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Posts Tagged ‘British Airways’

Allied Pilots Association (American Airlines’ Pilots Association) has been vocal about their opposition to the proposed American Airlines and British Airways alliance. Recently, they have put on billboards around the Dallas Fort Worth (DFW) Airport to display their opposition.

The application is – “BA and AA have applied to regulators in the United States and Europe for
antitrust immunity that would permit them to combine their route networks,
pricing, sales, marketing and purchasing power
. Iberia, the Spanish airline;
Finnair and Royal Jordanian are included in the submission but are secondary
players.”

From “Aviation Blog at Dallas News” –

One says:
AA’s Joint Venture? Higher Fares, Lost Jobs.

Good for Executives, Bad for America.

The other says:
AA’s multinational joint venture:

Is it good for America?

The billboards also include a web address to get more information, www.AmericanJobsAtRisk.com.

I do understand the big concern for other airlines at London’s Heathrow Airport like Richard Branson’s Virgin Atlantic. Richard Branson believes that the alliance will make a monopoly at London’s Heathrow airport and will drive smaller airlines out of the market. The biggest concern for Branson is that together the airlines can get even more market share.

But I don’t understand the American Airlines’ pilots, unless –

  • They beleive that some of flights to London will be removed, but then I don’t think there is enough overlap between BA and AA in those markets.
  • AA might not fly some of the potential future markets like middle east, asia, etc. This might be a legitimate concern.

Since this will be an alliance, none of the pilots can fly other airlines’ planes.

There is a big issue with old companies in US with unionized labor. It seems like the Unions and managment seem to have new philosophy  – “a company within a company safeguarding their own interests” rather than the original concept of “disallowing any labor exploitation”.

Maybe I am missing something?

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Qantas Airways and British Airways have agreed to pay a combined fine of $15.5 million (equivalent Australian $25 million) to “charges price-fixing charges brought
by Australia’s Competition and Consumer Commission
“. The price fixing charges were related to fuel surcharges applied to International Cargo shipments from 2002 to early 2006.

Qantas will pay around $12.2 million (Australian $20 million) while British Airways will have to pay the rest of A $5 million.

From Bloomberg

“Qantas apologizes unreservedly for the conduct of the
employees involved,” the airline said in a statement. Once the
agreement is accepted by the court, the liability for Qantas and
its current employees will be settled, the airline said.
BA has paid a total of $677 million in fines and class-
action settlements related to price-fixing investigations by
U.K. and U.S. regulators into fuel surcharges on cargo and
passenger flights. The European Union also is investigating
cargo-related antitrust violations.

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American Airlines, British Airways and Iberia announced today that they have signed “a commercial agreement to cooperate over flights between North America and Europe to help overcome soaring fuel costs”. The tie is also supposed to benefit for the open skies agreement between Europe and US.

Also, as a part of the new agreement all the three airlines have filed for worldwide anti-trust immunity from US DOT (Department of Transportation) over the tie up. This would be American Airlines’ and British Airways’ third attempt at immunity request.

Virgin Atlantic’s Richard Branson is very annoyed. He has termed the possible approval as a “monster monopoly” and “third time unlucky for customers”.

Meanwhile British Airways and Iberia are also discussing (separately) their own merger plans.

I personally think that air passengers will benefit from the deal by being able to fly seamlessly on the Oneworld network while gaining/using/benefiting points/miles on all loyalty programs.

From AFP

Oneworld said that it “warmly welcomed and strongly supports the application for anti-trust immunity.”

It
added in a statement: “Anti-trust immunity between oneworld’s
transatlantic partners would enable them to unlock even more of
oneworld’s potential, enabling us to operate under the same rules as
our alliance competitors” SkyTeam and Star.

merican Airlines, BA and Iberia said in a joint statement that their
new alliance would allow them to “expand customer choice by supporting
routes that would not be economically viable for the individual
airlines.”

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+
Higher oil prices have driven airlines to different solutions like capacity reduction, merger related synergies, airfare increase, charging for the usual freebies, etc.

