The European Commission has finished its examination of the US Airways and American Airlines merger, and has cleared the merger – but not without some changes
The Commission examined the competitive effects of the proposed merger on numerous transatlantic routes, and found only one route which would by a monopoly – the London Heathrow to Philadelphia route operated by US Airways.
Currently, there is competition on the route to Philadelphia (with US Airways operating for Star Alliance, British Airways operating for Oneworld). If the merger was to go through, both routes would be operated by Oneworld carriers/Joint Business Venture carriers, which would not be suitable.
To help the merger go through, the combined US/AA will relinquish the single slot pair that the London Heathrow – Philadelphia flight operates.
According to the European Commission, the combined US/AA also plan to:
.”..also provided further incentives such as the possibility for a new entrant to acquire grandfathering rights after a certain period of time. Furthermore, the parties, supported by their joint venture partners of the Transatlantic Joint Business, committed to entering into special feed traffic agreements with the likely entrant airline.”
The competitor that could take on the route has yet to be identified.
Currently, there are three direct flights a day between London Heathrow and Philadelphia – with British Airways operating two flights, US Airways operating one.
As a result the European commission says:
“In light of these comprehensive commitments, the Commission concluded that the transaction would not raise competition concerns.”
On other routes, there is competition from the “North Atlantic Joint Venture” – operated by Delta, Air France/KLM, and Alitalia, and the A++ Joint Venture – which include Lufthansa, Air Canada and United Airlines as core members.
There are still more hurdles to pass, with Bankruptcy Court Approval as well as final approval of US Regulators before the merger can be completed, but this is a significant step forward for the two airlines wishing to merge.
What competitor would want to fly that route? USAir has connecting traffic at PHL and BA at LHR. It seems like a losing cause for anyone else to fly it non-stop without flow at either end. Unless they can get the slots, fly the route for a year, and then shift it elsewhere