now.

blink
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