British Airways tightened its stranglehold over Heathrow yesterday after the loss-making carrier Swiss International Airways joined the BA-led Oneworld alliance.
The deal takes Oneworld's share of take-off and landing slots at the world's busiest international airport to more than 50 per cent for the first time. As part of an accompanying commercial agreement, BA is also paying just over £20m for 112 weekly slots that Swiss has at Heathrow.
BA said it would be interested in taking out an option to buy a stake in Swiss when the "lock-in" agreement preventing existing shareholders from selling their stakes expires next August.
The Swiss decision to join Oneworld is a victory for BA, which had faced competition from the rival and bigger Star Allliance which is led by Germany's Lufthansa and United Airlines of the US. Industry sources said Swiss had opted not to join Star because it would ultimately have meant losing its identity and being swallowed up by Lufthansa.
The two airlines will operate joint services between the UK and Switzerland, code-sharing on routes from Heathrow to Geneva, Basle and Zurich. Before the inclusion of Swiss, the Oneworld partners, which include American Airlines, Iberia, Qantas, Cathay Pacific and Aer Lingus, controlled 49 per cent of Heathrow's slots. Now the figure is 51 per cent.
News of the BA-Swiss tie-up came amid mounting speculation of a three-way alliance between Air France, KLM of the Netherlands and Alitalia, under which the three Continental carriers could take minority stakes in one another as the prelude to an eventual merger. Notwithstanding the Swiss deal, the Spanish carrier Iberia remains BA's favoured merger partner in Europe. BA already has a shareholding in Iberia and representation in its board.