The British Airways/Iberia relationship has tightened further following the approval by Brussels of their alliance on UK-Spain routes. British Airways, Iberia and BA's franchise partner GB Airways have been given approval by the European Commission (EC) for their wide-ranging joint venture on services between the UK and Spain.
The carriers, which applied for the European equivalent of antitrust immunity in July 2002, have given up slots at London Gatwick, Madrid and other Spanish airports to obtain the green light from the EC.
Iberia chief executive Fernando Conte says the tie-up between the carriers allows them to reap the benefits similar to those of a full merger, while "preserving the separate identities of the two companies". BA chief executive Rod Eddington says the deal is a "sensible step forward in our efforts to progress consolidation in Europe". BA, which has a 9% stake in its Spanish partner, says if it had to choose a merger partner in Europe it would be Iberia.
In its decision, the EC said that while the networks of BA and Iberia were largely complementary, it also identified several routes where the carriers would control between 50-100% of the market. It demanded slot givebacks to enable a competitor to come in on the routes concerned. Accordingly, the airlines will give back four slot pairs for a Gatwick and Madrid service, and one slot pair for Gatwick to Bilbao, Valencia and Seville. EasyJet has already said it is interested in operating the Madrid and Bilbao routes, possibly from the start of the summer schedule.
BA and Iberia are now assessing how to implement their joint venture which already features codesharing on 40 routes between the countries and the joint use of airport lounges. Now the partners can enter into joint network planning and co-ordinate capacity and pricing, as well as conduct joint sales.
The EC is considering slot givebacks in another joint venture application. Air France and Alitalia have proposed to release slots at Paris and Milan to satisfy the competition concerns of Brussels over services between France and Italy to gain approval for their alliance
Source: Airline Business
