British Airways-American Alliance Raises Concerns
An alliance between American Airlines and British Airways is not likely to get government approval without changes to protect competition, the top U.S. antitrust official said Thursday.
Joel Klein, head of the Justice Department’s antitrust division, said the proposed alliance could stifle competition on the lucrative U.S.-British route and raise travelers’ ticket prices.
Klein made his remarks during a Senate hearing on competition in the airline industry.
The proposed British Airways-American alliance would give the two airlines dominance over some British gateways, including Boston, and allow them to control more than 65% of daily round-trip flights between the United States and London’s Heathrow Airport--a popular choice with business customers.
The alliance would allow the companies to coordinate ticket sales and connecting flights.
Testifying before the Senate Judiciary Committee’s antitrust and competition subcommittee, Klein said: “You can be sure that, unless we conclude that effective conditions can be imposed to ensure competitive airline service between the United States and the United Kingdom, we will urge [the Transportation Department] to disapprove the alliance.”
But American Airlines Chairman Robert Crandall defended the competitiveness of the proposed alliance.
The hearing brought together leaders of the world’s major airlines, including British Airways Chairman Robert Ayling, Richard Branson, the billionaire chairman of Virgin Atlantic Airways, and executives from U.S. Airways, Delta Air Lines, United Airlines and Continental Airlines.
Branson opposes the alliance.
Separately, Branson told reporters that he wants Congress to eliminate a law restricting foreign ownership of U.S. airlines. He urged European officials to drop a similar restriction on U.S. companies.
If the restriction were dropped, Branson said he would immediately launch a low-cost U.S. carrier similar to Virgin Express, which serves markets within Europe.
“Air fares in America have gone up and up and up, to the extent that they’re now more expensive to go from Washington to New York than it is from New York to London,” Branson said.
