30 January 2010

Shock Horror - BAAABI Starts To Negotiate

Seeing their proposed Transatlantic Alliance going no-where fast and with the scrutiny of the European competition authorities being more and more aggressive (unlike their US DoT counterparts), it looks like the airlines are prepared to deal. Bloomberg and WSJ both reported on Friday that the three airlines (and presumably an army of lawyers) had opened up discussions on the surrender of slots at LHR. Long a bone of contention and with expressions like "Over my dead body" they are now indeed talking about that.

The 3 airlines (and occasionally joined by RJ - Royal Jordanian Airlines) have a great (sic) website with the title MORE TRAVEL CHOICES.COM to put their case against Virgin mostly but the other 2 existing Transatlantic Immunity groups - AF/KL+BL and A++ (LH, AC, UA, CO).

The Professor has opined that the ONLY way this alliance was going to get any chance of success was if the 3 players agreed to surrender slots at LHR.

At about $40 million per slot pair this represents a significant amount. Currently BA alone has 41% of the slots. LH quietly dumped a few to help pay for its take over of BD.

This battle will play for a while. And we know that BA is happy to surrender slots at LHR because it was offering several to JAL as part of the failed deal to keep them in the fold.

In my own opinion the EC and the US authorities have got themselves into a bit of a pickle. They can hardly hammer on these three having let the other 2 alliances gain immunity. So we are really condemned to LESS Travel Choices. Let's hope Sir Richard continues his battle.


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