Thursday, October 1, 2009
News outlets are reporting that Germany's Lufthansa will take full control of U.K. airline bmi when it purchases Scandinavian Airlines' 20% stake in the carrier. See Kaveri Niththyananthan & Dominic Chopping, Lufthansa Buys SAS Stake in BMI, Dow Jones Newswire, Oct. 1, 2009 (available here).
While it is far from certain what (if anything) Lufthansa will do with bmi, one of the key points to the story is that Lufthansa now controls bmi's 11% share of London Heathrow's highly coveted slots. This could be a boon for the Star Alliance which is looking at potentially fierce competition in the transatlantic market if U.S. regulators approve and grant antitrust immunity to American Airlines and British Airways as part of the oneworld Alliance's application. In previous bids for antitrust immunity, the issue of both carriers controlling a large share of Heathrow's slots had prompted the Department of Transportation to demand slot divestiture as a precondition for immunity. This was understandable since only American, along with United Airlines, had access rights to Heathrow. Even so, both BA and AA refused to surrender slots. Since the signing of the 2007 U.S./EC Air Transport Agreement, however, any airline from the U.S. can, in theory, access Heathrow so long as they acquire slots. This is still easier said than done. Some observers have expressed concern that should BA/AA receive antitrust immunity, the two airlines will effectively shut out competition into Europe's busiest airport. Whether that possibility is enough to stay the DOT's hand in granting immunization remains to be seen. Either way, with Lufthansa now controlling a fresh pool of slots, some concerns over competitive parity may be eased.