Trifecta: Why Iberia matters in the AA/BA tie-up

In all the hubbub over European approval for a joint venture between American Airlines and British Airways, one small detail — a $7.5 billion detail — was frequently overlooked.

After months of review, regulators also cleared a merger between BA and Iberia, helping to keep the Oneworld partners abreast of Air France/KLM and Lufthansa in the European consolidation race. While critics obsessed about a “monopoly” on North Atlantic routes, hardly anyone bothered to notice that Oneworld is now the de facto alliance on routes between Europe and the Americas.

Iberia by itself is the leading European carrier in Latin America, claiming more routes and more destinations than any of its competitors. Meanwhile, American is one of two carriers battling to dominate north-south traffic in the Americas, and its state-of-the-art hub in Miami gives it an edge over Houston-based Continental when it comes to connecting travelers for European flights.

Fortunately for the competition, Oneworld may have trouble capitalizing on Miami as a linchpin between Europe and the Americas. Regulators have already required divestiture of Heathrow-Miami and Madrid-Miami slots, and Oneworld lacks another European member with an attractive hub for American routes.

Still, the other alliances will be scrambling to play catch-up as Oneworld cements its leadership in the North America/South America/Europe market — and SkyTeam, in particular, could find itself at a disadvantage due to the relative weakness of Delta’s network south of the border.

Oneworld waited more than a decade for regulatory parity with the competition, but now that approvals are in sight, the payoff could come very quickly indeed.