The coming weeks will be crucial for the fate of the alliance between British Airways (BA) and American Airlines as the two carriers are expected to enter into serious talks with the European Commission over conditions to clear the deal.
European Competition Commissioner Karel Van Miert, who has been very critical of the planned link-up, told the European Parliament he hoped for "serious discussions" with the companies in the next few weeks. He later told reporters this could take a month or so.
"Now is the crucial phase. Either an agreement can be found or we will have to proceed with what we think needs to be done," Van Miert said, while refusing to be dragged into saying explicitly whether he would recommend that the deal be blocked if the companies did not cave in to the EU's demands. BA chairman Robert Ayling said in Paris on Tuesday he hoped that a deal would be reached.
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"We hope that with some quite regulatory diplomacy it may be possible to bring these alliances to approval as soon as possible," Ayling said. The Commission told the companies in July they would have to release about 350 slots at the congested Heathrow airport and Gatwick as the main condition to get EU regulatory approval for their plans to agree on flight tariffs and frequencies.
Van Miert, who stressed the deal was a merger in all but name, reiterated his concerns that the two airlines would control 60 percent of the traffic between the United States and Britain and that they would have a monopoly or a dominant position on 17 transatlantic routes. The deal is also waiting for regulatory approval in the US, where it has been made conditional on a new bilateral open skies agreement with Britain.
The two partners would have to wait several months, or "well into next year", for a final EU conclusion, Van Miert said, adding that it was not the Commission's fault if the case had been dragging on for so long.
Instead, BA was to blame for denying that the Commission had any competence to vet the deal, he said, hinting that the British company had not entirely abandoned this aggressive stance.
EU governments were also responsible for the delays as they have systematically refused to give the EC adequate and speedy powers to deal with air co-operation agreements involving non-EU carriers. (Reuter)
But, although the procedure was likely to take several more months, BA and American Airlines, which is owned by AMR Corp, were likely to know in about a month or so whether their plans would get the blessing of the EU's competition watchdog.
Van Miert said after the coming crucial phase he would inform the full Commission of the state of the file. The next steps consisted in consulting a committee of national aviation experts and publishing a draft decision in the EU's Official Journal for further comments.
The Commission started an investigation into the BA-AA deal, together with a few other transatlantic air link-ups in July 1996.
He rejected criticism by the two partners that the Commission was unfairly acting tough on their alliance and closing its eyes on the agreement between Lufthansa and United Airlines, another between Delta Air Lines, Swissair and Austrian Airlines and others.
He said the BA-American deal was by far the largest, and announced that the Commission would in the next few weeks make its position known on the Lufthansa-United Airlines alliance.
Britain has the lead in vetting the BA-American deal but it cannot ignore the Commission's recommendation or it may face legal action.