NBTA Speaks Out Against AA/BA Alliance; Association Says Corporations Will Suffer From Decreased Competition
ALEXANDRIA, Va., The National Business Travel Association (NBTA) expressed its concerns regarding the proposed American Airlines (AA)/ British Airways (BA) alliance this week in a letter to Deputy Secretary of Transportation Michael Jackson. In the letter, NBTA stated its belief that this alliance would further damage competition and the already unstable aviation industry, hurting American corporations.
Business fares have skyrocketed over the last five years, particularly in international markets like London, where there is little competition and only a few carriers. Currently, American and British Airways are two of only four carriers that offer service to London's Heathrow Airport from the United States. NBTA believes the AA/BA alliance will have an adverse effect on fares and both international and domestic service.
"NBTA and its members believe the alliance will likely enhance the market power of AA/BA and allow the two companies to maintain prices above competitive levels," said Marianne McInernery, Executive Director of NBTA. "American businesses are already paying high prices for travel to this key international destination, and the AA/BA alliance would only increase these prices."
In a recent survey, 40% of NBTA members stated they thought the AA/BA alliance would reduce competition and service in their key international markets.
In addition, industry experts predict the AA/BA deal would increase AA's dominance in domestic markets, thus hurting low-fare, new-entrant carriers. If the deal goes through, AA will be able to leverage their high revenues from business travelers on international routes and harm competitors by expanding capacity and reducing fares on the competition's domestic routes.
"If this alliance goes forward without allowing new entrants into the valuable U.S.-Heathrow market, weaker carriers will face bankruptcy or mergers," concluded McInerney. "As a result, business travelers will see higher fares, fewer choices and poorer service."
The National Business Travel Association, established in 1968, represents over 2,400 corporate travel managers and travel service providers. NBTA members manage and direct more than 70% of expenditures within the business travel industry. NBTA is committed to the professional development of its members and offers educational and training opportunities. It is the source for critical information on the business travel industry.