British Airways has signed a “tie-up” deal with American Airlines to share passengers and costs between the European Union and North America. Two non-EU nations, Switzerland and Norway, are also covered in the agreement.
BA says the deal will be worth $7 billion a year and will give passengers greater access to discounted fares. They’ll also get better connections and access to the airlines’ global network.
The deal, which has been in the works since 2008, only received regulatory approval this summer after rival carriers complained that it would create a near-monopoly. BA and Iberia merged last year. The current tie-in deal with AA is not a merger, but instead a close cooperation agreement to integrate ground operations and other aspects of the airlines. This will reduce costs by getting rid of overlapping services, and if these savings are passed on to the customers then there could indeed be a reduction in fares. With competition as fierce as ever, BA, Iberia, and AA will want to make this deal as marketable as possible.
The joint venture will being in October. Stay tuned to see how it turns out.
[Photo courtesy Fly For Fun via Gadling’s flickr pool]
It is no secret that air travel is in a downwards spiral. The industry always manages to find excuses, it could be the crappy economy, high fuel prices, or a general sense of panic that is keeping people from flying.
And when air traffic drops, so does the demand for many of the planes operated by the airlines. When a route could once be served by a 747, low traffic may now demand a smaller plane, and when a 747 is idle, you can’t just pull into a parking spot at the local airport and throw some quarters in the meter.
There are several types of aircraft boneyards in the world – some specialize in ripping all the valuable parts out of the carcass, others devote their knowledge to preparing the plane for a long break, awaiting the return of paying passengers.
A plane that is destined for a long break will have all its fluids removed, as well as some instruments that don’t do too well when they sit still. The engines and other openings are then blocked, and the airline simply pays for the spot. Some airlines even pay to have the plane moved around a little, to keep the tires in good shape.
In total, 1200 planes were grounded and moved to the boneyard last year, with an additional 675 heading to a parking spot this year, making it one of the worst on record.
Qantas CEO Geoff Dixon might be stepping down from his post after eight hectic years, but he still has something to say about the future of the famous Australian airline. Though he did not announce a merger, Dixon stated that a future merger is “inevitable.”
“For Qantas, consolidation is highly desirable. It is in our interests to be at the leading edge of efforts to build a global airline grouping.”
However, he did not give any further details, leading some to believe that he is just letting off steam after running up against stiff government restrictions concerning the percentage of foreign ownership allowed of Australian airlines. Attempts to merge with Singapore Airlines and Air New Zealand were less than successful.
Dixon will leave Qantas in relatively stable condition, all things considered. He will hand a profitable company over to Alan Joyce, the current CEO of Jetstar (the low-cost-carrier affiliated with Qantas). The airline claims to have saved money because it operates more fuel-efficient aircraft.
Gadling has been closely following the merger between air travel giants Delta and Northwest Airlines. The marriage of the two carriers was recently approved by the Department of Justice. But what does this mean for the people on the ground and in the air? Aside from seeing new color schemes on the staff and aircraft, there are all those frequent flier miles Northwest patrons have been saving. Jamie recently wrote about what to do with them. Customers stand to pay higher prices when the merger takes hold. Delta will be in a more dominant position than before. That usually means higher prices.
But what about the staff of Northwest Airlines? Here in Minneapolis, strikes by Northwest employees have been commonplace over the past few years. On the positive side, the merger will mean that Delta, which has recently been more stable than Northwest, will be in control. But job cuts are probably coming. Employees may find themselves cut from the company because their position has become redundant. Northwest will most likely see job cuts at their hub in Minneapolis, while Delta’s second tier hub in Cincinnati will lose out to Northwest’s Detroit base. So the airline’s employees will be working for a more stable company, if they can survive the job cuts. Because Delta has the upper hand in the whole process, most watchers expect Northwest workers will bear the brunt of the lay-offs.
As Grant reported, today the Justice Department has cleared the way for the merger between Northwest Airlines and Delta. Here’s a brief blurb from the Wall Street Journal that my friend at WalletPop, Tom Barlow E-mailed me.
Back in April, Grant wrote a post about why to be happy about the merger. Hmmm. I’m not sure about that given my future plans. Grant wasn’t too sure either.
I’m wondering if this merger will affect my trip to Denmark in a month. I have a Northwest flight to Copenhagen through Memphis and Amsterdam on December 2nd. My ticket (actually two of them) is thanks to 100,000 frequent flier miles (50,000 each). If my trip is messed up–the one I am taking with my daughter, I’m going to be sad. I actually have a stronger word in mind, but I’m being polite. From what I’ve read, we may not be affected. We’ll see.
As for the other Northwest frequent flier miles I have, I’ve a strong urge to book tickets now just in case. On the other hand, there are places that Delta flies that Northwest doesn’t, so perhaps I’ll hedge my bets. Frequent flier programs seem more and more like gambling ventures–or the stock market.
The time that it has taken for the Justice Department to decide if the merger is kosher or not has probably cut down the number of decisions the airlines might have to make. For example, perhaps with fewer amenities, Delta and Northwest won’t have to figure out which snacks to merge –or which type of pillows to use.