United and BMI seek antitrust immunity
United Airlines and BMI British Midland on Wednesday asked the US Transportation Department to give their transatlantic alliance immunity from American antitrust laws, throwing the US and UK’s second largest carriers into a bitter debate on air competition between the two countries.
In a 54-page application filed on Wednesday night, the carriers – along with Lufthansa, SAS and Austrian Airlines, all members of the global Star Alliance – said they wanted to “operate as if they were a single firm with a common financial objective” by sharing pricing, scheduling and revenues on transatlantic routes.
Such sharing of information would normally violate US competition laws, making immunity necessary. United already has such a waiver for its alliance with Lufthansa, SAS and Austrian.
The United-BMI application comes a month after rivals American Airlines and British Airways filed an identical request, sparking criticism on both sides of the Atlantic they are trying to dominate traffic between the US and Heathrow Airport in London, the world’s busiest international gateway.
In the past week Continental and Delta airlines have asked the Transportation Department to dismiss the BA-American application, arguing that the partnership is just as anticompetitive as it was five years ago, when a similar request was rejected.
In a motion filed by Continental and supported by Delta, the airlines said they both would need at least 140 weekly landing and takeoff slots at Heathrow to ensure transatlantic competition with BA-American, and insisted that more than 600 weekly slots would be needed to accommodate all potential competitors.
“British Airways and American are again asking the department to bless their plot to eliminate competition between them in the world’s largest intercontinental aviation market,” Continental argued in its brief.
BMI and United went to great lengths to differentiate their application from BA-American, arguing that because BMI does not fly to the US from Heathrow there would not be any reduction in the number of competitors in the market.
“Approval of the pending American-British Airways application . . . will reduce the number of major competitors in the US-UK market by one,” the BMI-United filing said. “This joint application, however, is entirely different.”
Although the BMI-United request is unlikely to generate as much opposition as BA-American, some rivals – particularly Continental – have argued that the twin applications make the competitive landscape even worse, giving approximately 73 per cent of all Heathrow slots to either the Star Alliance or BA and American’s Oneworld alliance.
Neither application can be approved until the two countries sign a new bilateral “open skies” deal, since the US has made a new treaty a prerequisite for any UK airline immunity request.
Financial Times
