American's proposed alliance with British Airways and the prospect of US-UK open skies is grabbing all the headlines. But the Dallas-based carrier's alliance building in Latin America could temporarily overshadow that with the promise of another slanging match and the prospect of Central American open skies.

The alliance with BA remains top priority for both American and the US Department of Transportation. But despite the two carriers filing for antitrust immunity in early January, Washington has still not initiated the official enquiry.

Two major political considerations appear to be delaying progress on the transatlantic alliance, admits a senior source at BA. The UK must hold a general election no later than May and a change of government seems likely, leaving Washington unsure who it will be dealing with. Moreover, transportation secretary Rodney Slater is barely wet behind the ears and will make the most of the political hiatus in the UK to get up to speed on the issues before grappling with the best opportunity Washington has yet had to crack the restrictive Bermuda II bilateral wide open.

The BA official admits he is now not expecting a final decision much before September which, according to sources in Washington, 'might move the Latin applications up.' American has applied for approval of codeshares with Central America's Taca group and Columbia's Avianca.

The chance of Washington's focus switching to Latin America is strengthened by the recent disclosure by Charles Hunnicutt, the DOT's assistant secretary for aviation and international affairs, that the six Central American nations which host the Taca consortium have all expressed interest in negotiating open skies agreements with the US. Washington signed a deal with Panama in mid-March.

John Byerly, US State Department special negotiator on transportation affairs, says the US expects to negotiate open skies accords 'with all Central American countries this spring.' Even though the DOT has ordered American to file further confidential materials because of what the DOT called 'serious competitive issues that need investigation,' Washington could change its tune with open skies.

But the proposed codeshare deals have drawn strong protests from other US majors, which could turn into a full storm along the lines of BA-AA. 'The Central American governments have made the judgement that open skies with the US is the price they have to pay to get their codeshares through,' says an insider at one of the UScarriers opposed to the applications.

Continental and United have warned the DOT that practical barriers to entry would bar any real competition against an AA-Taca combine even under open skies. Continental cites the strength of American's Miami hub as the US gateway to Latin America and the dominance of the Taca carriers in their own countries.

United adds that American has extracted promises of exclusivity from the Taca carriers, which contractually bar them from codesharing with other US carriers.

American hopes the DOT will approve its codeshare with Avianca in time to launch joint services by 1 May. The deal includes codesharing on flights from five gateways in each country. United says the proposed linkup is even more anti-competitive than AA-Taca because the US-Colombia bilateral restricts entry by other US carriers. So far the DOT has not acted on the application.


Source: Airline Business