American and British Airways Apply for Antitrust Immunity

Last Updated Aug 15, 2008 11:17 AM EDT

Welcome to the 21st century, oneworld. In an age where alliances continue to grow tighter and tighter, BA and American are now trying to play catch up by applying for antitrust immunity. They've tried this before and failed miserably, but will things be different this time? I'd bet so.

Look at the landscape when it comes to airline alliances. KLM and Northwest have had a joint operation for years and they split revenue on both carriers' transatlantic flights. Delta and Air France are now joining the party and there will be a solid SkyTeam joint operation across the Atlantic. United and Lufthansa have also had several years of working together and sharing revenue. Now Air Canada and Continental are applying to join as well. These guys have all had very close cooperation for a long time . . . and then there's oneworld.

The big players in oneworld are American and British Airways, and the two of them haven't been able to get close because the regulators won't let them. Why not? Heathrow. The argument was that combined, American and BA would control too many of the flights between the US and the UK and too many of the slots overall. It's a point that has frustrated American and BA loyalists for years. There is no codesharing on transatlantic flights nor can you accrue frequent flier miles on each other. Frankly, it's been a pretty poor experience for the customer.

So now, things have changed, and BA and American are hoping it can get pushed through. What changed? Open skies. Now any European or American carrier can fly between Heathrow and the US, and there is a lot more competition from the airport. There's a good chance that this will enable them to get the deal approved. If there is a sticking point, it could very well still be the Heathrow slots in general. Even though more carriers are legally allowed to fly between the two countries, they still control a fair number of slots. But as we've seen since the beginning of the year, airlines who want to get slots aren't having trouble finding them. And the percentage of slots that AA/BA control at Heathrow is far less than the number we see at other congested European airports where other airlines were allowed to couple years ago. (I'm looking at you, Frankfurt.)

This means approval is of a much higher likelihood now than at any point in the past. And that should be good news for just about everyone involved.