http://abcnews.go.com/Business/BusinessTravel/story?id=3D5635496&page=3D1 Partners or Robber Barons of the Skies? American, British Airways and Iberia Want to Team Up, but It Could Mean Far= e Hikes By SCOTT MAYEROWITZ ABC NEWS Business Unit Aug. 25, 2008 =E2=80=94 A war is brewing over the Atlantic Ocean -- high ab= ove the ocean. American Airlines, British Airways and Spanish carrier Iberia are trying to= team up in a move that their competitors call monopolistic and say could l= ead to higher airfare prices. The three carriers say their joint business agreement will give travelers g= reater choice, better connections and improved flight schedules. They are s= eeking immunity from antitrust prosecution here and in Europe. "If you listen to the alliances, it means consumer benefits out the wazoo,"= said Robert Mann, an airline analyst and consultant. "If you look at what = they are saying to Wall Street, it says the ability to coordinate schedules= and pricing, which means eliminating low-fare excess capacity, which would= seem to be inherently not consumer-friendly." Under the proposal, the three airlines would remain independent companies b= ut would be able to cooperate with schedule planning and pricing. Right now= such actions are generally illegal under antitrust laws. The companies would also expand their codeshare agreements in which one air= line sells seats on a flight operated by another. For example, a traveler g= oing from St. Louis, Mo., to London could buy a ticket through American but= be on an American jet for the first half of the trip and a British Airways= jet for the second leg. Several airlines already have antitrust immunity for their alliances. United and German carrier Lufthansa and other members of their Star Allianc= e have such protection. Northwest and Dutch airline KLM (now merged with Air France) also have that= protection. Delta is merging with Northwest and also is protected from ant= itrust laws. All of those airlines are part of the SkyTeam alliance. American, British Airways and Iberia are part of the rival oneworld allianc= e. This is the third time that American and British Airways have sought such p= rotection. The first time was in 1996, when Northwest and KLM partnered and= when United and Lufthansa joined forces. The second attempt was in 2002. B= oth times, the agreement against immunity was that the two airlines control= led key landing spots at London's Heathrow Airport, one of the most lucrati= ve markets in the world. Cheap Flights or Price Hikes? When the first attempt was rejected, the head of the Justice Department's a= ntitrust division said in a statement: "The combination of American and Bri= tish Airways would result in air travelers paying significantly higher fare= s for travel between the United States and Great Britain." But that all changed this year when the Open Skies agreement went into effe= ct, opening up Heathrow a bit to other airlines that had long been regulate= d out to London's other airports. Continental, Delta, US Airways and Northwest have all gained landing slots = at Heathrow because of Open Skies, but Mann says they all want more. He exp= ects those U.S. carriers to try and block immunity as part of a negotiation= to get greater access to Heathrow. The United States-to-London market is one of the world's biggest, Mann says= . But more important, because of the flow of business travelers airlines ar= e able to charge some of the higher premiums for the routes, flights landin= g at Heathrow instead of one of London's other airports, such as Gatwick, c= an be 15 percent to 20 percent more expensive. Mann calls it "potentially one of the most lucrative markets in the world." Richard Branson, president of Virgin Atlantic, has also raised a ruckus say= ing such an agreement would "damage competition." In a letter to both U.S. presidential candidates, Sens. Barack Obama and Jo= hn McCain, Branson said that "airlines everywhere are struggling with the c= urrent price of oil, but the solution to their problems should not lie in a= n anti-competitive agreement, which will inevitably lead to less competitio= n and higher fares." Rick Seaney, an ABC News columnist and CEO of FareCompare.com, an airfare s= earch site, said that competition is the No. 1 driver of airline ticket pri= cing. "Any time an airline goes bust, or two or more merge/partner, it means high= er airline tickets for passengers," Seaney said. "We have already seen mort= al enemies British Airways and Virgin Atlantic admit to colluding on fuel s= urcharges and agree to pay tremendous fines. & These antitrust agreements b= asically make this sort of activity legal." Better Flight Options Mann says American and British Airways have some legitimate arguments: Firs= t, the other airlines have immunity; second, while they do control a little= more than half the flights at Heathrow, Star Alliance airlines have a grea= ter share of flights at Frankfurt and SkyTeam has a larger percentage in Pa= ris. Also, airlines can serve certain routes through alliances that they otherwi= se might not try. For instance, Northwest and its partner KLM had nonstop s= ervice from Hartford, Conn., to Amsterdam. "That's a market that frankly would have never been served nonstop without = an alliance," Mann said. Richard Aboulafia, an aviation analyst with the Teal Group, says that Iberi= a is part of the deal because the big airlines want to "bulk up with the ni= che players before somebody else grabs them." Iberia also has several key Latin America routes, which can be added to Bri= tish Airways and American's networks. "No matter how much you want them or not, you don't want the other guy to b= ulk up with them," Aboulafia said. "It's all about maintaining that critica= l-mass global network." But ultimately, Aboulafia says the deal remains about Heathrow and how much= American and British Airways are willing to give up there. "A lot depends on what they offer as a concession. It does heavily come dow= n to Heathrow and access," he said. "There is no more lucrative traffic tha= n North Atlantic Heathrow. The fact is that BA [British Airways] and AA [Am= erican] will have an extremely strong position there. & There are many nice= alternate airfields, many inhabited by unicorns or leprechauns." Copyright =C2=A9 2008 ABC News Internet Ventures =0A=0A=0A <<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> If you wish to unsubscribe from the AIRLINE List, please send an E-mail to: "listserv@xxxxxxxxxxxxxxxxx". Within the body of the text, only write the following:"SIGNOFF AIRLINE".