Has there been a stranger courtship than that between British Airways and Iberia? The airlines, which have been talking for years, have finally agreed to merge, sort of. I mean, it’ll get there eventually.

I believe talks began in 1784 when King George III, still sad about losing that whole American Revolutionary War thing, decided to go take over Spain instead. (Note: please do not try to double check this in your history books). Though Englaspaña didn’t pan out thanks to bad blood over that whole Armada tiff a couple hundred years earlier, they agreed that were airplanes to ever be invented, they would talk about merging the two entities.

Now, a few hundred years later, the dream has become a reality. Well, almost a reality. If you happen to love BA or Iberia, don’t fret. Not much is likely to change for travelers. Think of it as being similar to the Air France/KLM merger or even Lufthansa’s takeover of, uh, most of Europe. There will now be a holding company called TopCo (wtf) that will be held by the current BA and Iberia shareholders. BA gets 55% and Iberia gets 45%. The brands will remain separate.

Is anyone else surprised how much Iberia is getting in this deal? I mean, I always thought of BA as part of the big three with Lufthansa and Air France, but this just makes them seem tiny. Well, whatever. It doesn’t matter to me. I don’t hold shares in either company, but even if I did, it’s not a done deal just yet.

There isn’t actually a fully defined agreement yet. That should be done by March . . . 2048. Ok, not really. March 2010 it is. Then they expect the Boards to vote by the end of 2010, and that’s when it will be done . . . assuming the European Union doesn’t have any issues. In other words, let’s talk about this in a year when something might actually be happening.

I had someone ask me whether I thought this meant that the British Airways/American Airlines antitrust immunity proposal would be hurt since Iberia and British Airways were consolidating. I don’t think so at all. Though we talk about BA/AA, Iberia is actually already a part of that deal. So this doesn’t change a thing.

So what do we take away from this? Nothing yet. Just keep waiting and we’ll see if it actually goes through. Until then, keep flying as if nothing happened.

Watch out, LAN. There’s going to be another Latin mega-carrier now that Avianca and TACA have decided to come together to form . . . AVIANCTACA? Ok, they’re not going that far. In fact, the brands will stay separate, but this is an interesting development in Latin America.

Avianca is based in Bogota, Colombia, and it traces its routes to SCADTA, an airline founded in 1919. That makes Avianca one of the oldest airlines in the world. Of course, it has had its ups and downs with management changes and insolvency. In recent years, it has seemed to regain solid footing under its latest ownership group, Synergy Group. This group also owns AeroGal and VIP in Ecuador along with OceanAir in Brazil.

On the other side, we have TACA, the group formed by Central American carriers TACA (El Salvador), NICA (Nicaragua), LACSA (Costa Rica), and Aviateca (Guatemala). They also started TACA Peru in the last few years.

So now the airlines are coming together to form a mega-carrier covering much of Latin America. The plan is to keep separate brands but consolidate management. Yes, it’s the Republic Airways of South America.

It looks like the senior management team will be shuffled between the two carriers. I don’t know a lot about Avianca’s team, but if they’re smart, they’ll make sure that TACA’s team sticks around. They have a very bright group of people over there and they’ve done a fantastic job with that airline group.

What this means for customers is still not clear. Avianca recently resumed its codeshare with Delta, but it also partners with Star-carrier Air Canada and oneworld-carriers Iberia and Mexicana. Meanwhile, TACA has been aligning itself with Star Alliance carriers, though it has yet to officially join. So will this new airline come together and move into a single alliance? It definitely won’t be oneworld with LAN a member, but the others could be up for grabs if they so chose. Regardless, this does create a fairly formidable presence throughout Latin America.

July Premium Traffic Shows Gains – BNET
It’s premium traffic monitor time again, and traffic is still in the tank. But it’s not quite as bad, so that’s good.

Delta’s SkyClub Promotion Slightly Misses the Mark – BNET
Delta offered club access to some elite members for a day. Good idea, not great execution.

Guest Posts From My Favourite Bloggers : Brett Snyder – The Cranky Flier – Flying with Fish blog
I wrote a guest post for Fish about the recently announced V Australia/Emirates codeshare.

US Airways and Delta Raise More Money – BNET
Airlines are raising money left and right these days. Might as well do it while they can.

United Goes Back Into Mini-Expansion Mode Domestically – BNET
Don’t look now, but United has started adding new flights and new cities once again. That’s always encouraging, though I do wonder about some of these.

Virgin America’s Improved Second Quarter Performance Details – BNET
Now that the government data is out, we can take a look at Virgin America’s performance in greater detail. Not too bad, but there’s still work to do.

Yesterday, Southwest submitted its complete bid to buy Frontier and I have to say that I like what I’m seeing here. There is a lot going on in this bid, and if they win, it will have a huge impact on customers. We could be looking at the possibility of Southwest coming to a slew of new, smaller markets on top of other big domestic and near-international ones. That doesn’t mean this would be an easy merger (they never are), but for the price, the benefits could be huge.

