British Airways' CEO Warns Of Transatlantic 'Duopoly'
15 October 2009 - 5:02AM
Dow Jones News
The head of British Airways PLC (BAY.LN) warned Wednesday that
the transatlantic airline market could turn into an "untouchable
duopoly" if regulators reject the company's plan to intensify
cooperation with AMR Corp.'s (AMR) American Airlines and Spain's
Iberia.
The comments by BA Chief Executive Willie Walsh are part of a
lobbying push by members of the Oneworld Alliance ahead of a key
decision from U.S. regulators this month. The Oneworld airlines are
seeking antitrust immunity from European and U.S. regulators so
they can cooperate on scheduling and revenue-sharing on flights
across the Atlantic.
Walsh, in prepared remarks before the International Aviation
Club in Washington, said the plan would level the playing field
with members of the rival Star and SkyTeam alliances, which have
been granted antitrust immunity.
"If Star and Skyteam remain the only immunized alliances across
the Atlantic, we could end up with an untouchable duopoly," Walsh
said in his remarks. "I do not believe that customers would want
that".
Walsh said that Oneworld's plan would strengthen competition and
benefit consumers.
But the plan has split U.S. lawmakers and drawn criticism from
some competitors who argue that expanding alliances could hurt
competition.
The U.S. Department of Transportation has said it will issue a
ruling on Oneworld's application by Oct. 31.
"We continue to consider this case and expect DOT to issue a
preliminary decision soon," a DOT official said this week. "This is
an important and complicated application and we want to make sure
that we are taking the time necessary to do a thorough review."
While DOT has the final say, the Oneworld partners remain
concerned about possible intervention from the U.S. Department of
Justice, which weighs in on the process and has at times taken a
tougher stance on antitrust immunity than DOT.
BA wants to expand its existing pact with prospective merger
partners Iberia Lineas Aereas de Espana SA (IBLA.MC) and American
Airlines, coordinating fares, schedules and marketing to improve
efficiency and access to business fliers.
European competition officials - who have twice effectively
blocked a similar application - have expressed reservations about
the plan.
People familiar with the situation said that officials in
Brussels have cited potential competition issues with flights from
London and Madrid to the U.S.
Walsh sought to defuse concerns that congestion at Heathrow
limited competition, noting that rivals had secured takeoff and
landing slots at the airport when the U.S.-E.U. open skies pact
liberalized access.
"Slots at Heathrow are available - just ask the Star alliance,"
he said.
Heathrow's slot coordinators told DOT earlier this year that
slots are available, though only in the secondary market. The noted
it was "probable" that the cost of slots has fallen back from the
"exuberant market of 2008 with open skies."
-By Doug Cameron and Josh Mitchell, Dow Jones Newswires;
312-750-4135; doug.cameron@dowjones.com