Partners or Robber Barons of the Skies?

Partnership could make trans-Atlantic flights easier, but airfares could spike.

ByABC News
August 22, 2008, 3:00 PM

Aug. 25, 2008— -- A war is brewing over the Atlantic Ocean -- high above the ocean.

American Airlines, British Airways and Spanish carrier Iberia are trying to team up in a move that their competitors call monopolistic and say could lead to higher airfare prices.

The three carriers say their joint business agreement will give travelers greater choice, better connections and improved flight schedules. They are seeking immunity from antitrust prosecution here and in Europe.

"If you listen to the alliances, it means consumer benefits out the wazoo," said Robert Mann, an airline analyst and consultant. "If you look at what they are saying to Wall Street, it says the ability to coordinate schedules and pricing, which means eliminating low-fare excess capacity, which would seem to be inherently not consumer-friendly."

Under the proposal, the three airlines would remain independent companies but would be able to cooperate with schedule planning and pricing. Right now such actions are generally illegal under antitrust laws.

The companies would also expand their codeshare agreements in which one airline sells seats on a flight operated by another. For example, a traveler going from St. Louis, Mo., to London could buy a ticket through American but be on an American jet for the first half of the trip and a British Airways jet for the second leg.

Several airlines already have antitrust immunity for their alliances.

United and German carrier Lufthansa and other members of their Star Alliance have such protection.

Northwest and Dutch airline KLM (now merged with Air France) also have that protection. Delta is merging with Northwest and also is protected from antitrust laws. All of those airlines are part of the SkyTeam alliance.

American, British Airways and Iberia are part of the rival oneworld alliance.

This is the third time that American and British Airways have sought such protection. The first time was in 1996, when Northwest and KLM partnered and when United and Lufthansa joined forces. The second attempt was in 2002. Both times, the agreement against immunity was that the two airlines controlled key landing spots at London's Heathrow Airport, one of the most lucrative markets in the world.