DAVID FIELD WASHINGTON
The issues are the same, a few of the players may have changed, but the latest attempt by British Airways to seal its proposed alliance with American Airlines under a new open skies pact enters a vastly different stage than previous sorties.The alliance has become symbolic, perhaps borrowing too from the symbolism of the UK's energetic support for the war on terrorism. Some 13 Senators have stated as much in urging both the Transportation Department (DoT), and unusually, the State Department, to approve the alliance: "The UK now more than ever is this country's staunchest ally and closest friend."
Indeed, Northwest Airlines President Doug Steenland has said that the current political climate might make US negotiators less demanding, and Virgin Atlantic chairman Richard Branson, too, fears that war-inspired patriotism would hasten approval between the UK-US allies.
This time there is a genuine deadline too. The European Court is due to rule in the new year on whether the European Commission (EC) will have the final say over bilaterals with the USA. If as expected the EC wins the argument then the window of opportunity for a US/UK open skies pact is closing.
The British Embassy in Washington has issued a statement acknowledging that the UK "is acutely conscious that we have one last opportunity" for achieving liberalisation.
The timing however could be less tight than it appears. The date for the court hearing has already slipped and insiders believe that it could slip again until the spring. Meanwhile, the DoT is already opening its investigation into the antitrust immunity filings by American/BA and United Airlines/bmi british midland. Paul Gretch, director of the DoT's Office of International Aviation, says that the claims are being processed on the assumption that the necessary open skies agreement will be in place. Although no formal statutory deadline for a decision exists, the DoT said in mid-September that because of the EC case, it "must act promptly". Formal filing deadlines have passed and a decision could be made before March, potentially giving a tight but workable window in which to agree on a US/UK open skies deal. Gretch warns that if it comes to a full US/EC deal, then that is likely to involve hard, protracted negotiations. He also dismisses talk in Brussels about the concept of a supra-national body to oversee aviation on the North Atlantic.
Opponents of BA/American, however, remain vocal against the dash for approval. "The DoT is moving with unseemly haste," Continental Airlines president Larry Kellner told a Senate panel. Continental wants the two to file many more details, while Delta Air Lines wants a full-fledged public hearing to avoid "decision-making behind closed doors". Virgin's Branson comments that it is "beyond me how any competition authority can conduct a relevant, robust and meaningful" analysis of the plan in the industry's current turmoil. But unless the alliance and the treaty are in place soon, it could be "several years" of an "unacceptable" status quo, BA director investments Roger Maynard told the antitrust subcommittee of the Senate's Judiciary Committee.
Other things have changed since the last go around. The US regulatory attitude toward airline consolidation is different than it was before 11 September, when it was sceptical of any combination. Another key change is that some of the prime opponents of the alliance now favour it. Chief among them is the influential economist Alfred Kahn, the former Civil Aeronautics Board chairman often called the father of airline deregulation. Kahn now says competition is between alliances, not between individual carriers.
Source: Airline Business
