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Aer Lingus

Finally, U.S. Regulators Allow Aer Lingus to Join Oneworld Trans-Atlantic Joint Venture

Finally, U.S. Regulators Allow Aer Lingus to Join Oneworld Trans-Atlantic Joint Venture
Joe Cortez

After years of debate and questions about managing slot access at London Heathrow Airport, the U.S. Department of Transportation has tentatively ruled Aer Lingus can officially join the “Oneworld Immunized Alliance:” the joint antitrust immunity agreement with American Airlines, British Airways, Iberia, Level and Royal Jordanian Airlines.

Aer Lingus may soon join American Airlines and four others in their trans-Atlantic joint venture, opening up more options for flyers between the United States and Europe. In a tentative ruling, the U.S. Department of Transportation will allow the Irish carrier owned by International Airlines Group to join the Oneworld sub-partnership.

Approval Based on Access to London Heathrow Airport Slots

Although IAG purchased Aer Lingus in 2015, the airline noted they had no interest in becoming a full member of the Oneworld airline alliance. In 2017, executives for the Irish carrier said they had “no plans” to become a partner, saying they needed to do “the business case” for membership. As of today, Aer Lingus is one of three IAG airlines which are not members of Oneworld.

However, that did not preclude them from requesting to join the trans-Atlantic joint venture lead by IAG and American Airlines. The “Oneworld Immunized Alliance” was founded in 2010, and consists of American, British Airways, Iberia, IAG’s low-cost carrier Level, and Royal Jordanian Airlines. Under the sub-alliance, the airlines are granted “merger-like efficiencies in covered markets,” including code sharing, interline transfers between carriers, and joint cargo operations.

The arguments that previously prevented Aer Lingus’ membership were led by Delta Air Lines and JetBlue. Although both airlines did not fundamentally disagree with the joint venture framework (as Delta has a similar joint venture with Virgin Atlantic and KLM-Air France), their concern focused on access to London Heathrow Airport (LHR).

Delta’s evidence focused on the fact that the Oneworld joint venture had a 59 percent slot share at London Heathrow, while Delta only has eight percent. JetBlue argued that although SkyTeam and Oneworld control over 70 of the slots at LHR, access must also be open to smaller carriers who wish to operate at Europe’s third busiest airport. JetBlue is planning to begin service to London starting in 2021.

Despite the concerns, the U.S. DOT believes that the addition of Aer Lingus to the joint venture would not hurt their businesses. With the rise of next-generation, single-aisle aircraft (the Airbus A320neo and Boeing 737 MAX), more airlines will have opportunities to reach western Europe from the United States.

“The competitive analysis shows that the addition of Aer Lingus to the Existing [joint venture] may enhance the Parties competitive position in the U.S.–Ireland market, with a significant reduction in competition on the two overlap routes as well as a handful of connecting markets,” the DOT writes in their preliminary order. “However, the arrival of the next generation of aircraft will bring Ireland within range of more LCC competition, the existing presence of an LCC competitor (Norwegian) in the U.S.–Ireland market, and the presence of some intervening hubs to offer a limited amount of connecting competition, will help to address many of the competitive concerns identified.”

However, because of the continuing COVID-19 pandemic and the struggles of both Norwegian Air and WOW Air, the DOT agreed to review the agreement in five years.

Public Benefit Outweighs Competition Concerns

By approving the joint venture, the U.S. DOT believes that the deal is in the interest of flyers. Their data estimates adding Aer Lingus into the joint venture would drive “An additional $67 million in incremental consumer benefits annually through increased connectivity, including 72 new unique codeshare destinations,” and lower fares for flyers on both sides of the Atlantic.

Even though they will be part of the “Oneworld Immunized Alliance,” don’t expect the Irish carrier to join the Oneworld alliance anytime soon.

The docket with full commentary from all stakeholders is available at regulations.gov, under docket DOT-OST-2008-0252.

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