COLIN BAKER LONDON

In August the transatlantic leaders of the oneworld and SkyTeam alliances submitted their filings to the US Department of Transport (DoT) for antitrust immunity - providing a rare and revealing view of the grey world of slot trading and transfers at London Heathrow.

It is too early to tell the exact impact of the events of 11 September on the antitrust process, although the DoT has extended the application period for American Airlines and British Airways to 19 October from the original 21 September.

The extension has less to do with the terrorist crisis and more to do with other US carriers wanting more time to respond to the filing. However, one London analyst says that BA and American may want to take another look at the benefits apportioned to each partner in the wake of the drastic capacity changes that took place in September. The DoT is adamant that there will be no further extensions, although other US carriers had been calling for more time to examine the implications of the BA/American deal. Delta wanted a 120- day extension.

The procedural process for the Delta/Air France application, meanwhile, has now been completed although open skies talks have been put back a month due to the attacks, and are now scheduled for 18/19 October. This has had a knock-on effect on UK-US open skies talks which were due to take place then, but which will now be held on 22/23 October. Successful open skies negotiations are a prerequisite for antitrust immunity. France is already phasing in open skies but wants to accelerate the process, while the UK's talks have long been mired over the issue of freeing slots at London Heathrow.

The race to file for antitrust immuity by both oneworld's American/BA and SkyTeam's Air France/Delta Air Lines comes as the industry awaits a judgement in the European Courts over whether open skies deals are deemed to conflict with the European single market. If so Brussels, which brought the original action five years ago, would effectively gain the final say over such deals. A ruling is expected as early as November.

The filings, meanwhile, reveal the extent of slot trading and transfers at Heathrow. The stumbling block for American/BA has been the lack of slots for rival transatlantic services out of Heathrow. However, in their DoT filing, American/BA hope to demonstrate how the Star Alliance has been able to build up a major presence at the airport and to transfer slots between members.

American and BA argue that they will both see a reduction in market share on the key London-New York route if antitrust immunity is granted. United and Continental airlines would gain, while Delta's entry on this route will give it a market share not far shy of 9%.

The filings reveal that between the winter of 2000 and summer of 2001 schedules, almost 100 slot trades were reached between 35 carriers covering 566 flights per week - equivalent to 6%of the total available slots. Star Alliance members have traded slots covering 85 flights per week over the two seasons (see table below). In a detailed report on the filings Commerzbank notes: "There is, for the first time, clear public evidence of the extent of slot trading and availability at Heathrow."

BA and American are proposing that American's code is put on 43 BA flights to Europe and 18 in Africa, the Middle East and Indian Ocean, while BA puts its code on 31 "beyond" destinations served by American. On top of this, American wants to add its code to 15 US gateways served by BA, while BA would put its code on American flights to US gateways it does not serve itself.

SkyTeam already has codeshares in place, with Air France's code on 74 Delta destination in the US, and Delta codesharing on 39 Air France destinations in Europe.

Current route frequencies London - New York

Airline

Weekly frequencies

Annual O&D pax*

 

number

share

thousand

share

American Airlines

49

23.8%

368.8

15.1%

British Airways

63

30.6%

706.3

29.0%

Continental Airlines

21

10.2%

145.1

6..0%

United Airlines

28

13.6%

297.0

12.2%

Virgin Atlantic

35

17.0%

746.4

30.6%

Air India

7

3.4%

110.9

4.6%

Kuwait

3

1.5%

20.1

0.8%

Others (indirect)

   

44.2

1.8%

Total

206

100.0%

2,439

100.0%

Forecast frequencies after open skies Lon - New York

Airline

Weekly frequencies

Annual O&D pax*

 

number

share

thousand

Share

American Airlines

49

20.9%

368.8

13.0%

British Airways

63

26.9%

706.3

24.9%

Continental Airlines

21

9.0%

216.7

7.7%

Delta Airlines

21

9.0%

252.3

8.9%

United Airlines

35

15.0%

370.8

13.1%

Virgin Atlantic

35

15.0%

746.4

26.3%

Air India

7

3.0%

110.9

3.9%

Kuwait

3

1.3%

20.1

0.7%

Others (indirect)

   

41.7

1.5%

Total

234

100%

2,834

100%

Note: Data is summer 2000 from BA / American evidence to US DoT. *O&D pax = origin & destination passengers only

Heathrow slot trades within the Star Alliance

 

Winter 2000 - summer 2001

Star Alliance Members

Number of

Flights

 

trades

Per week

United Airlines/Air Canada

3

9

United Airlines/bmi british midland

2

14

bmi british midland/Lufthansa

2

5

bmi british midland/SAS

4

15

bmi british midland/Air Canada

3

8

Lufthansa/All Nippon Airways

4

20

Lufthansa/Air Canada

1

1

SAS/Air Canada

4

12

Air Canada/Air New Zealand

1

1

Total

24

85

Source: Commerzbank/ Airport Co-ordination Ltd

 

 

Source: Airline Business