Last year, Aer Lingus, while it is not a member of the oneworld alliance, received permission from the US Department of Transportation (DOT) to be a part of the Atlantic Joint Business (AJB) agreement between American Airlines, British Airways, Iberia, and Finnair. Now, the joint venture agreements will include the upcoming long-haul transatlantic Aer Lingus operations out of Manchester Airport (MAN) under the Aer Lingus UK banner, which will be a huge benefit to the airlines.
DOT confirms Aer Lingus UK can be a part of the joint venture
In a letter to counsel for Aer Lingus, Todd M. Homan, Director of the Office of Aviation Analysis, confirmed that the DOT will consider Aer Lingus UK, as the entity exists today, as an immunized affiliate of Aer Lingus under the immunized AJB. The same provisions and obligations will bind the UK branch of Aer Lingus as the Irish branch of Aer Lingus.
Aer Lingus UK will participate in the joint venture in a metal-neutral fashion. The airline will target transatlantic routes out of Manchester, a weaker airport for oneworld airlines in the United Kingdom. Aer Lingus UK will continue to be viewed as an immunized affiliate of Aer Lingus so long as it holds underlying economic authority to conduct and market air services between the United Kingdom and the United States.
Certain actions, such as Aer Lingus UK independently marketing its own services using its own airline code, must be submitted to the Office of Aviation Analysis at the DOT for review.
The DOT’s understanding is that Aer Lingus UK will initially operate by utilizing Aer Lingus’s designator code, marketing capabilities, and distribution challenges. This will be until the airline builds its own infrastructure to serve as a stand-alone carrier. When Aer Lingus UK eventually does branch off from Aer Lingus and develops independent sales, marketing, and operational elements, the DOT will review the information and determine Aer Lingus UK’s standing within the AJB.
Aer Lingus in the AJB
In December 2020, the DOT officially granted final approval for the inclusion of Irish carrier Aer Lingus within the joint venture agreement between American Airlines, British Airways, OpenSkies, Iberia, and Finnair. In 2010, the DOT approved antitrust immunity for alliance agreements, including a coordinated revenue-sharing joint venture between American Airlines, British Airways, Iberia, and Finnair.
In 2015, IAG, the parent company of British Airways, Iberia, and OpenSkies, acquired Aer Lingus. In 2018, the parties filed a joint motion to include Aer Lingus into the existing joint venture agreement. The DOT finalized this in late 2020.
With Aer Lingus in the joint venture, the carrier adds its Dublin hub and nonstop services from the US to Ireland to the joint venture, which means more seamless integration and sales point for American, British Airways, Iberia, and Finnair to include flights to Ireland. It was only a matter of time when the airlines would seek to put Aer Lingus UK into the joint venture.
Filling in a gap
While the joint venture agreement includes British Airways, arguably the UK’s most well-known long-haul international carrier, the airline does not have a long-haul presence out of Manchester. Previously, American Airlines used to fly to the city from its hub in Philadelphia. However, that route has been axed.
While Aer Lingus UK will not be taking over the American Airlines route, it will be using its position in Manchester to run long-haul flights to key destinations in the United States.
The initial services are slated to start in December. The route launches have been pushed back amid the ongoing travel restrictions, which impede the airline’s ability to do well in the long-haul market. It now expects to launch New York flights on December 1st and Orlando flights on December 11th.
At the time of the airline’s approval to conduct US-UK flights from the DOT, the carrier noted three specific routes. In addition to the New York and Orlando to Manchester flights already on the books, the airline indicated plans to connect Boston with Manchester.
As part of the joint venture, the airlines will be able to fill in the gap at this major city in the UK. A competitor to this alliance, the Delta-Virgin Atlantic-Air France-KLM joint venture, is represented in Manchester through Virgin Atlantic. Aer Lingus UK and Virgin Atlantic will overlap on flights to New York and Orlando from Manchester.
A lucrative partnership
Joint ventures have been growing in popularity with airlines. This is in large part due to the benefits that they provide. With antitrust immunity and revenue-sharing, metal-neutral initiatives, the powerhouse partnership has fueled immense growth.
Essentially, Finnair, Iberia, British Airways, American Airlines, and Aer Lingus act as a single competitor in the market despite being multiple airlines. Between sharing on costs and marketing, the joint venture helps the airlines keep their planes full and gives travelers more options. In addition, airlines get to retain some more pricing power since they are not competing against each other and are, instead, working together.
The transatlantic market is also one of the top markets in terms of revenue for airlines. Between large origination and destination traffic to points in Europe and onward connections to Africa, the Middle East, and parts of Asia, airlines typically reap a lot of financial rewards in a normal year with no travel restrictions.
No airline can serve every point in the world. However, through partnerships, passengers have an opportunity to visit almost every place in the world. With a joint venture, airlines not only get access to additional connections but can also coordinate on pricing and marketing to reach a mutually beneficial point of driving greater revenue while also being relevant to more customers, thereby increasing their brand presence and potential.
With Aer Lingus UK now receiving a green light to be a part of the joint venture agreement with American, British, Iberia, Finnair, and Aer Lingus (Ireland), this sets up the joint venture to provide unrivaled services to the United Kingdom and sets up Aer Lingus UK for success through early access with close partners.
Are you glad to see Aer Lingus UK allowed to join the joint venture? Let us know in the comments!