Sky Talk

Branson responds to BA questions on alliance

Richard Branson of Virgin Atlantic has responded to six questions posed by British Airways regarding Virgin's opposition to the proposed anti-trust alliance between BA and American Airlines. Apparently Virgin has asked that the response be printed in British Airways' in-house newsletter, where the six questions were originally published.

According to a Dow Jones story:

In response to one of the six questions - "If BA and American Airlines used their alliance to put up fares and reduce service levels, as Virgin alleges, surely this would give Virgin a huge competitive opportunity?" - Branson said in the letter to British Airways:

"The stranglehold that BA/AA would have over travel agents and corporate customers, let alone over nearly half of all slots at Heathrow, would be used in an attempt to destroy its competitors. Any ability to respond would also be restricted due to the power of BA/AA's dominant shorthaul network, which can channel passengers onto its own transatlantic flights, therefore diverting feed passengers away from other carriers."

The company said it was answering the six questions in full, "so that BA staff and the public can see the true facts and the damage that such a monster monopoly between BA and AA would do."

- Trebor Banstetter

AA 'baffled' by pilots on anti-trust deal

In an unusually strong statement, American Airlines spokeswoman Tami McLallen took umbrage with the grievance filed by the Allied Pilots Association over the proposed anti-trust alliance with British Airways:

"It's baffling that the current APA leadership would attempt to block an agreement that fully complies with all our labor contracts and offers nothing but upside for everyone involved. Expanding this long-standing alliance relationship would generate more revenue and make our airline more efficient; it would create opportunities for employee growth and advancement and offer our customers the options they want. It would also make us more competitive with the other alliances that have become much stronger in recent months.

"It’s unfortunate the union has made such a calculated effort to undermine something that aligns with the APA's goal of protecting jobs and offering pilots more flying opportunities. Though we are disappointed in the union's political maneuver, it does not alter our plan to proceed."

UPDATE, 2 P.M.

We heard from a source in AA management that "a few heads are exploding" over the APA's statement, but they say they are very confident that an anti-trust deal wouldn't violate pilot scope. Stay tuned.

- Trebor Banstetter

More D/FW-Heathrow service if AA/BA deal approved?

We mentioned yesterday that American and British Airways dominate the D/FW-to-Heathrow route, a fact that the airlines noted in their latest filing with the Department of Transportation.

Don Casey, who heads international planning at American had this to add about the route from North Texas to London:

"This is a relatively small market with only 2000 passengers per week but over 5000 seats per week. That is, the market is well served because it is a hub to hub market for AA/BA. This is the kind of market that should end up with more service if this agreement is approved. The DFW airport recognizes the consumer benefits from the AA/BA proposal and have issued a press release supporting the deal."

More service to London would certainly be a good thing for D/FW and local business travelers who regularly fly between the two cities.

- Trebor Banstetter

AA blasts Virgin on anti-trust plan

American Airlines responded today to Virgin Atlantic's criticism of its proposed anti-trust alliance with British Airways and Iberia in a filing with the Department of Transportation. Virgin has charged that the hookup will create a monopoly on flights to Heathrow Airport in London.

American officials said they "strongly object to Virgin Atlantic's erroneous and unsupported allegations about the lack of competitiveness" on overlapping routes. The airline points out that, combined with British Airways, it has less than 50 percent of the market on routes between the United States and Heathrow.

The filing does note one route where American and British Airways dominate - D/FW Airport to London, where four out of five passenger fly either carrier.

- Trebor Banstetter

Pilots to AA: You need our approval for hookup

The Allied Pilots Union put out a statement this afternoon expressing concerns about the proposed hookup among American, British Airways and Iberia, and alleged that the deal would violate scope restrictions in their contract.

Scope, which is a very important issue for pilots, basically mandates that flights sold under the American name be operated by American pilots. The clause in the contract has certain exemptions, such as regional carrier American Eagle, or codesharing partners. The pilots are arguing that the proposal announced today goes beyond anything allowed in the contract.

"The scope clause in our current collective bargaining agreement does not include an exception for a joint business agreement between American Airlines and another airline," Lloyd Hill, the union's president, said. "Management therefore needs APA's consent before this joint business agreement can go forward."

American disagrees pretty strongly with that claim.

"This agreement complies with all aspects of our labor contracts," spokesman Sue Gordon told me.

It should be interesting to see how this plays out. The last time American needed pilots' approval for a big international project was when it wanted to fly from D/FW to Beijing. Most of you probably remember how that one turned out.

- Trebor Banstetter

Alliance website launched

In conjunction with their anti-trust application, American & Friends have launched a new site, MoreTravelChoices.com, which lays out their argument that the deal is a good one for consumers and employees and should be approved by the DOT. Not too surprisingly, it has letters people can download and send to the DOT urging the deal's approval.

It's pretty clear this is going to be a full court press from the airlines, probably reminiscent of American's push for new China routes.

- Trebor Banstetter

AA, BA, Iberia finally pull the trigger on alliance

In a move that surprised absolutely no one who follows the airline industry, American, British Airways and Iberia announced a new partnership deal that they hope will include anti-trust immunity on flights between the U.S. and Europe. This is a big deal for American, which has been dreaming of anti-trust for decades now but has never been able to convince regulators to grant immunity.

We have full coverage here, and will be updating the story as it develops throughout the day.

- Trebor Banstetter

Still waiting on AA-BA hookup

We're hearing that the anti-trust alliance between American and British Airways is unlikely to be announced today, but we may hear something official by mid-week. Meanwhile, Richard Branson is already complaining about it.

- Trebor Banstetter

News from Captain Obvious

For months now, various industry watchers and insiders have been predicting that an anti-trust/alliance agreement between American Airlines and British Airways (likely involving Iberia as well) is imminent. So it's not exactly going out on a limb to once again suggest a deal is close to being announced.

Still, we thought we'd throw this out there: We've heard from several sources, both inside and outside of American, that a BA/AA deal could finally be rolled out next week, perhaps as early as Monday.

We'll update Sky Talk and Star-Telegram.com as things develop.

- Trebor Banstetter

American, BA may be close to deal, finally

American Airlines and British Airways may finally be ready to unveil a deal for an expanded partnership that would include an application for anti-trust immunity. A British Airways spokesman in London told the Associated Press that the deal could be in place for two weeks.

These two airlines have wanted to hook up for years, but various obstacles have prevented it, including regulatory chafing at their dominance at Heathrow Airport in London. Today, however, with the new Open Skies pact making Heathrow more accessible, they may have a better shot at winning the valuable anti-trust exemption. That would allow them to coordinate planning, operations and marketing on overseas flights.

American hasn't yet commented on the statement from British Airways. I'll update the blog as soon as we get a response.

I'll also add my usual disclaimer: This would not mean an outright merger between the two airlines. (That's currently prohibited by U.S. law, in fact.) They would still be independent companies.

UPDATE, 10:43 A.M.

American spokesman Tim Smith wouldn't say much about the report. Here's what he told me a few minutes ago:

"We continue to have discussions with British Airways, and we're hopeful that the discussions will bear fruit soon. But we're not ready to put a time frame on this yet."

- Trebor Banstetter