[Anonymous]

[VintageKrug]

British Airways has signed an agreement to start a transatlantic joint business with American Airlines and Iberia which is worth a combined US$7 billion in annual revenues.

The revenue share agreement allows the three airlines to cooperate commercially on flights between the European Union, Switzerland and Norway and the United States, Mexico and Canada. The benefits from the joint business will be shared between the airlines irrespective of which carrier takes the booking. It has been approved by the regulatory authorities of the European Union and United States.

The joint business will launch this October and provide customers with greater access to discounted fares, more convenient connections and better access to the airlines’ global network.

It will also enable the airlines’ alliance oneworld to compete on an equal footing with the other main global alliances that have had regulatory approval to operate transatlantic joint businesses for several years.

http://www.bashareholders.com/phoenix.zhtml?c=69499&p=irol-newsArticle_Print&ID=1475764&highlight=

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You can already see many codeshares listed on ba.com and it is highly possible that limited Frequent Flyer Plan reciprocity could commence before the end of the year.

[Binman62]

This will be great for shareholders but not for customers (IMHO) Fares will increase and slots protected and the only loser will UK originating passengers, especially premium passengers.

The precedent for this is the JSA on the kangaroo route where BA and Qantas have colluded in last year to reduce their operations significantly whilst not losing the slots at LHR. The impact on customers was to limit capacity and keep fares artificially high whilst at the same time restricting new entrants at LHR through slot protection.

[VintageKrug]

I don’t think it’s the best news for ticket prices, but as many already point out the UK market also has significant direct competition from Heathrow to the US from Star Carriers operating both direct and viaEurope.

Star has has ATI since 2001, so this really only creates a level playing field for oneworld.

BA holds 41% of LHR slots, but compare this to Lufthansa’s 61% stranglehold at Frankfurt, and Air France’s 58% at Paris CDG.

The real advantage will come from reciprocity of the FFP’s, the ability to mix and match carriers on shared routings, especially for “turn up and fly” flexible tickets, and a broader range of codeshare desitinations.

[continentalclub]

I’m not sure that I completely agree, Binman62. The trouble, I suppose, is where you perceive the balance to be between profitable, sustainable businesses providing a reliable service, and consumers being able to avail themselves of ‘bargain’ prices.

What we’ve undoubtedly seen in recent years is rampant over-capacity, incredible fare-deflation and unsustainable industry losses.

More recently, we’ve seen capacity managed and those fire-sale fares drying up. Had we not, we probably wouldn’t have been able to fly at all to many destinations, at any price, within a very short space of time – that’s the price to pay for free markets and open skies.

So, American, Iberia and British Airways have convinced the authorities of the same arguments that went before from SkyTeam and Star Alliance, and as a result they should be able to run their businesses more efficiently – and sustainably. They will, however, have no excuses in the fight with Star and SkyTeam for TATL business; the playing field is now level (apart, apparently, from that bit of the wing on which Virgin Atlantic plays) with Star’s dominance at Frankfurt and SkyTeam at Paris being even more significant than oneworld’s at Heathrow.

And, away from London, those of us who live and work in the regions of the UK who’ve seen longhaul British Airways service removed from Birmingham, Manchester and Glasgow could see the return of oneworld operations as American and BA share the revenues on routes which neither might feel confident in being able to market alone. It’s not that long ago that American were on the brink of a Newcastle service, and Air Berlin joining OW might remake the case for Stansted.

There is also the opportunity for the new entity to link Madrid with UK regional airports providing new and increased connectivity to the Iberian Peninsular, Africa and Central and Southern America, without the need to transit Heathrow. Marketing considerations might define whether the UK-Madrid connections flew in BA or Iberia colours, but the ability to fly those routes, earn mileage and book them on ba.com would definitely be an additional choice for the consumer and would introduce new competition into UK regional markets in which KLM and Air France are particularly strong at present.

Overall then, I’m hoping for more choice, more competition and more rewards, with an understanding that airfares are only going to go one way from the unsustainable levels that we enjoyed a couple of years ago.

[VintageKrug]

Quite right. There is plenty of competition at LHR, when you add in regional competition (whcih used not to factor) and other European hubs often cited here as serious alternatives for the business traveller, I don’t see any significant competition/price gauging issues.

[jasonr01]

what I would like to know ( i’m being selfish here) but once everthing takes effect for the people who collect the air miles will we get full earning tier miles and all within BA, AA and iberia.
As currently I use BA where possible and fly WTP but when i am flying domestic through USA with AA i get very few tier point and i think its about 1/3 of the miles flown.
Will this now change?

[Cwyfan]

What would really make a link through Madrid more attractive is if a meal was served in the transit lounge, otherwise it just adds dead time to the journey

I too would like to see fluidity in the airmiles, as flights to the US on BA can not be booked using AA miles, and vice versa

Perhaps oneworld tier status should be earned by the combined usage of the partners, rather than the individual airlines, if they really want to attract us

[jasonr01]

I totally agree KMcottrell. This would be more of an incentive to stick within the alliance. As the company I work for pays for my trips I have to justify what I spend and why. Believe it or not I could use this as reason to stay within the alliance as they will not pay for business class. I can claim that the additional tier points and miles will allow me to get the upgrades using the miles which they would not have a problem with

[openfly]

kmcottrell

Hi, If you are transitting from short-haul to long haul with IB and their partners, at MAD, the business lounge has a full service restaurant available AND also an excellent hot buffet with a large selection of main dishes, salads, desserts and snacks. There is also a large quiet low-light room for relaxing/sleeping.

If you are using IB you get the same tier points as travelling on BA. The only thing that is not awarded are the Tier bonus miles, which I find strange. But I sure it will happen once the deal is completed.

regards.

[VintageKrug]

This is a useful calculator for assessing Tier Points and mileage earned on BA and oneworld partners, which can be adjusted to take account of your BAEC status:

http://www.britishairways.com/travel/calculatemilesandpoints/public/en_gb

[Binman62]

I must beg to differ on there being no competition issues at LHR as well as the price gauging. One just needs to look at BA fares ex Europe to see that fares ex LHR are hiked to take account of the demographics. We are constantly told that alliances such as this will reduce fares but it simply is not true. Just look at BA sale fares in the last 12 months many of which have seen hikes of 50% plus. This may be a free market but it makes it tough for those who pay their own way and ultimately cannot be good for the UK economy overall. And this alliance will simply make things worse.

As for competition, even the chairman of the BAA recognises that LHR is full and is now a second tier hub (Sunday telegraph Sep26) the lack of a 3rd runway will simply entrench the position of the dominant players and keep out new entrants. If BA and QF can manipulate capacity and slots in the way they have done this year then I have no doubt that a BA/AA/IB tie up will simply exacerbate this situation to the detriment of all. Just watch, I guarantee that BA will drop services and or capacity to JFK within the year to allocate the aircraft elsewhere and allow AA to take up the slack. Thus protecting slots and revenue whilst keeping out the competition. Great for shareholders not so great for the hard pressed UK based travellers who will almost certainly pay more and have fewer choices and who are already burdened by excessive taxation and a rip off mentality that has been prevalent in this country for too long.
There may be short term gain for those with lots of miles and the seats are opened up but again in time as capacity is controlled the hard won miles will become harder and harder to spend.
True competition would not allow this.

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