Justice Department Clips Wings of British Airways-American Airlines Alliance

18 December 2001

British Airways’ increasingly desperate bid to ally itself with American Airlines was dealt a setback Monday by the US Justice Department.

The would-be partners are eager to coordinate their pricing, schedules and profits, protected from US antitrust laws. Time is of the essence, however, and the twosome are desperate for a done deal before January when the European Commission will impose rules preventing member states from negotiating separate national aviation treaties.

Referring to the number of weekly landing and take-off slots currently allocated to the two airlines at London’s overcrowded Heathrow Airport, the Justice Department demanded that 126 of these be relinquished to other carriers – a demand repudiated as “inappropriate” by BA and AA in a joint statement.

However, the duo conceded that the latest ultimatum “far improved” on the same department’s demand in 1998 when it insisted that 336 slots be relinquished. Together, BA and AA hold more slots at Heathrow and Gatwick (London’s second airport) than any other airline or alliance.

The Justice Department’s recommendation – which is purely advisory – is seen as a complication rather than a deal-buster.

Stateside, the final decision rests in the hands of the Department of Transportation. The UK Department of Trade & Industry declined to comment.

News source: Wall Street Journal