BA plans for alliance hit fresh turbulence in US

A full year since it was first unveiled, the proposed transatlantic alliance of British Airways and American Airlines met renewed turbulence yesterday after US officials urged that both carriers surrender more landing slots at Heathrow airport than either have so far envisaged.

In the first formal opinion to be delivered by a US government body, the General Accounting Office of the Congress (GAO) stopped far short of opposing the link. But it said that for fair competition to be preserved, an additional 23 daily slots should be made available at Heathrow to other US airlines.

The opinion was offered as testimony to a critical hearing on the proposed deal at the US Senate in Washington. Among those attending were the chief executives of both BA and American, Robert Ayling and Robert Crandall, as well as the heads of some other airlines that have been vehemently opposed to it.

BA and American have already indicated a willingness to surrender some of the Heathrow landing rights. Until now, however, they have spoken only about 12 slots daily - roughly half what is suggested by the GAO. The GAO indicates that not all the new slots need necessarily come from BA or AA.

Notably present at yesterday's hearing was Virgin's Richard Branson, who has been especially vigorous in opposing the alliance. Stephen Wolf of US Airways was expected to testify, as was Sir Freddie Laker, who is rebuilding his own operation across the Atlantic from a base in Fort Lauderdale.

At a slick presentation before the main hearing, Messrs Crandall and Ayling voiced the frustration at the delay in getting approval for their deal. They placed the blame on their rivals.

"The footdragging is directly attributable to the activities of some competitors who have made a variety of misleading claims about our proposal," Mr Crandall thundered. He was especially abrasive about United Airlines, which has just forged a code-sharing agreement with Lufthansa, Thai Airways and Air Canada, called the Star Alliance, that by most measures will eclipse the BA-AA embrace.

"The United Airlines position in all of this has been particularly hypocritical," Mr Crandall said. Mr Ayling meanwhile attacked Mr Branson for stirring controversy on slot overcrowding at Heathrow while he has recently acquired landing rights for new US services from Sabena.

In its opinion, the GAO underlines its concern about the competitive impact of the alliance by saying that "to insure increased competition, the other major US airlines that fly international would need to serve Heathrow from their principal hubs".

Under the existing US-UK aviation agreement, only American Airlines and United Airlines are granted the all-precious landing rights at Heathrow. However, approval of the BA-AA deal by the US Department of Transport remains contingent on the successful conclusion of negotiatons for a new, more liberal inter-governmental package.