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Competition & Markets Authority launches probe into the BA / AA / Iberia / Finnair transatlantic JV

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The Competition & Markets Authority launched an investigation yesterday into the transatlantic joint venture which is operated by British Airways, American Airlines, Finnair and Iberia.

Details are on the CMA website here.

Almost all Head for Points readers will know that these are all airlines in the oneworld alliance, and that you can earn Avios and British Airways tier points on all of them.

What you might not know is that, when it comes to flying between Europe and North America, they are literally the same business.  There is no competition between the four carriers.

When you book a flight to New York on British Airways, British Airways does NOT get your money.  It goes into a big pot, together with all the money that American, Iberia and Finnair receive for selling flights between Europe and North America.  This money is then shared out between the airlines using an unknown formula.

This removes most incentives for competition between the airlines.  I imagine the only real competition is working out how to juggle the formula in order to take more than your fair share from the overall pot …. after all, if you agreed to pool your salary with everyone else on your street and split it later, you wouldn’t be queuing up to do any overtime.

The current position ….

Those of a certain age will remember the Virgin Atlantic “No Way BA / AA” campaign which tried to get this agreement blocked.  See:

However, the deal was eventually signed off by the EU.  As a concession, in 2010 the airlines committed to making landing slots available at Heathrow or Gatwick to competitors who wanted to launch London-Dallas, London-Boston, London-Miami, London-Chicago or London-New York.  Importantly, this commitment will lapse in two years.

Whilst this was originally an EU matter, the CMA has stepped in now because of the likelihood that the EU will no longer have jurisdiction in 2020.

But will anything change?

The market has, of course, moved on from the days of “No Way BA / AA”.  Virgin Atlantic was – arguably – forced into an identical joint venture with Delta Air Lines which became a 49% shareholder.

More importantly, Air France KLM is about to become a 31% shareholder in Virgin Atlantic.  Those two airlines are going to fold all of their transatlantic routes into one big Virgin / Delta / Air France / KLM joint venture.  It is hard to see Virgin Atlantic pushing to get the BA / AA deal scrapped because, if it was, its own four-way tie-up would also inevitably collapse.

Norwegian has shown that, at least at the budget end, it is possible to compete against these two alliances on transatlantic routes.  The failure of IAG (the parent of BA and Iberia) to buy Norwegian this year may have a silver lining in that it will show the CMA that there is competition out there.  On the other hand, the failure of La Compagnie and many others has shown that competition for the ‘business pound’ is tougher.

The position of Aer Lingus is also interesting.  It is not in the BA joint venture, and it is not in the oneworld alliance, but as it is owned by the same parent as British Airways and Iberia it presumably sets its pricing with one eye on what its siblings are doing.

From my many conversations with airlines, the real sticking point is NOT the joint ventures – it is the frequent flyer programmes and the unwillingness of corporate travellers to move away from their preferred scheme.

Breaking up the joint ventures but retaining the ability to earn Avios and British Airways tier points on American, Finnair and Iberia would not change customer behaviour much.  Similarly, if the ability to earn miles and points was removed from the other three airlines, the joint venture would have virtually no traction anyway.


How to earn Avios from UK credit cards (September 2023)

As a reminder, there are various ways of earning Avios points from UK credit cards.  Many cards also have generous sign-up bonuses!

In February 2022, Barclaycard launched two exciting new Barclaycard Avios Mastercard cards with a bonus of up to 25,000 Avios. You can apply here.

You qualify for the bonus on these cards even if you have a British Airways American Express card:

Barclaycard Avios Plus card

Barclaycard Avios Plus Mastercard

Get 25,000 Avios for signing up and an upgrade voucher at £10,000 Read our full review

Barclaycard Avios card

Barclaycard Avios Mastercard

5,000 Avios for signing up and an upgrade voucher at £20,000 Read our full review

There are two official British Airways American Express cards with attractive sign-up bonuses:

British Airways American Express Premium Plus

25,000 Avios and the famous annual 2-4-1 voucher Read our full review

British Airways American Express

5,000 Avios for signing up and an Economy 2-4-1 voucher for spending £12,000 Read our full review

You can also get generous sign-up bonuses by applying for American Express cards which earn Membership Rewards points.

American Express Preferred Rewards Gold

Your best beginner’s card – 20,000 points, FREE for a year & four airport lounge passes Read our full review

The Platinum Card from American Express

30,000 points and a huge range of valuable benefits – for a fee Read our full review

Run your own business?

We recommend Capital On Tap for limited companies. You earn 1 Avios per £1 which is impressive for a Visa card, along with a sign-up bonus worth 10,500 Avios.

Capital On Tap Business Rewards Visa

Get a 10,000 points bonus plus an extra 500 points for our readers Read our full review

You should also consider the British Airways Accelerating Business credit card. This is open to sole traders as well as limited companies and has a 30,000 Avios sign-up bonus.

EDIT: Applications for this card are temporarily suspended due to IT issues with the British Airways On Business SME loyalty scheme.

British Airways Accelerating Business American Express

30,000 Avios sign-up bonus – plus annual bonuses of up to 30,000 Avios Read our full review

There are also generous bonuses on the two American Express Business cards, with the points converting at 1:1 into Avios. These cards are open to sole traders as well as limited companies.

American Express Business Platinum

40,000 points bonus and an annual £200 Amex Travel credit Read our full review

American Express Business Gold

20,000 points sign-up bonus and free for a year Read our full review

Click here to read our detailed summary of all UK credit cards which earn Avios. This includes both personal and small business cards.

Comments (60)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • Phil Duncan says:

    I hope they will add Aer LIngus into this mix too, their fares have rocketed since the IAG take over and I can see no other reason than that for it.

    • RussellH says:

      Surely, like any free-market business, they charge what the market will bear. If they find that means they can increase prices, then that is what they will do.
      Your question should surely be, why would they not increase their prices??

      • Phil Duncan says:

        Perhaps if you believe in free market economics dominated on the edge of Western Europe by a group who offer an ever diminished product while making obscene profits and paying slave wages to their employees.

        I don’t believe in that.

  • GUWonder says:

    The formula for the revenue split is proportional to the covered market seat miles flown by cabin.

This article is closed to new comments. Feel free to ask your question in the HfP forums.

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