Latest alliance news from British Airways

I got this to inbox from BA since i am a club member:


I am writing to you to ensure that you are one of the first to hear
about the latest news from British Airways. Today we have reached
agreement with American Airlines and Iberia to form a joint business,
which if approved, will enable us to co-operate on flights from the UK
and Continental Europe to the US, Canada and Mexico.



We plan to file for worldwide anti-trust immunity from the US
Department of Transportation. The European Commission will also review
the deal. If successful, we will be able to form a closer working
relationship providing significant benefits for customers. All three
airlines will continue to operate under our separate brands.



Closer working will create opportunities to enhance customer benefits.
It will enable us to better align schedules giving more access to
destinations and improving connections through key airports. Other
benefits for customers include greater opportunities to earn and use
frequent flyer miles on the other airlines' transatlantic network along
with enhanced frequent flyer tier features. Our Executive Club members
will continue to be able to enjoy lounge access with British Airways
and its oneworld partners as they do today.



Our overall aim is to continue to deliver an upgraded travel experience
to you. Financial efficiencies that the joint business agreement will
give British Airways will help us to continue to invest further in our
products and services, despite the demanding economic environment that
the airline industry faces.



It is both a challenging and exciting time for British Airways and I
will ensure that you are updated on developments as the proposed
venture nears completion.





Warm regards,



Sarah Keyes

Executive Club Manager

BA seals alliance with American

British Airways says it has sealed an alliance with American
Airlines that will allow the two carriers to agree fares, routes and
schedules together.

The move will also include Spain's Iberia, which is merging with BA.

With aviation fuel prices near record levels and spending on air travel slowing, airlines are looking at ways to cut costs.

But the carriers will have to persuade the US that the deal does not break US rules on foreign ownership of airlines.

Challenges

Under the business agreement, the three airlines will co-operate on
flights between the US, Mexico and Canada and the EU, Switzerland and
Norway.

"We believe our proposed co-operation is an important step towards
ensuring that we can compete effectively with rival alliances and
manage through the challenges of record fuel prices and growing
economic concerns," said Gerard Arpey, chairman and chief executive of
AMR Corp, the parent company of American Airlines.

However, BA's rival Virgin Atlantic, owned by Sir Richard
Branson, said the plan would reduce competition in the airline
industry.

"What they're proposing is to create the world's biggest airline with American Airlines," said Virgin's Paul Charles.

"But we know what dominant players do - they snuff out competition, they raise prices and they become even more dominant."

Competition

Peter Morris, an aviation analyst from Ascend, told BBC News that it was unlikely that the deal would be anti-competitive.

"I think BA would argue that it will reduce its cost structure, which it can then pass on, to a degree, to passengers.

"BA is far less dominant than any of Air France, KLM or Lufthansa are out of their hubs."

Mark Pritchard MP, a member of the House of Commons Transport Select
Committee, also saw the decision as "good news" for both UK and US
consumers.

"With tougher trading conditions for most airlines - coupled
with the need to support the spirit of the Open Skies Agreement,
Congress has no real excuse to delay the deal unnecessarily," he said.

The airlines said they planned to apply to the US Department of
Transportation for immunity from US anti-competition rules and they
would also notify European regulators.

They have previously failed to win an exemption from these laws
because of their dominance at Heathrow, where BA and AA control nearly
half of all the landing and take-off slots to the US from the airport.

'Good news'

However, BA chief executive Willie Walsh said the relationship
would strengthen competition by providing consumers with easier
journeys to more destinations.

"This may not be good news for Richard Branson but it is good news for consumers," Mr Walsh told the BBC.

Earlier this week, Sir Richard said he had written to
presidential hopefuls Barack Obama and John McCain to warn that the
proposed alliance between BA and American Airlines would severely
damage competition on transatlantic routes.

BA, American, and Iberia Announce Commercial Tie-Up

Posted by: Kerry Capell on August 14

British Airways, American Airlines and Spain’s Iberia have applied for antitrust immunity from American and European regulators. If successful, the three airlines will be able to coordinate schedules, fares and marketing as well as share revenues and profits on transatlantic flights.

Under the joint business agreement, the three airlines and fellow oneworld alliance members Finnair and Royal Jordanian Airlines will cooperate commercially on flights between the United States, Mexico and Canada, and the European Union, Switzerland and Norway while continuing to operate as separate legal entities. They will expand their codeshare arrangements on flights within and beyond the EU and U.S., significantly increasing the number of destination choices that the airlines can offer customers, BA said in a statement.

BA, which less than two weeks ago announced its intention to merge with its Spanish rival, is hoping it will be third time lucky. BA and American’s two previous applications for antitrust immunity in 1997 and 2001 failed when the airlines refused to sell off lucrative slots at London’s Heathrow Airport as regulators requested.

Now BA CEO Willie Walsh believes the advent of Open Skies in March has changed the game. The treaty, which opened up competition on transatlantic routes, enables any European or American carrier to fly from anywhere in the European Union to anywhere in the U.S.

With Heathrow now open to competition and BA’s main rivals in Europe Air France KLM and Lufthansa already granted antitrust immunity for similar cooperation arrangements, Walsh says he’s confident that this latest application will be successful.

In April, six Skyteam alliance members including Air France KLM, Delta and Northwest were granted immunity for a similar venture. Meanwhile Star Alliance members Lufthansa, United and Air Canada also have antitrust immunity.

Granting antitrust immunity, BA argues, would enable oneworld airlines, including British Airways, American Airlines and Iberia, to compete more effectively with the other major airline alliances, Star and SkyTeam. BA says that the oneworld alliance holds a smaller share of the non-stop flights between the EU and the U.S.—21% compared to 35% for Star members and 28% for SkyTeam.

BA and American say approving their application for antitrust immunity will simply level the playing field. “This will enable oneworld members to strengthen their businesses at a time when unprecedented oil prices and economic slowdown have created the most difficult trading environment aviation has ever faced,” BA said in a statement.

Not surprisingly, Virgin Atlantic’s owner Richard Branson isn’t sympathetic. He’s already lobbying to block the application. He has written to both U.S. presidential candidates asking them to intervene. Branson says allowing the three airlines to cooperate more closely will be bad for consumers as it will result in higher prices and less choice. Virgin Atlantic says the joint venture will give BA and American too much control over flights from Heathrow to New York’s JFK, the two main airports linking Europe to the U.S.

But as Peter Morris, chief economist at aviation consultancy Ascend Aviation in London points out Star and SkyTeam alliance members already control a majority of the seats between their home markets and the U.S. He says that KLM Northwest control 73% of seats between Holland and the U.S., Air France controls more than 50% of seats between France and the U.S. and Lufthansa holds more than 60% between Germany and the U.S. In contrast, he notes, BA and AA control 41% of the seats between the U.S. and Britain.

Moreover, he says, there are 21 airlines now competing out of Britain to North America since Open Skies. “If any of the airlines did start to abuse that dominant position by increasing fares or reducing frequency of service, other airlines would be quick to come in and compete.”