BA and American Airlines to Land in Washington

07 July 2008

WASHINGTON, DC: Willie Walsh, ceo of British Airways, and Gerard Arpey, his American Airlines' counterpart, are set to meet US Transportation Secretary Mary E Peters later this month in a bid to help a closer alliance take flight.

Their coalition would involve AA joining BA's Oneworld alliance with Iberia airlines, but would also require the granting of antitrust immunity by the US government.

If successful, the carriers could then establish joint ventures to combine in arranging capacity and fares, make joint sales and share any resultant profits and revenues.

The 'open skies' agreement between the EU and US last year has allowed airlines to forge stronger links, a trend further encouraged by current high fuel prices and the slowing global economy.

UK airline Virgin Atlantic, and BA arch-rival, said it "would oppose this attempt to create an anti-competitive alliance".

Any agreement, it claimed, would "form a dominant mega-power on transatlantic air routes from two of the largest EU members, forcing up ticket prices for passengers and restricting choice."

Previous similar applications for antitrust immunity have been turned down, but AA and BA argue the aviation market is now more competitive, and access to major airports such as London's Heathrow more evenly distributed.

BA also announced that its traffic volumes fell in June by 3.4% year-on-year, meaning it filled 77% of all available seats. Premium traffic, which is seen as one of the key drivers of the company's profits, dropped by 3.1%.

Data sourced from Financial Times; additional content by WARC staff