AMERICAN AIRLINES chairman Bob Crandall expects all five major rival US carriers to compete with the British Airways/ American alliance at Heathrow if the deal goes ahead. The American boss is forecasting a fares war across the Atlantic as capacity outstrips demand in the wake of an "open-skies" deal between London and Washington.
Crandall is adamant that the opening up of Heathrow to other carriers is essential if the BA/AA alliance is to receive US anti-trust immunity. "With all the new entrants, there will be excess capacity, and this will drive down ticket prices...there are going to be the five US major airlines, plus us, competing on the north Atlantic from Heathrow, and I find it incredible that any one could suggest that prices could increase with this kind of competition."
Referring directly to Virgin Atlantic boss Richard Branson's claims about the impact on the alliance for the transatlantic consumer, Crandall says: "Richard just doesn't want to compete with all the new carriers at Heathrow."
Crandall says that a solution to the problem of Heathrow slot availability and the restrictions to access this causes for new operators is quite simple. "The UK Government just has to make a simple statement saying that `slot trading is okay'," he says.
In that event, the American Airlines chairman believes that up to 50,000 slots would be traded, and shifted to operators which have to serve Heathrow, such as Continental, Delta Northwest, TWA and United. He estimates that slots could change hands for anything between $1m and $10m each.
"There are plenty of Third World and regional operators who would willingly sell their Heathrow slots and move out to Gatwick or Stansted," says Crandall, who does not see the feed that these services could provide as vital to the BA/AA network at Heathrow. "You only require feed if the local market is not sufficient to fill the aircraft. At Heathrow, the size of the local market means that only some of the off-peak services will need to be fed," he says.
Crandall adds: "It makes more economic sense to utilise the slots at Heathrow for 400-seaters than for 50-seat regional aircraft. If the alliance goes through, we will concentrate on more direct transatlantic services from the UK's secondary airports, so that the Heathrow flights are primarily used to serve the local markets."
Justifying his change of heart from a previously anti-codesharing stance, Crandall says that "-governments make the rules and the airlines abide by them. They have permitted codesharing to take place, and so we have to participate to remain competitive".
Crandall seems patient about the amount of time that he is prepared to wait for the alliance to receive approval: "We will wait until it is clear that the alliance isn't going to happen before we look elsewhere. The BA alliance is the best deal open to us-we may make a simultaneous alliance with another European carrier while this one is pending".
Source: Flight International