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Hopes for a three-way British Airways, American Airlines, Iberia joint venture were up in the air today after European Commission officials said they believe the deal could be anti-competitive.
In a detailed statement of objections to the planned venture, the commission said: "Their proposed co-operation on passenger air transport services on transatlantic routes may be in breach of European rules on restrictive business practices."
The news sent BA shares down 4½p to 213½p.
BA's plans include an outright merger with Iberia and subsequently a close operating alliance with American Airlines as the UK flag carrier's way out of its current crisis where it is experiencing its worst-ever trading, putting it on course to report its deepest dive into annual loss.
Rivals, however, are telling the commission that such an alliance would be a calamity for competitors at Heathrow and that at 44% of all take-off and landing slots and 62% of the key route to New York's JFK, such dominance at the world's busiest international airport would not be good for consumers.
Virgin Atlantic said it believes a fundamental objection which commission officials have is what it called "the negative impacts on time-sensitive passengers on a number of transatlantic routes".
Virgin's chief executive Steve Ridgway said: "The European Commission's concerns are absolutely justified.
"This alliance between BA and AA is a monster monopoly which, if given the go-ahead, will allow these dominant carriers to increase their stranglehold at Heathrow by setting prices and agreeing schedules.
Virgin is continuing to lobby against the venture with the US Department of Transportation which has yet to rule on the proposals.
Despite the commission's objections, BA remains confident Brussels will wave through the plans because the DoT has already allowed similar transatlantic alliances led by its great European rivals - the Lufthansa-led Star Alliance and the Air France-led Skyteam.
In a statement BA said: "We have received the EU's statement of objections and look forward to the opportunity to address and overcome the EU's concerns, especially given the substantial benefits for consumers that would result from our transatlantic joint business.
"We believe the quickest way to robust competition and more travel choices for consumers is to ensure that all three global airline alliances can compete on an equal footing."
BA and American Airlines have twice attempted to formalise a close working alliance over the past decade and twice regulators have blocked the plans.
Reader views (2)
Go ahead BA, we don't give a damm what the EU has to say on the subject. The EU should remember that it will fall apart when we stop giving it our money,It can only ever work if England is in charge - without Gormless Brown.
- Vince, London, West London, 06/10/2009 21:49
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Yet it is okay for Air France, Lufthansa etc to do as they wish ? Also for Air France to be bailed out by public money ???
- David, London, 02/10/2009 12:31
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