bmi british midland and United Airlines submit applications for anti-trust immunity - bmi alliance proposals are pro-consumer and pro-competition

bmi british midland and United Airlines have formally applied for anti-trust immunity from the United States Department of Transportation covering all their routes between the UK and the United States.

The anti-trust application is the latest step in the long running campaign by bmi to introduce new competition between the United States and London Heathrow.

bmi, along with other parties, has campaigned for many years to liberalise transatlantic services from London Heathrow. However, successive UK governments have said that they will not liberalise services until BA has secured approval for its own transatlantic alliance. With the renewed anti-trust application, BA has finally acknowledged that the highly restrictive Bermuda II agreement, governing transatlantic services, operates against the interest of the consumer, and that an open skies agreement is now urgently required.

With an open skies agreement in place at London Heathrow, travellers will benefit from new entrants into the market. This will bring fresh competition, stimulating improved levels of service, a wide range of destinations and more competitive fares.

Aviation competition has changed dramatically over the past few years. It is now an arena of global alliances, rather than individual airlines operating purely on a destination to destination basis. New competition across the Atlantic has already been created with immunised alliances such as Northwest / KLM, as well as the grouping between American Airlines, Sabena and Swissair. These alliances compete from their respective hub airports with London. An approval of the anti-trust application being made by bmi and United would enable the alliance to bring new competition to existing and future immunised alliances, including the proposed linking of BA and AA, in addition to Skyteam, which includes Delta, Air France and Alitalia.

bmi and United have worked together since 1992 and launched joint services from Manchester to Chicago and Washington in spring this year. The application to also work together on London transatlantic routes is a natural extension of this relationship.

An application has also been made to extend an existing immunised agreement between United Airlines, SAS, Lufthansa and The Austrian Airlines Group, to include bmi. By extending this agreement, bmi would be better able to provide competition to the other alliance groupings, on its European feeder services in and out of London Heathrow.

Sir Michael Bishop, chairman of bmi, said:

“Our alliance with United is pro-competition and pro-consumer. bmi has always been a champion of competition, first on UK domestic routes, then on European routes, and now on inter-continental routes.

“The aviation market has changed extensively in recent years and through this agreement, bmi, together with our partners, will be ideally placed to compete with the alliances of BA / AA, Virgin / Continental, Northwest / KLM and Air France / Delta / Alitalia.

“Unlike the proposed BA / AA alliance, our application for anti-trust immunity with United presents no competition issues, as bmi does not operate long haul services from London. There will be no elimination of competition as there are no overlapping routes. Through our application to work with our partners, thus increasing the number of network destinations we can offer from Heathrow, we will be in a stronger position to provide competition. Currently, bmi only serves 12 international destinations from Heathrow, while BA serves approximately 100 destinations worldwide, of which 44 are in Europe.”

Sir Michael concluded:

“Our applications for anti-trust immunity should be granted without delay as they clearly do not present Regulators with adverse competition concerns. The applications represent an ideal opportunity to finally secure substantial benefits for consumers on both sides of the Atlantic.”

notes

1. Anti-trust immunity cannot be granted until a full open skies agreement is signed between the US and UK governments.

2. The Austrian Airlines Group includes Austrian Airlines, Lauda Air and Tyrolean.