European alliance hopes boosted

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European carrier alliance moves have taken significant steps forward. British Airways has secured European regulatory clearance for both its merger with Iberia and its transatlantic anti-trust immunity bid. Meanwhile, Alitalia is to join SkyTeam partner Air France-KLM's transatlantic joint venture.

BA and its oneworld partners American Airlines and Iberia received clearance from the European Commission for their proposed transatlantic tie-up in the middle of July. The approval came after "legally binding" commitments from the carriers to allay competition concerns.

The three airlines have agreed to make slots available from London Heathrow or London Gatwick to Dallas, Boston, Miami and New York, allowing competitors to fly 49 return flights weekly to these four US destinations. Slots will be accessible at New York JFK. BA says slots on the London-New York route will only need to be released if the number of services falls below current levels. The carriers are confident of receiving final clearance from the US authorities shortly in order to commence joint activity this autumn.

 ba, aa & iberia tails, oneworld
"For [Star and SkyTeam] to remain the only immunised alliances across the Atlantic would not be in the public interest," BA chief executive Willie Walsh reiterated during a recent Aviation Club address in London.

BA and Iberia have also secured EC clearance for their planned merger. Regulators had examined the potential impact on routes from London to both Madrid and Barcelona, but judged the merged airlines would "continue to face sufficient competition from other carriers".

It marks a further key step in the merger, which the partners hope to complete by year-end.Walsh has made clear the partners hold further consolidation ambitions: "The objective we set ourselves at the beginning was to create an entity that was capable of being scalable. The intention is be in position to take advantage of opportunities as they avail themselves," he says. "We are not targeting anything in particular, but we want to be in a position to do so if an opportunity arises. [Joint holding company] International Airlines Group is not about putting BA and Iberia together, but about creating a platform to create a global carrier."

Meanwhile, Air France-KLM and Delta Air Lines are bolstering their joint venture by the addition of Italian SkyTeam partner Alitalia. Under the deal, the venture will incorporate 20 daily transatlantic services to five US destinations from Rome and Milan. While agreed in early July, Alitalia's membership is being considered effective from 1 April.

Alitalia's Rome Fiumicino hub will become part of the core of the venture - through which the airlines share transatlantic revenues and costs - alongside Paris, Amsterdam and the US cities of New York, Detroit, Minneapolis and Atlanta. "Transatlantic traffic is the most strategic and competitive marketplace," says Alitalia chief Rocco Sabelli. "It further opens-up opportunities for our industrial and commercial growth." Alitalia's services will bring the joint venture's share of transatlantic capacity to around 26% and take annual revenues to some $10 billion.

Elsewhere, Ryanair's frustrations over the EC blocking a takeover of fellow Irish carrier Aer Lingus remain after a European court backed an EC decision three years ago which ruled a planned takeover move by Ryanair for Aer Lingus would be "incompatible with the common market".

However Ryanair, which is the single largest shareholder in Aer Lingus, has been cleared to retain its 29% stake in the carrier by the court. The court upheld the EC's earlier decision to allow Ryanair to maintain its shareholding on the grounds that "in the absence of effective control by Ryanair over Aer Lingus, Ryanair's shareholding cannot be likened to a merger which has already arisen, which would give the Commission the right to act".