• Kai Murtagh

BA and AA offer valuable London slots over transatlantic competition concerns

The Competition and Market's Authority (CMA) is to consult British Airways (BA) and American Airlines (AA) on commitments concerning competition regulation as part of the Atlantic Joint Business Agreement (AJBA).

Five airlines are part of the AJBA including British Airways, Aer Lingus, Iberia, Finnair and American Airlines. Under the terms of the AJBA, these five airlines have agreed not to compete on routes between the UK and the US. With Britain leaving the EU and a set of binding commitments the European Commission had accepted in 2010 expiring later this year, the UK's CMA has been consulting BA and AA on competition concerns about the matter following an investigation into the AJBA.

British Airways Boeing 777. Photo by Ervin Eslami | AeroNewsX

5 of the 6 routes subject to commitments originate from the UK. These precautions are in place to prepare for when the European Commission will no longer have responsibility for competition in the UK.

It is understood that British Airways and American Airlines, the two major UK and US players of the AJBA, have offered a set of new commitments that the CMA will review, having first launched an investigation into the matter in October 2018. These commitments include:

  • "Releasing additional take-off and landing slots at London Heathrow or Gatwick airports to enable competitors to begin or increase non-stop flights between London and Boston, Dallas and Miami."

  • "Measures to support competing services on these routes as well as on the London to Chicago and London to Philadelphia routes, including access to connecting passengers on preferential terms."

The CMA have examined the impact of the AJBA on customers due to loss of competition and have also assessed the benefits including connections, new routes and improved schedules. It has identified concerns on routes between London and 5 US cities including Boston, Chicago, Dallas, Miami and Philadelphia.

Ann Pope, Senior Director of Antitrust at the CMA, said:

"The CMA launched this investigation because we were concerned that, with the expiry of the current commitments, consumers might lose out since – without some kind of mitigation - the Atlantic Joint Business Agreement reduces competition on key routes between the UK and the US. On some of these routes there are either few or no other airlines offering direct flights to passengers."
"We therefore welcome the offer from BA and American Airlines to find a way of addressing the CMA’s concerns. Their suggested resolution has the potential to increase competition and deliver lower fares for customers, while also preserving the benefits that joint airline agreements offer passengers. We are acting now as the current commitments expire this year, but can review the agreement in the future if the market does not return to its pre-COVID state."

This is great news for JetBlue which has previously expressed strong interest in services from the US to London. The airline confirmed on Thursday that it still expects to take delivery of 5 Airbus A321LR aircraft due, in time for its inaugural services to London in 2021. On Thursday's earning call, JetBlue's CEO confirmed that the launch might be slightly delayed due to the market conditions. With the latest announcement, the carrier is in a good position to do so - if it can get its hands on those slots.

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