The new UK government has put Washington to shame by moving rapidly to bring itself up to speed with the complex issues surrounding the proposed British Airways-American Airlines alliance and the related US-UK open skies discussions.
Within a week of a landslide election victory for the Labour party on 1 May, Deputy Prime Minister John Prescott, who also has the transport portfolio, held a meeting with BA's chief executive Bob Ayling, in a move that caught rival Virgin Atlantic Airways off guard. Branson was due to meet Prescott in mid-May to put his case across.
Even the normally staid BA appears to have been caught up in the mood of optimism that is sweeping the UK, following the Labour victory. One BA official draws parallels between the summit between German Chancellor Helmut Kohl and US President Bill Clinton, just after the latter's election, at which the US-Germany open skies deal was signed and the one planned between UK Prime Minister Tony Blair and Clinton in June. He also points to the UK's new 'friendly' approach to the rest of the European Union, suggesting that this could help BA's cause with the European Commission. Brussels was set to report its findings on BA-AA before the end of May, but Commission officials remained tight-lipped at presstime.
But BA's post-election optimism could be misplaced judging by the foot-dragging in Washington. The US Department of Transportation had still not initiated the official enquiry in early May - over four months after the two carriers applied for antitrust immunity.
Any prospect of clearance for BA-AA, and consequently the signing of a US-UK open skies deal, seems to have been further set back by a surge of interest among some senators. During hearings into the proposed AA-BA alliance, a Senate judiciary antitrust subcommittee suggested there were sufficient question marks over the proposed alliance to merit a formal Department of Trade hearing.
But BA and American may yet get help from their arch-rivals Lufthansa and United in the form of the threat posed by Star Alliance (see story opposite). 'Will [Star] play into the hands of BA-AA?' asks one UK-based consultant, who suggests the two carriers can use Star to persuade their respective governments and the European Commission of the need for clearance because of the threat posed by such a massive grouping.
* The UK and Singapore signed an interim bilateral in late April which agrees to implement an 'open skies' regime for third and fourth freedoms by 2001. As part of the deal BA and Qantas have been cleared to codeshare over Singapore. In return, Singapore Airlines was granted a daily transatlantic service between London and North America but without the local traffic rights Singapore had sought.
Source: Airline Business
