BAAABI - Finally A Reality This Week?

So BA, IB and AA should find out whether or not their regulatory path has been cleared and they can proceed to create the third and presumably last Transatlantic Alliance Program. With Skyteam's program (AF/KL + DL/NW) already a reality and A Plus (CO, UA, LH and AC coming on stream - it would be logical to assume that it would be a simple approval with some minor tweaks.

The EC earlier this month filed legal papers to object. The three airlines received so-called 'statements of objections' against their planned agreement on coordinating operations and marketing on trans-Atlantic routes, the European Commission, the EU’s antitrust authority, said in an e-mail today.

The Brussels-based commission said the deal may be a “breach of European rules on restrictive business practices.”

However the EC has proved so far to be a reasonably affable player in this regard and given that the only sanction has been the surrender of slots at the hub airports of the major carriers involved. So that can be a given. However the economic value of a slot at LHR is probably worth a lot more than at Madrid or even CDG. So that the 3 players will have to surrender a few slots at LHR will make their life a little difficult and lessen the value of the alliance. The three airlines currently have about 44% of all the slots at LHR. So giving up 10% would be an expected requirement. Interestingly there could be a knock on effect. If BA tried to buy some or all of BMI it is likely that further slots would need to be relinquished. BA is steadfastly holding to the position that surrender of slots is completely unnecessary as the Transatlantic routes are effectively deregulated and therefore a surrender of its slots would be unnecessary.

The City of London - currently in a somewhat less than forgiving mood with BA has made its position clear with regard to a merger of BMI assets and BA. There is also an expectation of loss of assets at LHR by the merger carriers. But only BA has ordered a large enough aircraft to compensate for the loss of slots if they are to keep up the pax numbers.

BA's own position seems to be somewhat weak. It faces strike action at Christmas time with the Cabin Crew (represented by UNITE) calling for a strike ballot today. Needless to say BA faces a long uphill struggle at a time when it can least afford it.

Cheers