British Airways and Spain’s flag carrier Iberia (or Iberia, Líneas Aéreas de España, S.A. ) are deep in merger talks with Iberia “have taken direct/indirect 10% stake in British rival”. The merger is backed by boards on both airlines and will create the third largest airline in Europe (after KLM-Air France and Lufthansa).

So, as usual, I set out to find how the combined entity would look. Please be aware that I do not account for possible merger related capacity reduction (or airplane retirement) and unforeseeable changes.

British Airways in BLUE and Iberia in RED –

  • HeadquarteredWaterside, Harmondsworth, UK and Madrid, Spain
  • Destinations147 + 115 (+19 future) =252 (+19 future) – OVERLAP
  • Frequent Flier ProgramExecutive Club, Premier + Iberia Plus = ?
  • AllianceOneworld
  • HubsLondon Heathrow Airport, London Gatwick Airport, Barajas Int’l Airport
  • FleetAirbus A318, A319, A320, A321, A380-800*; Boeing 737, 757, 767, 747, 777, 787* + Airbus A319, A320, A321, A340; McDonnell Douglas MD-88
  • Fleet Size235 (+62 orders) + 152 (+19 orders) =387 (+81 orders)
  • Company SloganUpgrade to British Airways + With Iberia , you’re more = Upgrade with more???

Since, British Airways is a bigger airline, there might be a possible BA head over the combined airline. Willie Walsh as CEO???

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British Airways seem to be heading the all-business US – EU(or Europe) route. As a strategic deal that will bolster their OpenSkies subsidiary, it bought the two plane French Airline L’Avion that flies between Pairs (Orly) and New York (Newark) for £54m (or $107.6 million).

Facts about L’Avion

  • Founded by – 31 year old French entrepreneur Frantz Yvelin
  • First flight – January 3rd 2007 (Orly Airport, Paris to New York’s Newark Airport)
  • Fleet – Two Boeing 757-200 with 90 business class seats in 2×2 configuration
  • Interesting Fact – Fares are generally much lower than other major airlines flying the route
  • Fun Fact – Initially named Elysair but changed after a market research
  • For virtual tour – CLICK HERE

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British Airways (CEO Willie Wash) and BAA (CEO Colin Matthews) have called for the construction of a third runway at London’s Heathrow Airport. This statement came after a business group, London’s First, has called for “drastic action to end the problems of “Heathrow hassle“”. The group has called for scrapping of some flights at peak time (read here).

From Forbes

BA chief executive Willie
Walsh told a transport conference in London that the London hub needed
a short extra runway and mixed-mode operation on its existing two
runways, which would create more take-off and landing space.”

Walsh said the absence of
spare runway capacity had caused Heathrow’s global network to shrink
from 227 destinations in 1990 to 180 today. ‘This is a cycle of decline
that must be reversed,’ he said.”


I am little worried about more construction at the airport for the following possible reasons (you might agree with one or two of them) –

  • A patch to a bigger problem – The problem at Heathrow is capacity constraints, not just at the runway level but at Gates, etc. I think the best alternative would be to make another airport?
  • Bad Record – Terminal 4 has caused us all to believe that expansions can result in chaos!!!
  • Environmental Impact – Though I do not consider myself an environmentalist, but still I feel this should be studied, esp. with all the wide body planes at Heathrow.


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Continental Airlines has been in talks with American Airlines and British Airways to join their Oneworld alliance, but instead announced that it will join the Star Alliance (with United Airlines and US Airways).

Continental had to change its alliance from SkyTeam due to Delta and Northwest Merger Announcement.

From Dallas News

Continental’s
plan to partner with United and join the Star Alliance will provide
substantial new opportunities for all of our customers,” Continental
chairman and chief executive officer Larry Kellner said in the joint
announcement Thursday.

“In a network business, there is
significant value gained from linking with larger networks to provide
truly national coverage and expanded global reach, and exploring new
ways to reduce costs and improve efficiencies,” he said.

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