US gives American Airlines, British Airways tentative approval to expand their trans-Atlantic alliance

The United States Department of Transportation (DOT) has given tentative approval to American Airlines, based in Fort Worth, Texas, the United States, and British Airways, the flag-carrier airline of the United Kingdom, to expand their trans-Atlantic alliance. In return, the two carriers have to relinquish some slots at the congested Heathrow Airport in London.

It was the ‘open skies’ pact signed between the United States and the European Union (EU), which took effect from March 2008, that paved the way for the US Department of Transportation’s tentative approval.

The tentative decision by the US Transportation Department is likely to become final after a ‘comment period’ of 60 days.

British Airways is the third largest airline in Europe, and American Airlines is the second biggest carrier in the United States.

The decision by the US Department of Transportation, if finally approved, will let the two major carriers – American Airlines (a subsidiary of AMR Corporation) and British Airways – and their partners in Oneworld, one of the three biggest global airline alliances in the world, cooperate in areas like coordinating schedules and fares, the Wall Street Journal has reported. Usually, such cooperation is prohibited under antitrust laws since it amounts to ‘collusion.’

Member-carriers in the two other airline alliances – SkyTeam and Star – already have antitrust immunity for joint ventures on trans-Atlantic routes.

The competition authorities of the European Union, too, are in the process of reviewing the antirust laws.

According to aviation analysts, the move by the US Department of Transportation could help speed up the current negotiations between the United States and the European Union to deregulate the trans-Atlantic air travel.

Representatives of United States and the European Union held a meeting in Madrid, Spain, on February 15, 2010, aimed at expanding the US-EU ‘open skies’ agreement that took effect in 2008, which took away several restrictions concerning operations and airline marketing between the two biggest aviation markets in the world.

The Britain-based Virgin Atlantic Airways has been the strongest critic of an alliance between American Airlines and British Airways: Virgin Atlantic argues that granting immunity to the link-up will give the Oneworld alliance an “anti-competitive advantage” on trans-Atlantic routes from the United Kingdom.

Richard Branson, president of Virgin Atlantic Airways, has described the draft conditions imposed on the American Airlines-British Airways alliance by the US Department of Aviation as a “complete joke.” He demanded that the European Union impose stricter conditions in order to “protect passengers” when it reviews the application by the two carriers to expand their trans-Atlantic alliance.

According to a draft ruling from the US Department of Transportation, British Airways, American Airlines and their partners in the Oneworld alliance – Finnair, Iberia, and Royal Jordanian Airlines – will have to give up only 4 pairs of the highly coveted takeoff and landing slots at Heathrow Airport.