North Atlantic airline joint ventures: under the regulatory spotlight

One of the many unanticipated consequences of the uncertainties raised by Brexit is increased regulatory scrutiny of North Atlantic airline joint ventures. Members of these JVs are allowed to coordinate schedules and prices only with regulatory immunity from competition rules.

In Oct-2018 the UK's Competition and Markets Authority (CMA) launched an investigation into the JV inside oneworld between British Airways, Iberia, Finnair and American Airlines. The JV was approved by the European Commission in 2010 after JV members gave commitments to release slots to competitors on six city pairs: London-Dallas, London-Boston, London-Miami, London-Chicago, London-New York and Madrid-Miami.

The commitments expire in 2020, after the UK's scheduled exit from the EU, and five of the routes touch the UK, hence the CMA's investigation ahead of their expiry. It is expected to report in Mar-2019.

CAPA analysis indicates that there has been only a limited increase in competition, if any at all, on these routes and on the two routes most important to the other JVs (Paris-New York and Frankfurt-New York). Competition investigations are complex, and it would be foolhardy to second-guess their outcome, but the CMA's study could prompt other regulators to review the North Atlantic aviation market.

The CAPA Americas Aviation Summit in Denver on 18-19 March 2019 will include discussion of the North Atlantic.