Why the Competition & Markets Authority won’t renew the AA / BA transatlantic JV until 2026

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

• TimM says:

  5 Apr5 April 06:03

  Any ‘join venture’ of this nature is anticompetitive. It makes me wonder what incentives members of the CMA receive to sit on their hands and allow a cartel like this to exist and carve up the market. The CMA are failing at their primary functions of ‘competition’ and ‘markets’.

  • Rui N. says:

    5 Apr5 April 09:45

    They allow this because no mergers are allowed (because of ownership and control rules). If mergers were allowed, there would be mergers across the US/UK/EU and there would be no need for these shenanigans.

• Nathan says:

  5 Apr5 April 06:26

  Clearly the illuminati actually exist.

• Nick says:

  5 Apr5 April 06:31

  I believe, from my o-level economics GCE that I took 45 years ago, it’s probably an oligopoly.

  • Andy D says:

    5 Apr5 April 09:53

    Autocorrect has changed your original spelling of the word ‘cartel’

• ChrisC says:

  5 Apr5 April 06:44

  In Para 3 you say the profits are shared but in Para 5 it’s the revenue received that goes into a big pot.

  Profits and revenue aren’t the same so which is it?

  • Rob says:

    5 Apr5 April 08:53

    Is that contradictory? Revenue goes into a pot, costs are deducted, profits are shared?

    • insider says:

      5 Apr5 April 09:22

      except that it is a revenue sharing agreement, NOT a profit sharing agreement

    • ChrisC says:

      5 Apr5 April 09:47

      But are costs put into the pot?

      From what I’ve read elsewhere it’s only the revenue that gets divvied up.

      And even if they are what costs are actually included?

      I don’t see AA being happy if UK/EU 261 compensation is included given it only applies to them when leaving the UK whereas for AY/BA/EI/IB it’s both directions.

      And what if say one airline had hedged its fuel costs but others didn’t?

      How would variances in flight and cabin crew salaries, benefits and employees costs be taken into account?

      So much easier to just divide the revenue and the airlines to meet and control their own costs.

• Mark says:

  5 Apr5 April 06:50

  Given how hot the market watchdogs are in the US and the UK I’m still gobsmacked such blatant anticompetitive behaviour is/has been allowed

  • ChrisC says:

    5 Apr5 April 10:10

    It’s allowed because it can be controlled.

    JVs allow airlines to e.g. legally coordinate fares or schedules but at the expense of having to relinquish slots or have another activity constrained in some way.

• John says:

  5 Apr5 April 06:57

  Headline is a bit confusing. Why not just say “CMA has extended the JV”

  • Chrisasaurus says:

    5 Apr5 April 08:51

    Or delayed decision

• Paul says:

  5 Apr5 April 06:58

  It’s certainly not in consumers interest and should be scrapped

  • AJA says:

    5 Apr5 April 08:21

    Why do you say that? If you’re a frequent flyer and Finnair, IB, BAEC or Aadvantage member you have a lot more choice of routes over the Atlantic on 5 different airlines that will earn you Avios or AA miles. If the JV is broken up you will have to hope that the airline you are a member of increases capacity on its own.

    The other airline alliances do the same thing, so why pick on BA/AA? Surely Lufthansa should give up slots in FRA and AF in CDG and KLM in AMS too? Further afield Emirates should give up slots in Dubai.

    But if they all did that somehow you’re assuming BA would have the capacity to pick up these new slots elsewhere. Currently it can’t even cope with the capacity it already has. Think of the issues you’d have with being rerouted if you couldn’t be easily swapped onto another alliance airline let alone trying to get BA to accommodate you on a competitor.

    • RussellH says:

      5 Apr5 April 08:39

      Quite agree.

      Competition is a double edged sword – you might get lower prices, but it would inevitably be at the cost of lower standards on everything else.

      • sayling says:

        5 Apr5 April 09:00

        Or the dire consequences of failure, vis a vis energy suppliers and standing charges…

        • dougzz99 says:

          5 Apr5 April 10:01

          Exactly. You don’t get lower prices for sure either. Take PL football. Sky were deemed to have a monopoly. Packages of matches then had to be created and auctioned. So from paying Sky, you now have to pay Sky (never decreased in price), BT Sport and more recently Amazon too. The only winners were the PL footballers.

      • Callum says:

        6 Apr6 April 02:19

        Dougzz – PL football packages are completely incomparable to airline joint ventures. That’s splitting up a single product amongst multiple suppliers, this is multiple suppliers competing with eachother to supply a single product. For the analogy to work you’d need to block exclusive rights and let all three broadcasters show them all.

        I think it’s pretty obvious that it increases prices, otherwise there’d be very little reason for the airlines to want to do this. Plus I’d slightly disagree with Rob’s analysis – it was very profitable for BA before the JV, it will be if it’s broken up. Yes they’re better off as they are, but I don’t think it’s “difficult to overstate its importance”.

        And AJA, if this is broken up you’d still be able to fly and earn Avios on AA and Finnair, so you’re not gaining access to anything.

    • Chrisasaurus says:

      5 Apr5 April 08:54

      I may have misread Pauls post but I don’t think he was picking on BA/AA I think he was picking on JVs – and I’m inclined to agree with him.

      • AJA says:

        5 Apr5 April 15:25

        @Chrisasaurus The points I made for BA/AA also apply to any JV. AF/KLM/ Delta / Virgin or Skyteam in general or Lufthansa/ United/ Singapore Airlines and any of the Star Alliance airlines have the same competition issues. It is difficult enough to get re-routed on an alliance partner airline let alone trying to get re-routed on a competitor airline in a different alliance. If the JV was to be scrapped then it would just make it more difficult for passengers.

        If you are against JV’s are you also against the idea of codesharing or even the alliances eg Oneworld vs Star Alliance vs Skyteam? They all allow you to book on one airline and fly on another member airline. Do you seriously think the revenue on a ticket sold by Lufthansa to fly on United metal is not shared between Lufthansa and United? What’s the difference in reality between that and what BA/ IB/ Finnair and AA do?

• Lady London says:

  5 Apr5 April 09:35

  “Why the Competition and Markets Authority won’t renew the Transatlantic JV until 2026”.

  Why should they? This headlining implies they should.

  Has the CMA got any teeth? Or is it just another BA pussycat like the CAA?

  And that anti-competitive JV also takes in Iberia, Finnair as well as BA and AA, and will by then also include Aer Lingus.

  • ChrisC says:

    5 Apr5 April 09:58

    Yes the CMA has teeth.

    The CAA also has teeth but not in the consumer area (like enforcing UK/EU 261) which I know you’d like it to have.

    Mind whether they would want those powers let alone would the government give them is another issue.

    I used to work for a regulator and we could only regulate the activities we were permitted to regulate to the degree the law allowed.

  • Lady London says:

    7 Apr7 April 11:19

    Oh dear. Looks like I am going to have to eat my words.

    I have just had an email from Lufthansa promoting the er…Lufthana Group Atlantic Joint Venture with Air Canada and United Airlines. The email also tells me about United’s addition of 4 new Transatlantic routes, some of which look quite interesting, and United increased capacity on existing Transatlantic routes.

    If BA and the others don’t demolish the new Transatlantic players eg JetBlue and Norse, I can’t see the regulators being able to deny the Oneworld Transatlantic Alliance JV a renewal in 2026.

    • Rhys says:

      7 Apr7 April 12:14

      Delta, KLM, AF and Virgin are the third transatlantic JV.

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