BA and American create air superpower

British Airways and American Airlines yesterday ran into a storm of protest after unveiling plans for a highly ambitious code-sharing agreement that would create the world's largest aviation alliance with the power to transform competition between Europe and the United States.

Under the arrangement, announced simultaneously in London by BA's chief executive, Bob Ayling, and in New York by his American counterpart, Robert Crandall, the two airlines would splice together their schedules and share flight codes to forge a single network of routes around the world. But the alliance will be the subject of close scrutiny from competition authorities on both sides of the Atlantic and rivals were quick to warn yesterday of the dangers to competition.

Virgin's Richard Branson immediately condemned the deal as anti-competitive. Delta Air Lines, the third-biggest carrier, said it would oppose the alliance unless Britain and the US reached agreement on an "open-skies" agreement to further open up Heathrow airport to US airlines. Continental Airlines and the Dutch operator KLM were others that expressed unease at the link- up, with only USAir, in which BA has a 24.6 per cent stake, saying it would open up new opportunities.

The deal was welcomed by the stock market, which marked BA's shares 9p higher to 562p. Chris Tarry, an analyst with Kleinwort Benson Securities, described it as a major step. "It is likely to mark a greater willingness on the part of the UK to have a more liberal [open-skies] agreement. But it also opens the way for Virgin and others to wrest concessions," he said.

The link-up means that from April next year passengers booking with BA to the US, for instance, could find themselves on an American Airlines flight. Among those planes carrying both BA and American flight codes will be Concorde.

The two companies will remain independent, however. Contrary to the rumours of recent weeks, the pact does not foresee any swapping of equity or any trading of seats between the respective boards. British Airways, meanwhile, is seeking to retain its shareholding in USAir.

Instant criticism of the deal was provided by Richard Branson, whose Virgin Atlantic Airways could face harsh new conditions across the Atlantic. "Given the history of these two airlines and their anti-competitive behaviour, it would be hard to believe any rational government, in the interest of consumers, would allow this to go forward," he said.

Already among the world's most powerful airlines, BA and American would together account for almost 60 per cent of traffic between Britain and the US. Between Kennedy airport in New York and Heathrow their share is 70 per cent, while they are the only carriers on the London-to-Dallas route.

Analysts predicted that the two companies will be expected at the very least to carve out from the agreement some routes where their domination would be unacceptable, including possibly between New York and London. "This is nowhere near what the governments are going to accept," Craig Jenks, an aviation expert in New York, said. "Were the US to approve this, they would be abandoning the criteria they have applied to all previous cases of this kind".

For the agreement to be viable, the two carriers must extract immunity from the US government from current fair-competition regulations. That, is likely to be contingent upon the US and British governments resolving long-standing arguments on an "open-skies" aviation agreement.

Comment, page 17

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

Ashdown Group: Marketing Executive - 6 month FTC - Central London

£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...

Ashdown Group: Junior Project Manager (website, web application) - Agile

£215 per day: Ashdown Group: Junior Project Manager (website, web application ...

Guru Careers: Software Engineer / Software Developer

£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before