Southwest ended up putting its bid in at $170 million for Frontier and its Lynx subsidiary (more on that in a minute). Republic has also, as we know, submitted its bid. So, the two will bring their proposals on Wednesday and the auction should take place on Thursday. That’s when we’ll know who wins. At first look, the Southwest bid is better for creditors, but that’s the stuff I write about on BNET. Here, I want to talk about what will happen for the customer.

First, Southwest says that if it wins, it only wants to take 40 out of the 51 airplanes in the Frontier Airbus fleet. So my guess is that almost immediately you’ll see a cut in frequency on overlapping routes. Look at Denver to Vegas, for example, Combined they have 15 flights a day. They don’t need that, and it’s a similar situation on other overlapping routes as well. So then where will the 40 remaining planes go?

They’ve said that it will take 24 months for a full transition from Frontier to Southwest. So at the end of those 24 months, the Airbuses will be gone and they’ll have been replaced with 737s. Until then, they won’t be dropping any cities. (They will, however, be dropping Dallas/Ft Worth in favor of Southwest’s existing Love Field service.)

On a media call today, someone from Atlanta asked about their Atlanta plans. Southwest execs said that they do intend to keep flying to Atlanta initially under the Frontier name and eventually as Southwest. I asked them about Washington/National and whether they would be able to keep the beyond-perimeter slots that Frontier owns. They said that they think they’ll be able to, but they’re still studying it. So they want them for sure.

They will also be keeping Anchorage and Mexico flying. Of course, this could all change once the transition is done in 24 months, but for now it makes sense to try them out and see how they work. If they’re happy with the results, then they’ll keep them. If not, well, they won’t. It’s a great test bed for future opportunities. Oh, and Frontier is profitable right now so it’s a pretty nice testbed to have.

But the most interesting thing to me is the fact that they have decided to include Lynx in their bid. Originally, they weren’t sure about that, but they’ve decided to keep it. That means that they want those Q400s and they want to start offering service to smaller cities. It was more than a year and a half ago that I wrote this:

That’s why I think that ExpressJet could do very well if only they were Southwest Express. The connection to a large airline’s frequent flier program and access to passenger feed from a broader route network would be exactly what they’d need. Just look at the routes that are working here and you can see them fitting into the Southwest network quite nicely.

Now I have high hopes that this is what will happen. Though instead of the high cost Embraer regional jet, they will use the very cost efficient Q400 turboprop. This could be big if it works.

On the call, Southwest made it clear that it didn’t really know how this would play out. There was even discussion about having someone else possibly operate Lynx for Southwest, but none of that has been decided. I imagine that labor will dictate what happens there. If they can get reasonable rates from the flight crews, then they might try to keep it in house. I hope that’s what happens because an outsourced operation could be very problematic for Southwest.

All I know for now is that this acquisition could open up an incredibly large range of opportunity for Southwest. It gets them into Atlanta and probably Washington/National. It puts them in Mexico. And it gives them a second fleet type (Q400s) that can serve a ton of routes that aren’t currently on their map today.

Oh yeah, and they eliminate a competitor in Denver and make the place profitable. That alone makes Frontier worth buying for $170 million or more, but there is much more that’s possible. While the basic purchase of Frontier isn’t a bold move, what they might end up doing with it certainly is.

They just need to make sure that they keep the Southwest culture intact. The people piece is the most difficult and most important by far.

You knew it wouldn’t be long before the “Save Frontier” groups got together to rally for their airline. There are now a few efforts going, but I’m afraid that none of these are likely to have any impact.

Initial bids to bring Frontier out of bankruptcy were due by August 3 and only the Republic and Southwest bids were received. Assuming that both turn in complete final bids by the end of today, then the judge will have to decide which of the two is the winner.

The Republic bid keeps Frontier as a separate brand, so that’s the one that Frontier employees and fans are rallying around. An employee rally was organized last week, but turnout was 150 people at best (and probably less). At least one customer has taken the initiative to put out SaveFrontier.org (thanks, Things in the Sky). So will any of these help?

I doubt it. The judge is supposed to do what’s best for the airline’s creditors. Either of these bids is likely to produce a decent ending for the airline (though very different ones) but a higher price is better for the creditors. So, if you want to save Frontier, don’t bother with a rally or protest. Instead, get on an airplane to Indianapolis (Frontier and United will both you get there nonstop) and start talking to Republic management about increasing their bid.

If you’re an employee, you could talk about concessions and wage reductions. The more you can do to reduce costs, the more Republic could consider increasing their bid, I assume. Of course, if Southwest wants to win this one, they will. So your efforts could be futile, but it has a better shot at having an impact than just marching around.