EU approves air alliance

European
regulators have paved the way for British Airways, Iberia and American Airlines
to work together.

The
EU Commission said it would give BA and Iberia immunity from anti-trust laws
that prevent businesses from co-ordinating prices and schedules.

Under
the plan – which still needs US backing – the airlines would share costs, but
give up four transatlantic take-off and landing slots.

The
regulators also approved BA’s merger with Spain’s Iberia.

That
deal – to create Europe’s third-largest carrier – is aimed at helping both
carriers cut costs as the industry struggles to make money.

The
new company will be called International Airlines Group, but the BA and Iberia
brands will continue to operate as normal.

The
European Commission said it did not have any anti-competition concerns over the
merger because the enlarged airline would continue to face competition from
rivals, even on routes such as London-Madrid and London-Barcelona.

When
the merger was confirmed, BA said the group would operate 419 aircraft, flying
to more than 200 destinations, and carry a total of 62 million passengers a
year.

Virgin
Atlantic has been vocal in its opposition to the deal between BA and American
Airlines which it described as a “monster monopoly”.

Chief
executive Steve Ridgway said BA already had the bulk of transatlantic flights
from the UK, in particular out of Heathrow, and said that customers would
suffer.

“BA
and AA are not doing this to win a popularity contest. They’re doing it because
they want to dominate even more strongly these key markets across the
Atlantic.”

BA
has argued that closer co-operation between the airlines will benefit
passengers with more choice and lower fares.

It plans to begin the
transatlantic business from the autumn, provided it gets clearance from the US
Department of Transport.

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