Continental Airlines joins Delta Air Lines in unveiling post-Open Skies schedule for London Heathrow
US majors that won long-sought access to London Heathrow in the landmark EU-US Open Skies agreement have now secured the required slots and are preparing to launch services at the end of March.
Continental said in mid-November it had acquired four slot pairs at London Heathrow and will begin at the end of March double daily flights from both its New York Newark and Houston hubs. Continental has been forced by the old UK-US bilateral to operate to London Gatwick. It will continue to serve Gatwick from Newark and Houston as well as Cleveland on a seasonal basis, but chief executive Larry Kellner says its customers have "long requested the opportunity to fly to both London's main airports".
Continental refuses to disclose how it acquired the slots, but the airline revealed in an October Securities and Exchange Commission filing that it had set aside $130 million for Heathrow slot acquisitions. It is believed the slots come from a mix of sources from within and outside SkyTeam.
Skyteam slot deals
Continental follows SkyTeam partner Delta, which in October revealed a deal to lease three Heathrow slot pairs from Air France as part of their new transatlantic joint venture. Delta will serve Heathrow from its New York JFK hub twice daily and from its Atlanta hub once per day. A third SkyTeam carrier, Northwest, has not yet announced its Heathrow plans but is believed to have secured slots from partner KLM to support service from Detroit, Minneapolis and Seattle.
Only two US carriers, American and United, currently have access to Heathrow. American earlier moved to take advantage of the liberalised regime by unveiling plans to launch services to Heathrow from Dallas/Fort Worth and Raleigh-Durham, two hubs it is now forced to link with Gatwick because the old bilateral did not include them as possible gateways. American is the dominant US carrier at Heathrow. Chief financial officer Tom Horton says: "I think we'll be a formidable competitor for anybody who enters that market."
United, which has reduced its Heathrow operation in recent years, has unveiled plans to launch a new service from Denver. Star partner bmi has decided to hold off on launching Heathrow transatlantic flights but will increase its codeshare partnership with United. It seems another Star carrier, US Airways, will fail in its attempt to secure Heathrow slots.
British Airways is now competing with US and other foreign carriers to buy slots on the open market and has set aside £30 million ($61 million) for slot acquisitions. BA plans to shift its Gatwick-Dallas and Gatwick-Houston services to Heathrow and also add frequencies to its JFK, Seattle and Washington Dulles services. BA is also taking advantage of opportunities made possible by the Open Skies to launch services in 2008 from JFK to cities in continental Europe. Chief executive Willie Walsh says the new two-class Boeing 757 operation will initially consist of two or three transatlantic routes.
Virgin's plans
Virgin Atlantic also has been looking at launching services between the USA and continental Europe. Chief executive Steve Ridgway says Virgin is not yet sure if it can find a suitable aircraft for the proposed all-premium transatlantic operation. It has been evaluating the A319-derived Airbus Corporate Jet but is not yet sure if it can squeeze its patented business class suite on the aircraft. "The challenges are around aircraft and product," Ridgway says.
Although it will mean more competition for Virgin, Ridgway applauds Open Skies, saying "it is exactly the right thing. Aviation is the last industry to be regulated and there is no reason for it to be regulated." But he warns the agreement is "quite flawed" and Open Skies could be dismantled if the US fails to further liberalise by allowing foreign carriers to operate domestic US flights and foreign companies to acquire larger stakes in US carriers. He says US carriers need to be careful not to over-invest in Heathrow operations because they could be kicked back to Gatwick if a phase two Open Skies agreement does not happen. "It will be an interesting two to three years."
Walsh adds BA will "monitor these negotiations very closely over the next three years" and if it believes the USA and the EC have not made real progress by 2010 toward solving the thorny issues left on the table from stage one, it will ask the UK government to nullify the pact.
Source: Airline Business
