British Airways stands to strengthen its grip on Heathrow by gaining the right to buy a large chunk of take-off and landing slots at the airport, as part of proposals*Ryanair*is offering European regulators to seek approval for its*contentious takeover*of*Aer Lingus.
The UK flag carrier, the largest airline at Heathrow, has struck a deal with Ryanair to purchase more than 85 per cent of Aer Lingus’s slots at the airport, which are currently used to provide services to Dublin, Shannon and Cork, said three people familiar with the agreement between Ryanair and British Airways.
Heathrow is running at near full capacity, so the opportunity to buy Aer Lingus’s slots at the airport could provide British Airways with an important means to eventually expand its long-haul services.
Ryanair is trying to secure regulatory approval for its third takeover bid for the Irish flag carrier.
Last month, the European Commission*objected to Ryanair’s bid on competition grounds. The commission prohibited Ryanair’s first bid for Aer Lingus in 2007, and Brussels has never cleared a merger that it previously rejected.
British Airways is offering to take responsibility for many of Aer Lingus’s services out of Heathrow for at least three years.
With British Airways operating these services, Ryanair is privately saying that a combined Ryanair-Aer Lingus would not be dominant on those routes, said people familiar with the Irish budget carrier’s stance.
However, British Airways would run these services in place of Aer Lingus for between three and five years – after that it would have the right to buy the Irish flag carrier’s Heathrow slots and reallocate them to different destinations, such as New York.
Aer Lingus is the third-largest airline at Heathrow, and British Airways would be able to purchase up to 20 pairs of slots for daily flights that are held by the Irish flag carrier at the airport.
In the same regulatory process,*Flybe, the smaller UK airline that has issued four profit warnings since its 2010 flotation, has offered to operate flights for three years on 20 routes where Ryanair and Aer Lingus currently both have services.
Without Flybe’s offer, the combined Ryanair-Aer Lingus would be in a monopoly or dominant position on those 20 routes.
The moves by British Airways and Flybe form the centrepiece of a remedies package that Ryanair has submitted to the European Commission, to try to persuade Brussels to approve the takeover bid.
International Airlines Group, parent of British Airways, said: “We have signed a non-binding [memorandum of understanding] with Ryanair which is subject to EC approval ... and IAG board approval.”
Flybe and Ryanair declined to comment.
(source:
http://www.ft.com/intl/cms/s/0/28317d80-4601-11e2-b780-00144feabdc0.html#axzz2F4LyABZq)
