BA faces further delay to US alliance

THE LAUNCH of British Airways' alliance with American Airlines is facing the threat of yet further delay, possibly until next summer, following opposition to the link-up from the US Justice Department.

BA yesterday attempted to play down the significance of the Justice Department's intervention, saying: "This is just another step along the regulatory road."

However, the call for the alliance to be "significantly restructured" before it is allowed through could dash the two airlines' hopes of launching their long-delayed partnership this autumn.

The Justice Department said that as it stood the alliance would lead to significantly higher air fares across the Atlantic. It recommended that 336 take-off and landing slots - the equivalent of 24 round trips daily - be surrendered at Heathrow airport as a condition of approving the tie-up. It also called for the Dallas-London and Chicago-London routes operated by BA and AA to be excluded from the alliance.

BA stressed that responsibility for final approval of the alliance in the US rested not with the Justice Department but the Department of Transportation, which it said would apply a broader test of public interest. BA also said: "The Justice Department has made it clear that the slots don't have to come from BA/AA."

However, the US DoT is not expected to deliver its final verdict on the alliance before the end of the summer at the earliest, leaving the two carriers little time to begin co-ordinated services in time for the launch of the winter schedule.

BA shares slipped in early trading as news of the Justice Department's tough stance emerged but later recovered most of their lost ground. Richard Hannah, transport analyst at Bankers Trust Alex. Brown, said: "We don't think this is a deal-breaker at this stage. It is another major regulatory hurdle that has to be crossed."

The alliance has now been awaiting regulatory approval for two years and has yet to be formally cleared by the UK or the European Commission. The Office of Fair Trading recommended that the two airlines surrender 168 slots in return for approval. But in its initial ruling, the European Commission called for the surrender of up to 350 slots. Karel Van Miert, the EU Competition Commissioner, is expected to announce his final ruling in mid-June. The indications are that Brussels is looking for the airlines to make 250-300 slots available.

The Justice Department also said that approval for the alliance should be contingent on an open skies accord being agreed between the UK and the US, allowing more carriers to compete on transatlantic routes.

BA said: "Naturally, we expect the US DoT to consider not just the competition analysis but also the benefits of an open skies agreement between the UK and the US and stronger competition between global alliances."

The deadline for filings to the US DoT passed yesterday. The Department now has a month to consider them before reaching an outline decision. BA can then make representations depending on the level of concessions being demanded.

City analysts warned there would come a point when the two airlines would walk away from any deal, thus scuppering any open skies accord and depriving other carriers of any slots.

Start your day with The Independent, sign up for daily news emails
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Guru Careers: Management Accountant

£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

Guru Careers: Project Manager / Business Analyst

£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

Day In a Page

General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power