American Air Says Venture Creates NYC-London `Shuttle'
By Mary Schlangenstein -
Oct 6, 2010 4:59 PM MT

American Airlines will step up competition in New York City by coordinating flights with joint- venture partner British Airways Plc to offer London departures every half hour each evening.
The carriers’ trans-Atlantic business alliance, formally kicked off in London today with partner Iberia Lineas Aereas de Espana SA, lets travelers book flights from any of their websites.

American and British Airways will mesh timing of their 11 daily Heathrow airport departures at New York’s Kennedy and three flights at New Jersey’s Newark.

“It will be like a shuttle service between JFK and Heathrow,” Tom Horton, American’s president, said in an interview today. “Nobody else, even the merged entities in the U.S., can come anywhere close to that.”

The coordinated Kennedy-Heathrow flights, starting in April, will depart at 8 a.m., 9:30 a.m., 6 p.m. and then every half hour into the evening. They will compete with offerings from United and Continental airlines, which merged on Oct. 1 to create the world’s largest carrier, and Delta Air Lines Inc., which acquired Northwest Airlines Corp. in 2008.

The venture lets travelers earn and redeem frequent-flier miles on each airline’s flights and gain access to a broader range of connecting service and fares, the companies said.

Regulatory Approval

It puts the three carriers on equal footing with rivals in the U.S. and Europe that already secured regulatory approval to coordinate flight schedules, pricing, frequent-flier benefits and customer service. Costs and revenue will be shared among the three on flights between the European Union, Switzerland and Norway and the U.S., Canada and Mexico.

“We have 15 years of experience cooperating with trans- Atlantic partners, which is what has allowed us to grow to be the clear leader in the total European market,” said Kent Landers, a spokesman for Atlanta-based Delta. The carrier is part of the SkyTeam alliance.

United Continental Holdings Inc. and its Virgin Atlantic partner will offer 10 daily flights between Heathrow and New York starting this quarter, serving both John F. Kennedy International and Newark Liberty, said Julie King, a spokeswoman for the combined carrier.

Average ticket prices are likely to increase as the carriers coordinate flights to attract more business travelers, who generally pay higher fares, and drop the lowest available fares from the market, said Michael Derchin, an analyst with CRT Capital Group LLC in Stamford, Connecticut.

Business Travelers

A larger number of business travelers “might come out of Delta’s or United’s or somebody else’s hide,” Derchin said in an interview.

United Continental, with Continental’s major hub at Newark, holds the largest market share among four New York City-area airports, based on number of destinations from New York, weekly departures and weekly seats in the market, according to Dan McKenzie, a Hudson Securities analyst. Delta ranks second, followed by American.

American, a unit of Fort Worth, Texas-based AMR Corp., and British Airways had sought antitrust approval for their joint venture in two earlier attempts dating back to 1997. Iberia and British Airways plan to merge later this year.

The U.S. Transportation Department today gave tentative approval for a similar antitrust agreement between American and Japan Airlines Corp. for flights across the Pacific.

Pilot Recalls

American also said today it plans to recall 545 flight attendants and 250 pilots, in part to staff international service being added under the business alliance. American is at least the fourth major U.S. carrier to announce employee recalls since July as business travel returns following the recession.

AMR rose 10 cents, or 1.6 percent, to $6.21 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have fallen 20 percent this year.

American will add flights between Kennedy and Budapest, and Chicago and Helsinki next year, and increase the frequency of flights between Kennedy and Barcelona, and Miami and Madrid. British Airways will offer a new London-San Diego flight and Iberia will begin a flight between Madrid and Los Angeles.

The combined route network of American, British Airways and Iberia will serve more than 400 destinations in 105 countries with about 5,200 daily departures, the companies said.

American is continuing talks with the Port Authority of New York and New Jersey to move British Airways and Iberia into its overhauled terminal at Kennedy. The plan would require an expansion of Terminal 8, where American completed a $1.3 billion renovation in 2007. The 1-million-square-foot facility is American’s primary international gateway in the eastern U.S.
“We’re working closely with the Port Authority,” Horton said. “We have a great working relationship with them.”

He declined to comment on progress in the talks, which began after the three carriers won U.S. approval for their business venture. A Port Authority spokeswoman didn’t immediately return a call seeking comment.

To contact the reporter on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net
To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net