BA link-up faces tough US curbs

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The Independent Online
Two big players in the US airline industry served notice yesterday that they would insist on Washington imposing harsher conditions on the transatlantic alliance between British Airways and American Airlines than those proposed by UK authorities.

United Airlines, the world's biggest carrier, is to urge US regulators to block some of the most lucrative benefits of the tie-up, while Delta Air Lines said it was confident that the two airlines would face tougher curbs to gain approval on the other side of the Atlantic.

The moves came as Friday's deadline approaches for airlines to respond to the conditions imposed on the alliance by the Office of Fair Trading, which has recommended that BA and AA divest themselves of 168 take-off and landing slots at Heathrow.

Michael Medlicott, Delta's vice-president for Europe and Asia, said he viewed the OFT's proposals with "considerable distaste", adding: "The conditions are too few, the number of slots to be divested is derisory and it would not allow Delta or anyone else to provide effective competition."

Both Delta and United also said they were opposed to the idea of BA being allowed to sell the slots, a move which could net it up to pounds 180m.

On four routes from London where BA and AA would enjoy a total or near- monopoly - to Dallas, Miami, Chicago and New York's John F Kennedy airport - United will ask the US Justice and Transportation departments to limit the alliance solely to code-sharing, where passengers travel between airlines using the same flight code. Other benefits, including the pooling of revenues, facilities and collaboration on ticket prices, would be blocked.

United insisted the extra conditions were perfectly reasonable. Similar terms had been attached to the 1995 deal with Lufthansa on overlapping routes with United between Frankfurt and Chicago and New York.

Mike Whittaker, United's director of international affairs, said: ``In previous cases US competition authorities have been concerned that where two carriers have hub airports at both ends of a route they will use their market dominance to raise prices, particularly for business travellers.''