Oneworld trio aims to appease European regulators with London slot leases

Oneworld partners British Airways, American Airlines and Iberia offered to lease at least four daily slot pairs at London Heathrow or Gatwick to competing carriers for service to three US cities in order to address regulatory concerns about their proposed transatlantic joint venture.

Early last month the European Commission said it was assessing "the effectiveness of proposed commitments" by the airlines designed to address a formal Statement of Objections issued last September. At that time, the EC identified a number of long-haul routes, mainly between LHR and the US, with potential antitrust issues (ATWOnline, Feb. 2).

Later in February the US Dept. of Transportation tentatively granted antitrust immunity to the oneworld joint venture under the condition that the carriers surrender four slot pairs at LHR for up to 10 years (ATWOnline, Feb. 15). DOT did not suggest LGW was an acceptable alternative. AA and BA repeatedly have resisted ceding slots at LHR.

Yesterday, BA issued a statement addressing the EC investigation and pledged that the trio will make available for lease to nononeworld airlines two daily slot pairs to Boston from either LHR or LGW, one daily slot pair to Dallas/Fort Worth from LHR or LGW and one daily slot pair to Miami from LHR or LGW. In addition, two slot pairs from London to New York JFK could be made available "should today's competitive conditions between [the cities] change," according to BA.

"The slots can be leased from the airlines' current slot portfolio and don't have to be slots currently used on the specified routes. The European Commission has agreed that the airlines should be compensated financially by those airlines wishing to lease slots," BA said.

"We're pleased that the EC has recognized that we should be compensated for leasing the slots. This reflects the fact that there is an active slots market in London where slots are generally traded for value," BA CEO Willie Walsh said. There had been speculation that the EC might demand the slots be surrendered for free. The initial leasing period will be five years, a BA spokesperson told ATWOnline, adding that the decision regarding which airline will give up which slot will be finalized once regulatory approval is finalized.

The EC is expected to conduct its "market test" phase, which allows third parties to comment on the airlines' proposal, before making a final decision on April 10.

Regarding the US DOT ruling, the oneworld trio reiterated that it is "reviewing the order and will respond by the timeframe established for comments," and said it "welcomed the EU's announcement that it will be working closely with the US DOT and taking into account its opinion at key points in the regulatory process." A final DOT ruling is expected at the end of April.