EC allows American/BA alliance in exchange for Heathrow slots

Carriers on both sides of the Atlantic are stressing that there is still all to play for despite the European Commission's long-awaited ruling on the British Airways and Lufthansa transatlantic alliances.

Major US airlines are already gearing up to lobby the US Department of Transportation to increase access to London Heathrow, while Lufthansa and United are threatening a legal challenge to the conditions imposed on their alliance.

After two years of wrangling, competition commissioner Karel van Miert finally issued draft proposals demanding that BA give up 267 weekly slots at its London hubs as the price for its pending alliance with American Airlines. That is expected to divide between 220-230 at Heathrow and the rest at Gatwick. The airlines would also have to cut frequencies on key hub routes to Dallas/Fort Worth, Miami and Chicago for six months to allow competitors to become established.

Similar conditions are imposed on the Lufthansa/SAS alliance with United, with the loss of 108 weekly slots. This includes 98 slots at Frankfurt and a further 15 at Copenhagen, says Lufthansa. The three partners will also have to halve frequencies for six months on the Washington and Chicago routes if competitors take on the routes, as well as allow rivals onto their frequent flier programmes.

Full details of the draft rulings will not be published for another week and airlines will then have 30 days to comment. Public hearings and comment by national governments could then take several more months before the draft is approved. The BA/American go-ahead will also hinge on the signing of a UK/US open skies agreement with attached anti-trust immunity for the alliance.

BA has given a cautious welcome to the EC draft but suggests it will lobby against some of the terms as they go through UK and US approval.

Lufthansa made a furious attack on Brussels, threatening action through the European courts if new conditions are imposed on its four-year-old alliance. United has also lodged a complaint with the DoT, arguing that re-regulation of the hub routes from Frankfurt conflicts with the open skies deal. American is due to follow suit.

The DoT is also set to come under intense pressure from the major US carriers hoping to set up services out of Heathrow. Continental, Delta and US Airways have already put in applications for 10 daily return flights out of the airport, while Trans World Airlines wants a further five. That would translate into 490 slots a week.

In the UK, British Midland is also planning to revive transatlantic services, with an application for 10 daily flights, and Virgin Atlantic has long been pushing for extra transatlantic services.

Delta has argued that the slot concessions would have to be closer to 800 a week to allow five carriers to mount viable competition, and hopes that US authorities will "take more assertive steps" than Brussels.

Estimated slot distribution at London Heathrow

Note Shares based on latest available data with equivalent daily flight information calculated from slot total 1997. Estimates do not take into account seasonal variations.

Source: Flight International