British Airways and American Airlines: Monopoly under scrutiny

As Britain parts away from the European Union, there are certain issues that need to be addressed when it comes to the immensely profitable United Kingdom and the USA air routes. To understand the brewing situation we have to turn back the clock to the year 2008.

In 2008, British Airways and American Airlines went into a partnership agreement. The agreement allowed the two companies to present themselves as one entity and manage a profit-sharing mechanism over the coveted UK to USA routes.

British Airways and American Airlines are colossal companies. Their ‘almost-merger’, as one might call it, would have shot and drowned smaller airlines that were operating on the same routes. However, after ten years of continuous deliberation, requests and compromises, these two giants were allowed to become one strong bridge that moved British and American citizens over the Atlantic Ocean.

This agreement was managed and brokered by the European Union’s Commission on Market Authority. Even at the time of the agreement, there was heavy criticism of the alliance. Virgin Atlantic famously painted “NO WAY BA/AA” on its jets to protest the cost-sharing deal, which was provided with an exemption from anti-trust laws of the European Union.

One should also keep in mind that this “monster monopoly” also has the Spanish Iberia Airlines in the loop. Before the American Airlines partnership with British Airways, BA merged with Madrid based Iberia –making a Transatlantic Airline Trinity.

In order to balance the scales, British Airways was made to let go of a few flight slots from both London Heathrow and London Gatwick airports. All was well until Britain decided to exit the European Union, which was the platform this delicate cost and profit sharing agreement was set upon.

Britain’s own Competition and Market Authority (CMA) has now hurriedly stepped in and announced that it would be looking into this alliance altogether, from the scratch. British Airways, on the other hand, is also eyeing at the slots it was made to drop in favour for other airlines, at the key Heathrow and Gatwick airports all those years ago.

If the Brexit agreements do not provide a cover and British independent surveillance over the “monster monopoly”, customers can bet on experiencing a flux in the airfare prices in the near future. Fingers crossed, though!