Oneworld to Take Over the World?

The U.S. Department of Transportation (DoT) gave its tentative approval to grant antitrust immunity to five partners of oneworld to form a global alliance. Oneworld is one of the world’s three largest global airline alliances. The DoT previously granted immunity to oneworld’s larger rivals Star Alliance and the SkyTeam Alliance.
The five partner airlines are American Airlines, British Airways, Iberia Airlines, Finnair and Royal Jordanian Airlines. If the DoT’s decision is made final, these airlines will be able to sell seats on each other’s flights, co-ordinate marketing efforts and share revenues without fear of prosecution. The DoT said that the benefits of the oneworld alliance would be lower fares on more routes, increased services, better schedules and reduced travel and connection times. It will also mean that oneworld will be able to compete more effectively with the Star and SkyTeam alliances. It is likely that business travelers have been paying higher fares than necessary on oneworld airlines as a result of oneworld’s failure to compete on a level playing field with the other airline alliances.
However, the DoT has imposed conditions on the grant of antitrust immunity, including in particular the condition that oneworld give up four daily landing slots at London’s Heathrow airport. American Airlines and British Airways play a dominant role in transatlantic travel (i.e. flights between the United States and Europe). Regulators hope that forcing American and British Airways out of some of their valuable Heathrow slots will help other airlines compete for business travelers because it will free up landing and takeoff slots.
However, the number of slots that the airlines are required to surrender in order for the deal to go through is much lower than expected. Interested parties have 45 days to raise objections to the deal. Richard Branson, the president of Virgin Atlantic Airways, is no doubt preparing his submission to the DoT at the time of writing. Virgin is not in any of the three alliances and competes with American Airlines and British Airways on the transatlantic route. He has described the decision as “sticking two fingers” up at consumers.