Business | Aviation
US regulators delay BA plan to team up with rival
British Airways' hopes of securing a swift ground-breaking alliance with a US rival were this weekend dealt a blow by American regulators just days after a proposed merger with Australian airline Qantas also collapsed.
- By Alistair Osborne, The Telegraph Group Limited, London 2008
- Published: 23:51 December 21, 2008
London: British Airways' hopes of securing a swift ground-breaking alliance with a US rival were this weekend dealt a blow by American regulators just days after a proposed merger with Australian airline Qantas also collapsed.
BA has been ordered by the US Department of Transportation (DoT) to file more detailed information over its tie-up with American Airlines (AA) relating to their global expansion ambitions, the impact on the US travel retail industry, and BA's other merger plans. The demand, which analysts warned could delay any deal by several months, was delivered to BA and AA in a detailed filing by the DoT on Friday night.
It will be a bitter pill for Willie Walsh, BA's chief executive, who last week walked away from talks with Qantas that would have seen BA take a significant leap towards becoming the world's first genuinely global airline.
Uncertainty about the scale of BA's vast pension deficit is proving an additional headache in the company's merger discussions with the Spanish airline Iberia.
In its report, the DoT acknowledged that it was after submissions from Virgin, Air France and US travel agents that took the decision to force BA and four other carriers to provide the extra data. The emergence of Air France and US travel agents in questioning the alliance is likely to add weight to Virgin's argument that a deal between BA and AA represents a "monster monopoly".
In August, BA filed for anti-trust immunity for a transatlantic tie-up with AA that would enable the pair to co-ordinate schedules and share revenues. The application was made jointly with BA's other mooted merger partner, Iberia, and two smaller airlines - Finnair and Royal Jordanian.
The DoT has demanded details on take-off and landing slots and fares, as well as "passenger preference analyses" for pairs of airports, in particular the New York and London airports. This includes documents "that reflect the preference of air carriers or travellers for the use of Heathrow over any other London airport" and traffic trends before and after last year's "open skies" deal between the EU and America, which allowed new carriers into Heathrow.
BA must also provide data on how a merger could affect "capacity and pricing decisions" for both the planned union with Iberia and even the abortive Qantas deal. The latter is on the grounds that BA and the Australian carrier have not "foreclosed" the option of a deal at a later date.
Also, the DoT has told all the applicants to provide documents previously withheld on the grounds that they deemed them confidential. The information could offer BA's rivals a valuable insight into how the UK flag carrier operates.
The DoT has also asked airports operator BAA for information, particularly the availability of take-off and landing slots. Sir Richard Branson, the Virgin founder, has furiously lobbied US regulators and politicians.
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