In a business where the product has become somewhat of a commodity and competition is brutal, airlines are always looking for better, more efficient ways to get and retain more customers. For some airlines, the best perceived strategy is a merger, as in the recent hook-up of Continental and United.
For others, however, collaboration is preferable, because the airlines can retain their own identities yet benefit from each other. That's why British Airways, Iberia, and American Airlines just announced an agreement to code share — airline language for sharing routes, as well as coordinating schedules and fares. Passengers will be able to purchase tickets on each other's websites and essentially switch carriers as the need arises.
While collaborations aren't unusual in the airline industry, this one brings together three well-known brands from different countries and ultimately will provide transatlantic passengers with greatly expanded choices.
American Airlines already flies transatlantic routes, but partnering with BA and Iberia will give it more options. Willie Walsh, BA's chief executive, tells the Guardian, "You are going to witness a new era of competition... you can mix and match. You can travel outbound with AA and inbound with Iberia."
One key reason for this newest partnership is the competitive impact of two other alliances: Sky Team, which includes Delta, Air France and eleven other airlines, and Star Alliance, a group of over 25 airlines, including Lufthansa, SAS, United, and US Airways.
The collaboration stops short of a merger for legal reasons, although BA and Iberia are actually scheduled to merge by the end of 2010. The three-way alliance has apparently been given approval by both the European Union and U.S. regulators.
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