Fantastic! I am over the moon! Competition reigns
US antitrust officials oppose BA-American plan
By Peter Spiegel in Washington
Published: December 18 2001 00:31 | Last Updated: December 18 2001 01:24
The plan by American Airlines and British Airways to operate as a single airline across the Atlantic was dealt a serious blow on Monday when US antitrust officials recommended that the Bush administration reject it.
However, Justice Department lawyers held out hope that the carriers could gain approval for the alliance if they shed dozens of landing slots at London's Heathrow airport.
American and BA, however, indicated on Monday night they would be unwilling to meet such a condition.
In a recommendation to the US Transportation Department, which has final authority over the deal, Justice Department lawyers argued that the reduced competition on six routes - Heathrow to New York, Boston, Miami, Chicago, Los Angeles and Dallas - would lead to higher prices and poorer service.
Antitrust officials said they might support the deal if American and BA shed enough take-off and landing slots to allow competitors to offer seven daily round-trips to Heathrow from New York and two from Boston.
The divestiture of 126 weekly slots is at the low end of what American's domestic competitors have called for and is significantly lower than the numbers suggested by regulators in 1996, when the carriers first attempted to join up. But American and BA on Monday described the number as "inappropriate," saying it only established an "outer limit" of potential remedies.
The Justice Department also called on the Transportation Department to "carve out" the Dallas and Chicago markets from the alliance, as even divesting slots would not restore enough competition to the cities, where American has large hubs.
The Transportation Department is not obliged to follow the Justice Department's recommendation, but it is expected to carry great weight in the agency's deliberations, which could conclude as early as next month. Transportation rejected the 1996 application from American and BA largely because of stiff Justice Department objections.
The White House has appeared eager to approve the deal, both because of British assistance in the war in Afghanistan and hopes of gaining a new, liberalised "open skies" aviation treaty with the UK.
Currently, only two US airlines, United and American, can fly into Heathrow. The British government has signalled it is ready to accept most American demands in a new "open skies" deal, but only if American-BA is given immunity from US antitrust laws so it can operate as a single airline.
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