BA and AA offer concessions to keep their transatlantic JV – Government to accept

As most HfP readers will know, British Airways, Iberia, Finnair, American Airlines and Aer Lingus run their transatlantic flights through a Joint Business Agreement.

Put simply, the five airlines put all the money from transatlantic ticket sales into a pot and share it out under a pre-agreed formula. They agree pricing between themselves. It makes zero difference to BA if you fly BA, American or Finnair – BA gets the same cut of your money regardless due to what is known as ‘metal neutrality’.

This obviously has repercussions for competition on transatlantic routes, which means that the UK Competition & Markets Authority (CMA) takes a regular look at what is going on.

A full review of the Atlantic Joint Business Agreement was delayed due to the pandemic, with interim measures put in place until March 2026.

Slightly surprisingly, given the history of these negotiations, both sides are in agreement about what happens next.

British Airways and American Airlines have offered a number of changes to the agreement to mitigate areas which have begun to cause concern.

The CMA considers this offer to be reasonable and, whilst it is accepting counter-arguments until late April, has said that it is minded to accept.

What concessions have the airlines offered?

There are four city pairs when there are competition concerns:

• London – Boston
• London – Chicago
• London – Dallas
• London – Miami

This is where each route stands:

London to Boston

Three groups operated daily non-stop flights on this route in Summer 2024: BA / AA (using four slots), Delta / Virgin Atlantic (using two slots handed over by BA/AA and one of their own) and JetBlue (using its own slots to provide one daily service from both Heathrow and Gatwick).

United and Norse no longer operate the route.

London to Chicago

Two groups operated daily non-stop flights on this route in Summer 2024: BA / AA (using seven slots) and United Airlines (using three slots).

No other airline with premium seating has operated between London and Chicago since 2016.

London to Dallas

AA and BA are the only airlines operating non-stop on the London – Dallas route.

This route is a cause of competition concern, given that Dallas is a key American Airlines hub where no other long haul carrier has a major presence.

London to Miami

Three groups operated daily non-stop flights on the London – Miami route in Summer 2024: BA / AA (using three slots), Delta / Virgin Atlantic (using one slot provided by BA/AA and one of their own) and Norse using its own slot at Gatwick.

This route is a cause of competition concern, given that Miami is a key American Airlines hub.

What has the BA / AA / Iberia / Finnair / Aer Lingus JV offered?

The Atlantic Joint Business Agreement partners have offered the following concessions if the deal is allowed to continue for a further 10 years:

London to Boston

A pair of slots (for landing and departure) will be made available by BA or AA to any competitor which wishes to launch up to seven flights per week between either Heathrow or Gatwick and Boston.

The CMA is happy for this to go to Virgin / Delta or JetBlue if they want it. It does not need to go to a new entrant.

London to Chicago

BA and AA have offered a daily slot pair. The CMA is insisting that it is not given to United, which means that a new entrant should appear on the route. Whoever takes the slot must commit to offering daily direct flights during the summer and either non-stop or one-stop flights during the winter.

London to Dallas

There is a complex commitment here which forces BA and AA to carry a minimum number of ‘local’ passengers (ie passengers who do not connect further in Dallas or London). The requirement to sell a certain number of seats to passengers travelling only between London and Dallas is designed to keep prices low.

London to Miami

A pair of slots will be made available by BA or AA to any competitor which wishes to launch up to seven flights per week between either Heathrow or Gatwick and Miami.

The CMA is happy for this to go to Virgin / Delta if they want it. It does not need to go to a new entrant.

For all of these city pairs, among various other commitments is one concerning frequent flyer programmes. In the (admittedly unlikely) scenario that a slot went to a new entrant which did not have an established frequent flyer programme, it can force BA, AA, Iberia, Finnair and Aer Lingus to make it a partner in their programmes.

Conclusion

There are pros and cons to the Joint Business Agreements operated by BA / AA et al and Virgin / Delta et al, along with a similar Star Alliance one which doesn’t really impact the UK.

If you read the full CMA report here you can see why it is believed that there are good points – in particular around connections and options for flexible ticket holders to swap flights – as well as bad ones.

It seems virtually certain that the concessions offered by BA and AA will be accepted by the CMA, which will last for 10 years until the next review.

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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.

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Run your own business?

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