open skies and LHR what does it mean for AA

FA Mikey

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goldwatermiller08.com
story here

The agreement, announced by the Transportation Department, would allow European airlines to fly from anywhere in the EU to any point in the U.S., and vice versa. For example, it would end restrictions on the number of airlines allowed to fly between the U.S. and London's Heathrow Airport, one of the world's busiest. Only four carriers -- United Airlines, American Airlines, British Airways and Virgin Atlantic -- now serve that market.
 
Removing the LHR restictions is only the first step for carriers looking to serve LHR. They must then purchase slots, which can get quite pricey during popular transatlantic hours. The most likely airlines to spend the money on slots would be CO for EWR and DL for JFK. If that is what happens, then AA and BA would probably suffer the most. But overall, I suspect that things will not change a whole lot after the restriction is lifted.
 
Removing the LHR restictions is only the first step for carriers looking to serve LHR. They must then purchase slots, which can get quite pricey during popular transatlantic hours. The most likely airlines to spend the money on slots would be CO for EWR and DL for JFK. If that is what happens, then AA and BA would probably suffer the most. But overall, I suspect that things will not change a whole lot after the restriction is lifted.


So if LHR is opened up to other USA airlines, and they manage to get/buy slots, would AA-BA be allowed to code-share between USA-LHR?
 
So if LHR is opened up to other USA airlines, and they manage to get/buy slots, would AA-BA be allowed to code-share between USA-LHR?
With this part of the agreement below and the previous rumor of BA buying AA, might not need the codeshare as they'll be one airline.

Another key aspect of the deal, described to The Associated Press by a U.S. government official who spoke on condition of anonymity, enables European companies to own up to 49.9 percent -- and in some circumstances, more than 50 percent -- of U.S. airlines, up from the current 25 percent limit. Yet another provision could help Richard Branson's Virgin Group Ltd. gain regulatory approval needed to launch a U.S. subsidiary, Virgin America Inc.
 
There's a couple things about this story that seem a little fishy. First, the ownership clause is a law. As such I would think that something more than a simple treaty would be required to change that. Something like Congress passing an amendment that changes this previous law. If that happens, why would they limit it to just European carriers? I would think Asian governments would also lobby to get the same access.

As for the Heathrow piece, I think AA & UA would benefit from this change. The could swithc their current Gatwick services to LHR thus increasing their hold on the market. For example, maybe at least one DFW would be exchanged for a current ORD service.
 
As such I would think that something more than a simple treaty would be required to change that. Something like Congress passing an amendment that changes this previous law.
If I correctly remember what I learned in my constitutional law classes, international treaties, once ratified by congress, trump federal legislation.
 
story here

The agreement, announced by the Transportation Department, would allow European airlines to fly from anywhere in the EU to any point in the U.S., and vice versa. For example, it would end restrictions on the number of airlines allowed to fly between the U.S. and London's Heathrow Airport, one of the world's busiest. Only four carriers -- United Airlines, American Airlines, British Airways and Virgin Atlantic -- now serve that market.

This was only a "tentative agreement". The article completely omitted the fact it had to be approved by both the EU and by our Congress.

Typical Yahoo reporting. Every other other news article I read reported it it correctly.
 
Britain still has the power to veto this EU wet dream, and I suspect that the UK will do just that; for the forseeable future, only UA, AA, BA and VS will continue to enjoy access to LHR to/from the USA (other than the few exceptions, like Air India and Air New Zealand, etc).
 
Upsilon,

Apparently it was an AP story. You're right though. I've seen more than one story on the Yahoo news arena that was later "updated" to include a more complete story.

TWAnr, you're kind of agreeing with me. By approving this, Congress would be nullifying their previous mandate.

With regards to FWAA's comment, can the UK veto the whole thing alone? In other words, if the UK say no, does the whole thing go down the tubes or can it win by simple majority.
 
...so, likely nothing will change but everyone gets to say they tried. The UK will veto this and we'll have gone nowhere. In the end, it seems the two big sticking points are foreign ownership and the right of EU carriers to fly within the US. The first one is tricky. Congress would have to receft the CRAF rules probably, to ensure that the US has sufficient lift during wartime. The second seems to be a be careful of what you ask for...you just might get it. Virgin Atlantic wanting to fly within the US sounds good, but do they really think they'd win? Most Euro carriers don't do so well on short haul service in general. Virgin group has even lost at being a low-cost operator. Interesting times.
 
Correct me if I'm wrong, but if the UK veto's it, then it doesn't necessarily kill the treaty -- it just wouldn't apply to the UK (similar to how the Euro isn't the official currency in the UK).

Without the LHR restrictions, I still see LGW being a viable airport for AA and others to serve. It's certainly a lot easier from a transit perspective, and BA has a lot of destinations served only from LGW or with better frequency than from LHR.
 
Correct me if I'm wrong, but if the UK veto's it, then it doesn't necessarily kill the treaty -- it just wouldn't apply to the UK (similar to how the Euro isn't the official currency in the UK).

Without the LHR restrictions, I still see LGW being a viable airport for AA and others to serve. It's certainly a lot easier from a transit perspective, and BA has a lot of destinations served only from LGW or with better frequency than from LHR.
I think that you're wrong. Treaties do not have "opt outs" unless they are part of the original agreement. The US will never agree to liberalization without opening LHR. Just not going to happen.

As for LGW, most high fare passengers prefer LHR, so I don't see anyone moving flights to LGW unless there is no alternative.
 
This high-fare passenger doesn't. I like LHR, but prefer the compactness of LGW both when connecting and for O/D. It's a lot easier to navigate, and my dependability record in/out of LGW over the course of 20 years is far better than what it is in/out of LHR.

Without an opt-out, then I'd say the likelihood of a veto is pretty high.
 
'Open skies' turbulent for BA
Shares plunge for British Airlines as pact could weaken UK carrier's positions in transatlantic market.
March 5 2007: 7:28 AM EST


LONDON (Reuters) -- Shares in British Airways fell as much as 10 percent Monday, after the United States and Europe agreed to the outline of a pact that could weaken the airline's position on profitable transatlantic flights.

The European Commission said Friday it had reached a provisional agreement with the United States over a so-called "open skies" deal to open their transatlantic aviation markets in a bid to boost traffic and jobs.

Analysts said British Airways had most to lose from a deal, because it would open up competition on flights from London's Heathrow Airport to the United States.

The lucrative transatlantic route contributes a major slice of BA's profits and increased competition could drive down fares, hitting the airline's revenues.

Currently, direct transatlantic flights from Heathrow are limited to British Airways (Charts), Virgin Atlantic, United Airlines (Charts) and American Airlines (Charts).

"From BA's perspective, the negative is the breaking-up of the cartel (over flights from) Heathrow to the U.S.," said Exane analyst Nick van den Brul.

"Any time you break up a cartel the implication is that prices are going to fall, and everybody knows that BA's yields on the north Atlantic are what drives its profits."

Story