The European Commission has launched an investigation into the proposed deal between British Airways, American Airlines and Iberia that would see the three airlines agreeing to fix routes, prices and schedules.
“It is not a merger investigation and has no specific deadline,” a European Commission spokesman said.An EU spokesperson said the investigation was being initiated to consider if the deal breaches competition rules, but does not follow a specific complaint.
Virgin Atlantic has been particularly vocal of its opposition of the deal, and welcomed the EU investigation.
Steve Ridgway chief executive of Virgin Atlantic said, “The European Commission have rightly begun an investigation, under their own initiative, because they understand that consumers will be worse off if this alliance proceeds.
“The proposals would create a monster monopoly, which would mean that BA/AA and Iberia would be way too dominant on key routes into and out of Heathrow airport.
“The European Commission will also be aware that the fragile state of the European economy is no excuse for BA/AA to be given the go ahead, as we all know that monopolies never work in the consumers favour, in good times or bad.”
The tie-up is the closest alliance possible under US airline laws, which forbids foreign ownership of major US carriers.
A previous attempt by BA and American to strike a similar collaboration failed to gain regulatory approval on breech of competition laws. However, the airlines are expected to argue that the competitive situation has changed since the Open Skies agreement between the U.S. and the European Union came into force in March, allowing airlines to fly to and from any point in the U.S. and any point in the EU.
The deal is also being sought against a backdrop of soaring fuel prices and slackening demand, conditions that BA chief executive officer Willie Walsh last month described as “the worst trading environment the industry has ever faced.”
British Airways and American Airlines already work together as partners in the One World alliance which lets member airlines share flight capacity and airport facilities.
If approved, a new deal would see them work much more closely to try to reduce costs in areas such as ticketing and administration.
Other US airlines such as Delta and United, are also in code-sharing deals with their European partners Air France and Lufthansa.