Daily Telegraph:

Setback for BA American link
By Damian Reece (Filed: 02/12/2001)


PLANS by British Airways to forge a business alliance with American Airlines suffered a setback last week when a key witness in the US government's investigation condemned the tie-up.


Set-back: BA's competitors are demanding greater access to Heathrow
Michael Levine, a Harvard law professor and the architect of US airline deregulation, attacked the proposals, telling the US government that the link would dramatically reduce competition in most markets between Heathrow and America.

The submission will be a blow to BA, which is trying to forge closer links with American in order to bolster its flagging transatlantic business following September's terrorist attacks.

In a submission to the US Department of Transport, Levine, who masterminded Northwest Airline's joint venture with KLM, argued that the proposed tie-up between BA and AA should only go ahead if competitive access to Heathrow is guaranteed for the American partners of other global alliances.

Levine said that unless access to Heathrow for BA's competitors is dramatically improved, the partnership will result in a duopoly operating across the Atlantic, involving the BA/AA alliance and the similar proposed link between United Airlines and BMI British Midland.

"It is my view that the AA/BA filing . . . should be thwarted either by disapproving immunity or insisting on removing barriers to airport access by competitors," said Levine.

"If these applications are approved without access conditions, they will allow American and United and their non-US alliance partners to create the only two global networks with broad access to London Heathrow and Tokyo, both key airports for high-yield business travel."

A spokesman for BA rejected Levine's claim that access to Heathrow was too restricted. "It is not true that competitors can't get into Heathrow. United Airlines has massively increased its services out of Heathrow. Virgin Atlantic also now has a very signficant service," he said.