The proposed British Airways alliance with American Airlines faced a major but not fatal roadblock in the last days of 2001. US competition authorities, in the form of the Department of Justice (DoJ) antitrust division, urged the Department of Transportation (DoT) to impose slot divestitures and other conditions on the proposal. Similar demands from Brussels killed theoriginal plans in 1996.
The two carriers should not get the antitrust immunity they want unless they give up London Heathrow slots for at least 126 transatlantic flights a week, enough for other carriers to operate seven daily roundtrips between Heathrow and New York and two between Heathrow and Boston, the antitrust unit said.
It also urged that the alliance get no pricing immunity on flights between Heathrow and both Chicago O'Hare and Dallas/Fort Worth because "even with slots other airlines would be unlikely to enter" these markets.
The DoJ objection is not fatal: in the past the DoT has rejected its recommendations, and the conditions justice urged are considerably less severe than the 336 slots it wanted divested when it opposed the plan in 1998. Given this, American and BA should be pleased, according to Jon Ash, managing director of Global Aviation Associates. The DoJ in effect has set the parameters for bargaining between the two carriers and the DoT, which is expected to make a final ruling during January 2002.
American and BA called the DoJ filing "not unexpected from an agency that has traditionally taken the hardest line" in airline competition and "an outer limit of potential remedies", suggesting that they are willing to bargain.
The DoJ joins a list of opponents that includes the powerful US Teamster union, which has 50,000 airline members. Senators have come out for and against immunity for the alliance depending on the how their home states would be effected, and UK prime minister Tony Blair has lobbied the White House on behalf of it. n
Source: Airline Business
