The 2018 survey is not unexpected. The initial 2010 joint venture agreement is expected to be renewed. What is unexpected is that it has not been resolved. Observers believe there is something “at stake.” Against the parties under investigation: American Airlines Group Inc; International Consolidated Airlines Group SA (including Aer Lingus Limited, British Airways plc and Iberia Léneas Aéreas de Espaa SA); And Finnair OYJ. Aer Lingus is a signatory to the agreement, but does not yet operate services under the Atlantic Joint Business Agreement, as it is subject to the United Stated Department of Transportation, which renews antitrust immunity (under review). Are we about to actively encourage British Airways to encourage the UK government to SAVE Virgin Atlantic? Faced with the decision to lose competition from Virgin Atlantic or lose the money from the transatlantic joint venture, I think British Airways is more afraid of it. A quick search shows that there are currently 6 airlines flying directly from London to New York. There are 32 daily direct flights between New York and London; 3 flights with Norwegian, 5 on Virgin, 3 on Delta, 6 on United, 11 on BA and 4 on AA. It is between Newark and JFK in the United States and Gatwick, Heathrow in the United Kingdom (BA001 Flight London City is no longer displayed in flight plans. I searched ITA Matrix for non-stop flights on November 2, 2020).
This means that 17 flights will be operated by other competing airlines compared to 15 on BA/AA. While the BA is dominant, it is not as dominant as I thought. Assuming Virgin and Norwegian disappear, two other airlines remain in direct competition with AA and BA. I also think that Jet Blue was taking over the slots abandoned by Norwegian and that Delta was taking over all the slots lost by Virgin. Gerard Arpey, President and Chief Executive Officer of AMR Corp., the parent company of American Airlines, said: “We believe our proposed cooperation is an important step in ensuring that we can truly compete with rival alliances and face the challenges of record fuel prices and growing economic concerns. In addition, we believe we will be more effective competitors with greater ability to invest in our products and services. As a result, this business agreement will produce positive results for our customers, shareholders, employees and the communities we serve. When the commitments made by the parties expire in 2020, the European Commission will be able to re-elect the agreement, but this is not necessary. Given that 5 of the six lines of engagement are from the United Kingdom and are preparing at a time when the European Commission may no longer be competent for competition in the United Kingdom, the CMA has decided to re-examine the impact of the agreement on competition in anticipation of the expiry of the commitments.
Common trade agreements are a way for airlines to come together to help them expand the reach of their networks in an industry where foreign ownership rules often prevent mergers in good standing. The airlines intend to apply today for a global exemption from the agreements from the U.S. Department of Transportation and will inform the relevant regulatory authorities of the European Union. This eliminates most incentives for competition between airlines. I guess the only real contest is figuring out how to juggle the formula to take more than your fair share of the total pot…. Finally, if you agreed to group your salary with everyone else on your street and divide it later, you wouldn`t be queuing up to work overtime.