Delta a Big Winner as Treaty Opens Up Heathrow, London's Top Airport

LONDON — It's called the gold standard of trans-Atlantic flights.

Heathrow airport just west of London, the world's busiest for international passengers, hosts 90 airlines that carry 67.5 million passengers a year, 61.3 million of which are crossing national borders.

And now Atlanta-based Delta Air Lines is about to win its long-sought access to Heathrow through a new partnership with Air France.

"Delta's strategy is the right one because the trans-Atlantic market is such an important — and such a lucrative — market for an airline," said Laurent Delarue, senior manager at Arthur D. Little, a management consultancy in Paris that studies airport traffic.

"London is a major financial center visited by business travelers, so gaining access to Heathrow is key for Delta if it wants to make gains in this market," he said.

In addition, Heathrow has long been a valuable connecting airport for European destinations, and is only 15 minutes from London by train.

Delta's access to Heathrow is being made possible by an "Open Skies" treaty that's set to take effect March 28.

That international agreement will shake up the entire U.S.-to-Europe travel market by liberalizing rules and ending airline restrictions at Heathrow.

Until now, Heathrow — which currently accounts for about 40 percent of trans-Atlantic flights from Europe — has granted exclusive rights to only four carriers: British Airways, Virgin Atlantic, American Airlines, and United Airlines.

Delta is currently allowed to use Gatwick Airport, which is at least an hour's drive outside London.

But by inking its deal with Air France, Delta is gaining three coveted Heathrow landing slots. Analysts have predicted that the partnership could translate into billions of dollars in revenue for the two airlines.

Henry Harteveldt, a San Francisco-based travel analyst with Forrester Research, said that business travelers, who pay higher fares, prefer Heathrow over the Gatwick or Stansted, the other airport serving London.

"Airlines such as Delta need to have a viable presence at Heathrow in order to compete effectively for the large corporate accounts," he said.

Delta spokespeople declined to comment on its new access to Heathrow, except to point out that Delta had announced special introductory fares to celebrate the start of daily nonstop flights from Atlanta to Heathrow in the spring. Other Delta flights will connect Heathrow with New York's John F. Kennedy International Airport.

Not only Delta, but all U.S. carriers have been shuffling their schedules for months now in preparation for Open Skies, cutting domestic service and boosting trans-Atlantic service in order to position themselves to win a piece of the lucrative international market.

"Delta has been among the most aggressive when it comes to transferring aircraft capacities from domestic to international services," Delarue said. "You can expect that it will certainly increase its presence on the New York-to-London route."

But other airlines, too, have announced changes. Continental Airlines, for example, announced last week that it would launch two daily nonstop flights from its Houston and Newark hubs to Heathrow beginning in the spring.

American and British Airways will start service from Dallas-Forth Worth to Heathrow beginning March 30. Previously, flights from Dallas-Fort Worth went to Gatwick.

U.K.-based BMI has announced it will add five new U.S. destinations under its code-share agreement with United Airlines from Heathrow to Chicago, Los Angeles, San Francisco, Denver, and Washington.

"With the launch of the Open Skies agreement and the end of exclusive rights at Heathrow, an era of full competition — and in some cases, cooperation — will emerge," said Betty Stark, a travel consultant in Madison, Wis. "The big unknown about Heathrow is capacity. Even with the opening of Terminal 5 in March, they are operating close to capacity, so that could impose limitations on other carriers' expansion options."

When it opens March 27, Terminal 5 is expected to reduce congestion and check-in times at Heathrow with the capacity to handle 28 million passengers a year.

In general, the Open Skies agreement will allow European Union airlines to fly from any city in the 27-nation bloc to the United States and vice versa, replacing extremely limiting bilateral air treaties that date back 60 years.

U.S. airlines will also be able to continue flights within the EU after arriving from the United States.

The agreement also opens up Heathrow to more service to and from the United States.

EU government officials who approved Open Skies last March have touted the economic benefits of the agreement, saying it will cut the cost of tickets while also putting an extra 25 million people on trans-Atlantic flights within five years.

Just fewer than 50 million people now fly on those routes.

Daniel Hamilton, director of the Center for Transatlantic Relations at Johns Hopkins University in Baltimore, said the Open Skies treaty could likely create an economist boost of $15 billion with the creation of tens of thousands of jobs.

"In addition to the cost savings for travelers, the Open Skies treaty will give consumers many more options and facilitate ease of transport," he said. "And this itself is a big boon at a time when air travel can be so frustrating."

HEATHROW AT A GLANCE

Heathrow is the world's busiest airport in terms of international passengers, but only the third busiest in terms of total passengers.

Top five airports by international passengers, 2006

1. London Heathrow, 61.3 million

2. Paris Charles de Gaulle, 51.9 million

3. Amsterdam, 45.9 million

4. Frankfurt, 45.7 million

5. Hong Kong, 43.3 million

Top five airports by total passengers, 2006

1. Atlanta, 84.8 million

2. Chicago O'Hare, 77.0 million

3. London Heathrow, 67.5 million

4. Tokyo Haneda, 65.8 million

5. Los Angeles, 61.0

Source: Airports Council International

Heathrow's numbers:

Airlines, 90

Car parking spaces, 34,603

Runways, 2

Employs, 68,000

Economic contribution, $10.3 billion

Retail space, 516,000 square feet. Stores include Harrods, Christian Dior, and Emporio Armani.