Airlines’ transatlantic deal to be reviewed by UK competition watchdog

Airlines’ transatlantic deal to be reviewed by UK competition watchdog

The Competition and Markets Authority (CMA) has launched a competition investigation into a transatlantic agreement between American Airlines, BA, Iberia, and Finnair.

The Atlantic Joint Business Agreement was first agreed in 2008 and subsequently amended when other airlines have become parties.

It established a revenue sharing joint venture covering all passenger routes between Europe and North America.

The CMA said the agreement provides for “extensive cooperation between the airlines on the transatlantic routes including pricing, capacity and scheduling coordination as well as sharing of revenues”.

Following a 2010 investigation under EU competition law, the European Commission accepted commitments from the parties in relation to six routes to address potential competition concerns.

The routes were: London-Dallas, London-Boston, London-Miami, London-Chicago, London-New York and Madrid-Miami.

These agreements included a commitment to make landing and take-off slots available to competitors at either London Heathrow airport or London Gatwick airport and were binding for 10 years.

On expiry of the parties’ commitments in 2020 the European Commission is able to re-assess the agreement, but there is no requirement for it to do so.

A statement from the CMA said: “As five of the six routes subject to commitments are from the UK, and to prepare for the time when the European Commission may no longer have responsibility for competition in the UK, the CMA has decided to review afresh the competitive impact of the agreement in anticipation of the expiry of the commitments.

“This case is at an early stage and no assumption should be made that the Atlantic Joint Business Agreement infringes competition law.

“In line with the approach of the European Commission when it first investigated the agreement during 2009 to 2010, the investigation is being conducted under the rules on agreements restrictive of competition.”

In a statement BA parent International Airlines Group said it will respond to the CMA’s review.

It added: “Since 2010, British Airways and Iberia’s transatlantic joint business with American Airlines and Finnair has been bringing significant benefits to millions of travellers.

“It provides them with improved access to cheaper fares and easier journeys to more destinations.

“During this period the joint business has launched 45 new routes including 14 between the UK and US.

“Also, the airlines are able to align their flight schedules and frequencies to enhance customers’ travel choices.”

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