The US Department of Justice (DoJ) has recommended that the proposed alliance between American Airlines and British Airways is not approved unless sufficient slots are made available at London Heathrow to allow additional carriers to provide substantial new service to the USA.
American welcomed the DoJ's statement, arguing that its rivals had been hoping that the department would reject the alliance. The carrier points out that the Department of Transportation (DoT) has final jurisdiction on the alliance, and has not always accepted all of the DoJ's recommendations.
The DoJ's conclusion that the alliance, as structured, "-would significantly reduce airline competition between the USA and the UK", is contained in comments filed with the DoT. If it had anti-trust jurisdiction over the alliance, the DoJ says, it "-would seek to block the proposed arrangement".
Joel Klein, assistant attorney general of the Justice Department's anti-trust division, says: "From a competitive point of view, this is a troubling alliance and therefore only a very strong remedy could possibly justify its approval."
The DoJ says that a US/UK open skies agreement could reduce the competitive harm, but would not be enough. The Department calls for slots to allow at least 24 extra daily US round trips to be "-made available" at Heathrow to American/BA competitors. American, however, highlights the DoJ's finding that "-slot divestiture by American or British Airways should not be a requirement for approval".
The DoJ additionally recommends "carving out" of the alliance flights between American's Dallas and Chicago hubs and London, and requiring the two airlines to continue to compete head-to-head on these routes, "-where entry by new airlines is-highly unlikely".
American and BA will now be given an opportunity to respond, and the DoT is expected to rule in July. The European Commission is expected to decide in June.
Source: Flight International
