The posturing surrounding the proposed American Airlines-British Airways alliance has moved across the Atlantic with the US Department of Transportation coming under growing pressure from rivals to act.

In the most extreme case, the outspoken chairman and chief executive of Continental Airlines, Gordon Bethune, is threatening to ask Congress to rescind the DOT's antitrust competence in international aviation matters, because of its willingness to grant immunity to alliances the justice department would reject.

On a more measured note, the heads of five US carriers have called on Rodney Slater, the new secretary for transportation, to hold a public hearing into the proposed alliance along the lines of the inquiry held by the European Commission in early February.

Bethune argues 'Congress must step in' unless the DOT shows more willingness to reject alliances such as the proposed AA-BA linkup. He points to the use of antitrust immunity by the DOT as a lever in its quest for global liberalisation. Bethune accuses the DOT of becoming so enamoured with the prospect of winning over open skies converts that it seems willing to offer antitrust immunity to a link that in practice is anticompetitive. 'If the DOT plans to sacrifice competition on the altar of open skies, it may be time for Congress to provide the counterweight,' warns Bethune.

Bethune cites the joint application by American and BA for alliance approval as an example where 'open skies by itself won't create competition'. The result would be double the concentration levels that the DOJ would ever approve, claims Bethune.

The heads of five other US carriers - United, Delta, TWA, Tower Air and Laker Airways - have also rounded on the DOT, demanding a public hearing into the proposed alliance, as part of a detailed study, before further bilateral talks are held. The CEOs argued in a letter that any analysis will be 'fatally flawed' unless the DOT takes account of 'major factual disputes' over matters such as slots, access to terminals and post-alliance market shares.

The call for a US public hearing followed the two-day enquiry in Brussels, which was described by one attendee 'as the biggest meeting of its kind'. But Brussels is unlikely to be swayed by what it heard at the meeting. 'The Commission was treating the hearing more as a show for the airline parties to vent their arguments,' says the source.

Despite the pleas of the US CEOs, however, open skies negotiations between the US and the UK were due to resume in Washington in mid-February. Press reports of an early settlement were treated with scepticism in Washington, where Slater was still waiting to be sworn in. 'I have too much respect for the UK negotiators to think they will just hand this over to the USA,' says former US negotiator Jeffrey Shane of Wilmer, Cutler & Pickering.


Source: Airline Business