July 24--US Airways Group and American Airlines have offered to give up a pair of landing and takeoff slots at London's Heathrow Airport to a competitor that would fly between Philadelphia and London.
European Union antitrust regulators have one concern: that after the $11 billion merger of US Airways and American, the new American, as the airline will be called, could substantially hike airfares between London and Philadelphia.
Why? The only other competition would be British Airways, which has a joint business agreement and financial stake in American's trans-Atlantic flights.
EU regulators want a third airline -- and it could be a foreign-flag carrier -- to offer competition on the route.
For Philadelphia travelers, it would be another option to get across the pond and help stabilize airfares on one of the busiest and most lucrative destinations for business travel.
It's not unusual for airlines to give up airport slots to competitors to ease regulatory concerns that a merger might harm competition.
"The parties have had ongoing discussions with the European Commission staff. All along they identified one city pair as raising concerns, and that was London to Philly," said a person familiar with the antitrust process who was not authorized to discuss it. US Airways and American declined to comment, pending regulatory approval.
Slots are the rights purchased by airlines to take off and land at airports at certain times.
Under the proposal, the new airline would get to choose what landing time, or slot, it wanted in London. The most desired arrival time is between 6 and 7 a.m. for business travelers. US Airways' current London flight gets in later, at 10 a.m.
A competitor airline would likely want an earlier time and select Heathrow slot times now used for flights from New York, Chicago, or some other city.
The airport losing the arrival and takeoff slots would have one fewer flight to London. Instead, Philadelphia would get the slots, and an additional flight, to satisfy EU regulators' concerns.
American operates nonstop Heathrow flights from New York, Chicago, Dallas-Fort Worth, Miami, Los Angeles, and Raleigh-Durham, N.C. US Airways flies nonstop from Philadelphia and Charlotte, N.C.
"We like to see competition on routes, so this ultimately could be a good thing for Philadelphia if a new-entrant carrier were to come in and serve the market in addition to the frequencies that we have today," said Philadelphia International Airport CEO Mark Gale.
US Airways has one daily nonstop to Heathrow, and British Airways has two, from Philadelphia.
EU regulators will require the airline getting the slots to commit to the Philadelphia-London route for four years, after which the carrier could choose to fly from another city.
Heathrow is a slot-constrained airport, where airlines must purchase slots. At Heathrow and other slot-controlled airports, including John F. Kennedy and LaGuardia in New York City and Reagan National in Washington, slots are coveted.
The European Commission, the executive body of the European Union, said it would decide by Aug. 6 whether to clear the deal.
The U.S. Justice Department is also looking at the proposed merger to create the world's largest airline.
A federal judge is expected to approve American's bankruptcy reorganization plan and the merger Aug. 15. The airlines expect the deal to close in September.
European Commission staff are currently assessing interest among airlines in buying the Heathrow slots. Analysts believe the slots will be purchased and some airline will operate the available Philadelphia-Heathrow route.
Copyright 2013 - The Philadelphia Inquirer
