BA may have to give up a third of Heathrow slots

The European Commission is understood to be demanding that British Airways give up as many as a third of its lucrative slots on US routes from Heathrow airport as a condition for approving its proposed alliance with American Airlines.

It also emerged that UK regulatory approval for the merger could be delayed until the middle of December.

Commission officials are examining the monopoly implications of the tie- up, which would give the two carriers control of 60 per cent of flights between the UK and the US, and are unlikely to make recommendations before April.

British Airways and American vehemently oppose the conditions, which may turn out to be tougher than those privately recommended by the UK regulatory watchdog, the Office of Fair Trading.

Last month the OFT passed its report to Ian Lang, the President of the Board of Trade, who has to decide whether to refer the alliance to the Monopolies and Mergers Commission. The OFT is also believed to have approved the arrangement on condition that the two carriers divest themselves of a substantial number of Heathrow slots.

Mr Lang was thought to be about to reveal his decision, though sources yesterday suggested the announcement could be delayed until mid-December. One reason would be that significant progress in the revived open skies negotiations between the UK and the US is unlikely until President Clinton forms a new cabinet. Frederico Pena, the US Transport Secretary, is not expected to keep a seat in the new Clinton administration. The US Government will only agree to the BA-American alliance if the UK signs an open skies agreement.

The latest proposals by the EC, which were presented to the two carriers last week, are believed to apply to UK-US routes where they would enjoy close to a monopoly. In services between Heathrow and Boston, Miami and Seattle, the alliance would give BA and American 100 per cent of the market.