Julian Moxon/Paris
The European Commission (EC) competition directorate has laid out its position on granting approval to the planned alliance between American Airlines and British Airways.
The paper, in which the EC outlines a series of problems it has with the alliance, repeats the call for BA to give up 350 weekly slots at Heathrow - more than double the 168 demanded by the UK competition authorities in their earlier ruling on the deal.
A major cut in the number of flights is also mooted on certain transatlantic routes. These include a halving of frequencies between London and Boston, Chicago, Miami and Philadelphia, as well as a 25%cut in services to New York and Los Angeles. Routes to Baltimore and Charlotte, North Carolina, and Seattle, should be frozen at today's level, says the competition directorate.
The statement is being regarded as a "positioning paper" by the two airlines, which are preparing for a tough round of bargaining over the next few months as the EC moves towards a final decision in November. American describes the demands as unreasonable, saying that they are tougher than regulations imposed on other US-European alliances.
An EC source says that there is "no problem" in principle with the alliance if competition concerns can be addressed by the two airlines, which together hold around 40% of the slots at Heathrow and 60% of the UK-US market.
The EC is worried about the monopoly which would be held by the alliance on 13 transatlantic routes, giving the possibility of fare rises as well as potential "anti-competitive" practices.
The debut of the Galileo International computer-reservation system on the New York stock exchange has raised $784 million, valuing the company at $2.45 billion. BA has announced the sale of part of its holding, worth $137 million, while retaining a 7%stake.
Source: Flight International
