ATW Daily News

AA, UA favor open skies despite LHR impact; UK still negotiating as vote nears

Thursday March 22, 2007

American Airlines and United Airlines, the only US carriers permitted to operate to London Heathrow, are backing adoption of a tentative US-EU open skies accord, on which EU transport ministers are scheduled to vote today, even though it could hurt them in the London market.

"More airlines flying to Heathrow by definition can't be good for someone flying into Heathrow now," AA Chairman and CEO Gerard Arpey conceded yesterday at the JP Morgan Aviation and Transportation Conference, available via webcast. "But I do think [open skies] presents opportunities for oneworld and for our partnership with [British Airways]." He added that AA still wants antitrust immunity for profit- and revenue-sharing with BA, particularly if open skies is approved. "We don't believe we should have to give up anything to get antitrust immunity," he said.

UA similarly supports open skies despite the obvious conflict with its interests at LHR. "Of course we'd rather not have Heathrow open," Executive VP and CFO Jake Brace told the conference. "But over the long term, the London Heathrow operation will face competition and we accept that. . .Heathrow is not a huge driver of our cash flow. We may suffer in the short term but over the long term open skies is the right way to go."

Delta Air Lines, the largest US transatlantic carrier, issued its own statement yesterday urging the EU to ratify the agreement, saying it welcomed "the ability to participate more broadly in European markets, particularly London's Heathrow airport."

Opposition continued to filter in as well. Rep. James Oberstar (D.-Minn.), chairman of the House Transportation and Infrastructure Committee, told the St. Paul Pioneer Press that he opposes the deal. "I want to ensure this agreement does not lead to a greater foreign control of US airlines. Decisions would be made far away from us about which US markets would be serviced," he warned, while implying his position might soften if Northwest Airlines was granted expanded antitrust immunity for its alliance with Air France KLM.

In the UK, the House of Lords registered its discontent and demanded the US drop restrictions on the Fly America program requiring US citizens traveling abroad on government business to use US airlines on routes handling more than 60 passengers per year (ATWOnline, March 6). "No such policy exists in the EU. We regard this as a very unbalanced arrangement," Internal Market Sub-Committee Chairman Lord Freeman said.

Prime Minister Tony Blair's office rejected reports that President Bush had rebuffed Blair's request to make concessions on the issues concerning the UK. "They were fully aware of our concerns," the PM's spokesperson said, adding, "What we wanted to see was as open a market as possible, with real competition on both sides of the Atlantic."

by Aaron Karp and Brian Straus

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