DOT Approves BA, American Airlines Alliance

DOT Approves BA, American Airlines Alliance

The U.S. Department of Transportation on Saturday, Feb. 13, gave tentative approval to grant anti-trust immunity to a passenger and cargo alliance among American Airlines, British Airways and Iberia in return for giving up four pairs of daily landing and take off "slots" to rival airlines at congested London Heathrow airport.

Washington's preliminary approval of the trans-Atlantic alliance boosted hopes of progress at talks Feb. 15 between the European Union and the United States over a deeper "open skies" aviation agreement

The long-awaited decision came on the eve of two days of talks starting in Madrid Monday aimed at deepening the 2008 open skies agreement that liberalized passenger and cargo services on the Atlantic.

EU negotiators are pushing for deeper liberalization including the right of European airlines to buy or merge with U.S. carriers. Current regulations prevent foreign companies owning more than 25 percent of the voting stock in U.S. airlines.

The EU, which claims the current deal is weighted in favr of U.S. carriers, is also pushing for greater traffic rights for its airlines in the U.S. domestic market.

British Airways, which has been seeking a tie up with American Airlines since 1997, plans to close a merger with Spain's Iberia by the end of this year. The three carriers are members of the Oneworld alliance.

The Department of Transportation's preliminary ruling is much more generous than its demand in 2002, when BA and American Airlines last sought approval, that they surrender sixteen daily slots. This prompted the carriers to withdraw their application.

The DOT said that if its decision is made final the alliance "would be able to more closely coordinate international operations in trans-Atlantic markets."

The alliance would provide "travelers and shippers with a variety of benefits, including lower fares on more routes, increased services, better schedules and reduced travel and connections times."

The ruling is expected to put pressure on the European Union to clear the alliance, which also includes Oneworld partner airlines Finnair and Royal Jordanian Airlines.

The United States has already granted anti-trust immunity to Oneworld's rival Star and SkyTeam alliances.

If the alliance is approved, the carriers will share revenues and profits and co-ordinate capacity, routes, fares and sales on services between the United States, Canada, Mexico, the 27-nation EU and Norway and Switzerland.

Virgin Atlantic boss Richard Branson said the Department of Transportation's decision was a "kick in the teeth for consumers" and described its call for the surrender of four slots as a "complete joke.”

Contact Bruce Barnard at brucebarnard47@hotmail.com.