Airline chiefs move heaven and earth

Robert Crandall, chairman of American Airlines, has issued a stark choice to British regulators - back the alliance with British Airways or put at risk the industry in this country, writes Ian Griffiths.

He said the proposed partnership with BA would bring a sharp increase in the number of cities served by direct transatlantic flights. If the alliance was blocked, BA would have to drop routes, undermining Heathrow's ability to compete with Continental rivals.

"In the long term, the consequences of blocking the alliance will be adverse," he said. "Already airports at Frankfurt, Amsterdam, Zurich and Brussels are being promoted by big alliances. If London is only promoted by BA, then it is bound to suffer.

"At the moment, a number of BA routes can only be supported by the number of passengers they carry who live outside the country. As other cities develop their airports and competition for the continental traveller intensifies, then BA will be forced to drop some routes."

Mr Crandall's views were echoed by Robert Ayling, BA's chief executive.

"More than half our travellers on US routes come from outside Britain," Mr Ayling said. "We could not justify half our services to the US, which benefit point-to-point travellers from the UK, unless we have transferring passengers. It is they who provide the incremental revenue we need to justify the plane taking off."

The alliance is being scrutinised by competition authorities on both sides of the Atlantic. The deal is also conditional on BA and American being granted immunity from US anti-trust laws. The US government has said that immunity will only be given if it can successfully negotiate a new open skies air agreement with Britain. Those talks are currently deadlocked.

Mr Crandall said it would be possible for an open skies agreement to be negotiated without anti-trust immunity but that would put the proposed alliance at risk. "You could only do that if you were prepared to ignore the commercial interests of BA," he said.