- The Washington Times - Wednesday, August 15, 2001

British Airways and American Airlines have asked the Department of Transportation to allow them to seal a partnership that would dominate the passenger airline business between the United States and Britain.

But the department's approval, which is necessary to avoid running afoul of antitrust laws, faces tough opposition from other U.S. carriers that want better access to the lucrative North Atlantic air market.

British Airways and American, which tried and failed to obtain an official approval for their deal in 1996, say they should be able to work with foreign airlines just as Northwest, United Airlines and Delta already do.

American's Oneworld alliance already includes several foreign airlines, such as Qantas, Cathay Pacific and Iberia airlines.

"We simply want to have the same commercial advantages and deliver the same consumer benefits that rival airline alliances and their passengers enjoy," British Airways Chief Executive Officer Rod Eddington and American Airlines CEO Don Carty said in a joint statement.

Their competitors disagree.

In a letter to Secretary of Transportation Norman Y. Mineta, the heads of Continental Airlines, Delta Air Lines and Northwest Airlines all demanded that the department head off the proposed alliance.

"The two most dominant airlines in the [U.S.-British] market now seek to create the most powerful and anti-competitive alliance in international aviation history," they wrote.

The proposal is also drawing the ire of consumer groups because the new alliance would control air travel to London from a few cities, such as Dallas, and would have a commanding position in others, such as Boston, New York and Los Angeles.

"These deals limit consumer choice and raise fares," said Paul Hudson, president of the Aviation Consumer Action Project, a group affiliated with consumer advocate Ralph Nader.

Flights out of Washington Dulles International Airport would be largely unaffected. American does not serve that airport, so a linkup with British Airways would not change service out of Dulles.

BA already controls service to London's Gatwick Airport out of Baltimore-Washington International Airport and there are no trans-Atlantic flights out of Ronald Reagan Washington National Airport.

The fight between American and its competitors is likely to dovetail with diplomatic efforts to revamp a treaty and open the U.S.-British air market to fuller competition, analysts said.

The 1977 aviation treaty between the United States and Britain limited access to British airports to only two U.S. airlines. Today, those airlines are American and United, which also control the takeoff and landing slots at London's Heathrow for flights to the United States.

Their competitors would like to see the treaty changed, but are also demanding that American and United also give up some of the slots. Without slots, changes to the treaty would be meaningless.

"The other airlines would give their eyeteeth to fly to Heathrow," said one former U.S. government official, who asked not to be named. "That's where the well-heeled business traveler wants to go."

The United States already has "open skies" agreements that eliminate restrictions on air service with 17 European countries. Changing the U.S.-British treaty would be the last major step to opening British skies to full competition.

"In the future, we're looking at an open European-American market," said Darryl Jenkins, director of the Aviation Institute at George Washington University.

Some analysts agree with American that times have changed since American and British Airways last sought permission to forge a formal alliance in 1996, which would allow them to operate as one company by setting fares and scheduling flights.

In 1996, other alliances were either nonexistent or in their infancy, according to Jon Ash, a consultant with District-based Global Aviation Associates. Now, there are others, such as the Star Alliance, which includes United, British Midland and Germany's Lufthansa.

Today, the alliances allow other U.S. airlines to serve Britain through their partners, evading a key restriction of the treaty. The Star Alliance, for example, has 24 percent of the U.S.-British market, slightly more than BA and American would have if they were allowed to work together.

"The other alliances have created strong competitive forces in the North Atlantic," Mr. Ash said.

But American's competitors in the United States would like to be able to fly directly to Heathrow without having to form alliances and they want the U.S. government to help them pry it open.

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