Airline Company - Regulatory Environment
REGULATORY ENVIRONMENT
Bilateral Agreement between U.S. and U.K.
Flights from major international airports in the U.K. to the U.S. are regulated by a Bilateral Agreement between the two countries. The government negotiates routes for its country and then distributes these to the airline of its choice. Usually airlines have to submit an application detailing why its proposed service is in the best national interest. This creates a barrier to entry which is difficult to overcome. In addition, landing and takeoff slots at London Heathrow and London Gatwick are difficult to obtain creating another barrier to entry. These barriers to entry give a strong advantage to existing airlines. However, U.S. and U.K. government have been negotiating possible liberalization of skies. If this happens, we expect to see additional capacity out of Heathrow to the USA which may have an impact on yields.
Open Skies for Regional Airports (Bermuda II Agreement)
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