BA-American alliance may escape MMC

British Airways' alliance with American Airlines looks set to escape a referral to the Monopolies and Mergers Commission but it could still founder on the tough conditions regulators want to attach to the controversial tie-up.

The Office of Fair Trading is preparing to tell ministers that the alliance, which would give BA and American up to 60 per cent of key transatlantic air routes, should not be sent to the MMC.

BA has made it clear that it will walk away from the alliance if it is referred. A lengthy investigation by the MMC could also scupper hopes of an open skies agreement being signed between Britain and the US because it is conditional on the alliance going ahead.

Instead the OFT looks set to approve the tie-up, on condition that the two carriers give up some of their lucrative take-off and landing slots at Heathrow. BA's chief executive, Robert Ayling, has insisted that the two carriers should not be forced to surrender slots as the price for regulatory approval.

But industry observers believe BA and American will have to give ground to accommodate the objections from rival carriers, led by Richard Branson's Virgin Atlantic and United Airlines of the US.

Robert Crandall, the chairman of American Airlines, in Britain this week on a "hearts and minds" mission to win support for the alliance, has floated the idea that the two carriers might lease slots at Heathrow to other carriers rather than give them up outright.

He is also promising to increase American's regional services from Manchester and Birmingham if the alliance is approved. At present American flies only to Chicago from the two regional airports but would launch new services to Dallas, Miami and Los Angeles if the alliance is given the green light.

Mr Crandall saw the Deputy Prime Minister, Michael Heseltine, yesterday to argue American's case and flies back to Dallas at the end of the week.

The OFT's recommendations are expected to be passed to the President of the Board of Trade, Ian Lang, in the next 12 days, possibly as early as Friday.

A decision not to go for an MMC referral would represent a victory for the Department of Transport, which has given the alliance its broad backing.

Intense discussions between BA, American and OFT officials have been continuing for weeks aimed at finding a compromise acceptable to the two carriers without the need for an investigation by the MMC. The current stumbling block is thought to lie more with American, which is believed to be insisting on hanging on to the bulk of its Heathrow slots.

Separately, the regulatory hurdles which the alliance needs to clear became even more complex yesterday when the European transport commissioner, Neil Kinnock, said the EC's own investigation into airline alliances, begun after the BA-American announcement, would be unlikely to reach any conclusions until next year.

"It would be very difficult before Christmas. There's a lot of information to be gathered and some of that information is not very easily available," said Mr Kinnock.

It also emerged that the European Commission has decided to extend its inquiry further, casting further doubt on BA's aim of getting the alliance under way by next April.

The EC is already investigating seven alliances between US and European carriers and is examining proposals by United to transform existing links with Lufthansa and the Scandinavian carrier SAS into a trilateral partnership.

Start your day with The Independent, sign up for daily news emails
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern
Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

Paul Scholes column

Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?