E.U. Signals Approval for Larger Airline Alliance

E.U. Signals Approval for Larger Airline Alliance
By JAMES KANTER
copyright by the New York Times
Published: March 10, 2010
http://www.nytimes.com/2010/03/11/business/global/11airline.html?ref=global-home


BRUSSELS — European antitrust regulators took a step Wednesday toward approving an expanded alliance between British Airways, American Airlines and Iberia after the airlines offered to give up landing and takeoff slots at airports in London and New York.

The European Commission said the three airlines, all members of the Oneworld alliance, had offered to cede slots at two airports in the London area, Heathrow and Gatwick, and at John F. Kennedy airport in New York.

That concession was aimed at lowering barriers to entry for other airlines to fly from London to New York, Boston, Dallas and Miami — routes where British Airways and American Airlines currently dominate.

The commission said it would be seeking comment from interested parties on the settlement until April 10 — normally a sign that the regulator itself considered the offer satisfactory. The U.S. Department of Transportation gave preliminary approval to the arrangement last month on condition that British Airways and American cede four pairs of takeoff and landing slots at Heathrow.

The European settlement would force the airlines to yield more slots at Heathrow — six rather than four.

Even so, Sir Richard Branson, president of Virgin Atlantic, one of British Airways’ main competitors, reiterated his opposition to the deal, calling the proposed concessions “woefully inadequate.”

In a statement, he noted that a combined British Airways and American would have 47 percent of the slots at Heathrow, one of the busiest European hubs.

The commission began an investigation into the case nearly a year ago over worries that combining the airlines’ services would limit competition and raise fares on some of the world’s most frequently traveled routes. The commission then sent a formal list of antitrust charges to the airlines in September.

Similar trans-Atlantic partnerships are already in operation among four members of the Star Alliance — Lufthansa, Continental Airlines, United Air Lines and Air Canada — and the SkyTeam members Air France-KLM and Delta Air Lines, which absorbed Northwest Airlines last year.

The European Commission is still investigating the Star Alliance and SkyTeam arrangements.

Under the settlement offered to European regulators, the airlines would make slots available at Heathrow or at Gatwick for competitors to serve the routes to the four American cities, the commission said.

The commission also said that the settlement offer would allow passengers flying on airlines other than British Airways, American Airlines and Iberia to earn frequent flyer miles with programs offered by the three airlines.

It also said a trustee would be appointed to monitor such an agreement.

The British Airways-American venture is the two carriers’ third attempt in recent years to win approval for a closer partnership.

Two previous efforts, in 1997 and 2002, were abandoned after the airlines rejected as too onerous a requirement that they give up as many as 16 daily takeoff and landing slots at Heathrow.

But the market for trans-Atlantic air travel had changed in recent years, allowing the current deal to go forward with fewer concessions of slots than regulators had demanded in the past, said E.U. officials who spoke on background because the arrangement had not been finalized.

Unlike in the past, when American Airlines and British Airways sought to form an alliance, Continental, Delta and B.M.I. now were offering services, the E.U. officials said.

Nicola Clark contributed reporting from Paris.