Monday, 13 February 2012

BA/JAL Poposed joint services deal,- Time for a serious review.

The news that IAG's BA and JAL are proposing a joint services arrangement between Japan and the UK and will be referring it to the regulators,- presumably the UK/EU and Japan,-for approval and anti trust immunity is interesting.

This would be BA's 3rd joint services arrangment,the oldest being the mid 1990s one with Qantas which has seen the BA brand almost eliminated in Australia, Melbourne, Perth and Brisbane services abandoned and just a single daily operation to Sydney remaining from summer 2012. This hardly suggests the arrangement as a dynamic development for the airline or its customers. True, a number of Qantas services carry the BA flight code but what does that really mean to the traveller who likes and wants the BA brand and maybe even thinks that's what they have bought? In fairness the economics of this ultra long 2 sector route dogged by low yields and a plethora of high quality 6th freedom competitors offering very similar end to end journey times and a better spread of UK and European destinations are pretty impossible for operators based at either end of the route and especially those with traditional legacy airline high costs . In this case the approval of the joint service deal as the only way in which BA (and Qantas) can remain in viable business on the route is probably acceptable as it leaves them still in the game as competitors and that has to be be good for customer choice.

The second deal is the BA/Iberia/American Airlines trans Atlantic pact .Again this is probably unobjectionable as there is plenty of high frequency competition of similar or better quality on most of the routes involved and certainly on the North Atlantic overall. The question of the codeshare element being at best highly misleading and actually of no benefit to the man or woman in seat 32J remains as strong as ever and needs attention and a furrowed brow. In most other industries it would raise issues of mislabelling and probably be unacceptable.

This third deal comes at a time when BA have long abandoned their substantial presence in the Japanese market . They have long quit Osaka and Nagoya and retreated into a simple double daily operation to Tokyo. A joint services deal will not increase customer choice or on past perfomance induce BA to be a more aggressive player and open up new routes. More likely is that it simply regularises a retreat and leaves JAL an open field via, depending on the terms of the deal, something that is in reality a kind of royalty for BA not operating. The nonstop competition on the route comes from ANA and Virgin but this does not give the same level of comparable alternatives or frequencies available between the UK and Australia or the UK and the USA.

The answer therefore on this occasion should be a very definate "No,-this isn't good for competition, the industry or the customer. You need to fight this market out and not get cosy". Perhaps more importantly, the regulators should take this opportunity to challenge the so far largely passive governmental response to codeshares. The benefits are convenient to airlines in disguising the extent of their real operations,-or often non operations,-on a route but the whole concept is highly misleading to the passenger , certaily as to what they may expect on a flight. Many services carry more than one additional codeshare, thus cluttering up airport departures and arrivals boards, confusing baggage systems and leaving passengers not receiving the style and substance of service they thought they had booked. Think for example of an oriental code between London and Glasgow and dreams of Asia style cosseting compared with what you are likely to get and you have the picture.

Regulators,-it's literally in your court. It's time to apply the handbrake and to stem the drift towards less and less real choice via alliances and codeshares and to challenge to those too often heard words from alliance and airline head offices announcing yet another tie-up as "More great news for customers" when actually the news is a further slide along the road to less competition, less choice and higher fares.

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