Sky Talk

Pajamas and headphones!

American, British Airways, Iberia, Finnair and Royal Jordanian filed a response to the Department of Transportation's request for information on how anti-trust immunity would affect competition. American officials said in a news release that they still expect the deal, which would allow the airlines to cooperate on transatlantic flights, to be approved in the second half of 2009.

Most of the 57-page report is redacted for confidentiality reasons. But here's one tidbit that wasn't omitted from the public filing:

"American’s and Iberia’s business class customers currently receive electronic noise canceling audio for use during flight, which are in the process of being introduced at British Airways. British Airways’ first class customers receive pajamas on their flight, while American’s and Iberia’s do not. It is likely that all three carriers will eventually offer noise-canceling technology and pajamas to their customers."

Now if that doesn't get you excited, I don't know what will.

- Trebor Banstetter

Bill would make airline antitrust deals harder

A bill was filed late Tuesday by Rep. James Oberstar, D-Minn., that would make it more difficult for airlines to win antitrust immunity for international alliances. That could be a major setback for American Airlines in its bid to gain antitrust status with British Airways and Iberia.

Keep reading for more.

- Trebor Banstetter

Senate committee warns of anti-trust dangers

The U.S. Senate Committee on the Judiciary sent a letter to the Department of Transportation and the Department of Justice on Dec. 19, expressing concern about the possible impact of anti-trust immunity for airline alliance on competition.

In the letter, the committee said that the agencies "should exercise its statutory authority to grant antitrust immunity sparingly" and only in rare circumstances "where parties seeking immunity have sustained their heavy burden of establishing that competition must be supplanted to serve some other public interest."

That's worrisome language for American Airlines, British Airways and Iberia, which are hoping to receive approval from government regulators for an international alliance with anti-trust immunity.

The letter appears to have gotten the DOT's attention - on the same day it was received, regulators asked the airlines for more information on the proposed hookup, including the impact on competition.

Keep reading for the full text of the letter.

- Trebor Banstetter

DOT wants more info on AA-BA alliance

In an order filed Friday, the Department of Transportation requested additional information from American Airlines and British Airways regarding their application for anti-trust immunity on a transatlantic alliance.

In response to requests from several airlines, including Virgin Atlantic and Air France, DOT regulators want more detail on how the partnership would impact competition on routes between Europe and the U.S., as well as cargo operations, competition at Heathrow Airport and plans for Asian and Latin American markets.

The DOT order can be read here.

UPDATE, 11:07 A.M.

American spokesman Andy Backover provided this response to the DOT order:

"The DOT request for information was not unexpected and in fact is standard procedure during the review process. We look forward to responding to the request as quickly as possible so that DOT can deem our application complete and then make a decision within the required six months. We remain confident that the facts strongly support approval of our application and continue to believe we will receive approval well before the end of 2009, as we originally stated when we filed our application."

- Trebor Banstetter

BA, Qantas merger talks collapse

The flirtation between British Airways and Qantas has ended without a marriage proposal. The two carriers broke off merger talks, according to Bloomberg News, because neither side could agree on who would control the company.

The proposed merger could have affected American Airlines, possibly benefiting the airline by strengthening the Oneworld alliance. But some analysts had also wondered if the merger could have complicated AA's application with the Department of Justic for an anti-trust exemption to partner with British Airways on transatlantic service.

- Trebor Banstetter

NTSB probing engine power loss on Delta flight

The National Transportation Safety Board is investigating a Nov. 26 incident in which a Delta Boeing 777, flying from Shanghai to Atlanta, temporarily lost power in one of its engines.

According to the agency, the plane's right Rolls-Royce Trent 895 engine experienced an "uncommanded rollback" while at 39,000 feet. The pilots descended to 31,000 feet and the engine recovered. The plane, which had 15 crew members and 232 passengers, landed safety in Atlanta.

There was a similar - but far more serious - problem with a British Airways 777 a Jan. 17 flight to London. In that case, both engines lost power and the jet crashed short of the runway on approach to the airport. That incident is being investigated by the United Kingdom's Air Accidents Investigation Branch. (A report on that crash is available here.)

- Trebor Banstetter

Qantas: 'Significant issues' with BA merger talks

Qantas officials are saying there are "significant issues" that need to be resolved before a proposed merger with British Airways can take off, according to a Bloomberg News report out of Sydney, Australia. The merger talks are being closely watched by the folks at American Airlines, who are negotiating their own deal for an anti-trust alliance with British Airways.

Qantas wants an "appropriate merger ratio" and is also watching how pension issues and the global economy could impact a merger, Bloomberg reports.

- Trebor Banstetter

Analyst: AA 'major beneficiary' of BA, Qantas merger

 Vicki Bryan of research firm Gimme Credit writes in a report today that American stands to gain from a possible merger between British Airways and Qantas. She writes:

AMR could be a major beneficiary if new merger talks succeed between British Airways and Quantas Airways Ltd. BA also said on Wednesday it is in merger talks with Spain’s Iberia Lineas Aereas, and the company claims it could close both deals to create a megagiant that would dominate international markets. AMR and BA have been closely aligned for some time by all but the wedding ring, held apart by U.S. legal restrictions.

The alliance with a larger, more diversified BA could meaningfully extend AMR’s reach into lucrative global markets. There also could be unforeseen consequences. AMR still is awaiting permission from the U.S. Department of Transportation to join BA and Iberia in a new trans-Atlantic alliance. It’s not clear whether the DOT will approve AMR’s bid if a BA-lead mega-merger materializes.

- Trebor Banstetter

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