BA-American deal faces another delay
Thursday 31 July 1997
The blow came as John Bridgeman, director general of Fair Trading, launched a strong attack on Britain's consumer protection laws which he said were allowing rogue traders with a history of cheating to continue in business. Releasing figures showing a 10.8 per cent surge in consumer complaints in the year to last September, he called for a "major rewrite" of the legislation.
Mr Bridgeman said it was "a possibility" that the OFT would not be able to clear the BA alliance with American Airlines by November, more than a year after the competition watchdog began its probe. Bob Ayling, BA's chief executive, has threatened to abandon the deal if the regulatory watchdogs do not give their approval by November.
The OFT delay could prevent BA from coordinating its service plans when the international air regulator, IATA, allocates slots in November for flight schedules the following summer. It would mean BA would have to wait until 1999 to begin joint services.
The alliance would pool ticket revenues, marketing activities and link timetables, giving the two carriers some 60 per cent of flights between the UK and US. A BA spokesman said the group believed it could stick to the existing timetable: "Time is pressing on but we still hope November is a possibility."
Mr Bridgeman said he believed it was possible to "engineer an accommodation" with all sides, but said the OFT had still not reached a conclusion. Last December the OFT provisionally called on the two carriers to give up 168 lucrative slots at Heathrow Airport, equivalent to 12 daily return trips, as a condition for approving the deal.
But the watchdog is still considering its verdict after attacks from rival US carriers, who described the conditions as too lenient. The European Commission, which is conducting a parallel investigation, is thought likely to press for the airlines to give up more than 300 slots.
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