More than a decade after British Airlines and American Airlines first sought antitrust immunity for their global alliance, the U.S. Department of Transportation last week granted their request.
The immunity allows the members of the so-called Oneworld Alliance – including British Airlines, American Airlines, and Iberia of Spain – to coordinate on prices, capacity, and service. The U.S. approval follows on the heels of a similar grant from the European Commission the week before.
Both the U.S. and the E.U. have conditioned immunity on the Oneworld Alliance members’ giving up coveted takeoff and landing positions at Heathrow airport for flights departing to the United States. But the airlines seem to believe that this sacrifice will be worth the advantage they will gain from partnering with one another. The Oneworld Alliance will compete against two other global competitors that already have antitrust immunity – Star Alliance (made up of Lufthansa and United/Continental, who have announced a merger) and SkyTeam (made up of Delta Air Lines and Air France-KLM.)
These global partnerships are changing the face of airline competition. Rather than one airline competing against the others serving the same region, these global alliances will compete against one another. This will particularly impact corporate travel buyers, who tend to negotiate with the alliances. Proponents of these ventures argue that forging an alliance, and gaining global reach, keeps the airlines competitive with what business travelers need.
Of course, this means that airlines left without global partners may be at a distinct disadvantage, as critics of the U.S. and E.U.’s actions would be quick to point out. Virgin Atlantic’s Richard Branson, for example, has been an outspoken critic of the Oneworld Alliance. Virgin Atlantic has no global partners.