American and British Airways Joint Venture Reexamined by UK Regulators

Oct 12, 2018

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The United Kingdom’s government is reexamining American Airlines and British Airways’ joint venture partnership, it said Thursday.

The biggest carrier in the world teamed up with IAG carriers British Airways, Iberia, Finnair and Iberia nearly a decade ago to align schedules, pricing and capacity on six transatlantic routes. This close partnership allows the carriers to share revenue on routes that are vital to each airline’s profits.

“As five of the six routes subject to commitments are from the UK, and to prepare for the time when the European Commission may no longer have responsibility for competition in the UK, the Competition and Markets Authority (CMA) has decided to review afresh the competitive impact of the agreement in anticipation of the expiry of the commitments,” the UK regulator said.

The Wall Street Journal reports that the UK’s Competition and Markets Authority hopes to finish the initial investigation by March.

The probe was launched because when the airlines joined together in 2010 they made compromises to ensure they wouldn’t monopolize routes like New York-London, Chicago- London and Miami-Madrid — saving airport time slots for other airlines. Those agreements made in 2010 with the EU will come to an end in 2020.

The UK’s looming Brexit also played a part in the UK regulators decision since the European Commission may no longer manage competition in the UK.

American Airlines says it’s confident that the regulators will find that the JV has benefitted consumers enough to continue to operate. IAG concurs, stating that its flyers experience “significant benefits” because of the partnership.

According RTE, analysts say the investigation may affect IAG’s potential buyout of budget carrier Norwegian, which just announced it carries more passengers between New York and Europe than British Airways.

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