Heathrow Access Still Key To American, Ba Pact

Opening Londons busy Heathrow Airport to more competition remains key to a new US-Britain aviation pact that would allow British Airways alliance with American Airlines to go ahead.

The importance of the debate over landing rights and facilities at Heathrow was underscored at a Senate aviation subcommittee hearing Wednesday that brought allies and competitors into the same room.

Top executives of American and British Airways emphasised the competition that an open skies agreement between the two countries would bring by allowing other US carriers into Heathrow.

But critics, including executives from US Airways and Virgin Atlantic, wondered at allowing more airlines to fly to Heathrow if they couldnt operate there. British Airways Chairman Robert Ayling told lawmakers that more efficient use of Heathrow, the slots created every year and the purchase of slots could meet other airlines needs. If people want to operate into Heathrow, they can get the slots, Ayling said.

 

This comment caused Virgin Atlantic Chairman Richard Branson to pound the table and exclaim: Heathrow is full. There are no slots. Its incredible to hear this man look you in the eye and say this.

American and British Airways Plc announced a year ago that they planned an alliance to market each others flights as their own and would seek antitrust immunity to do so. Critics of the American-BA alliance say the combination will dominate trans-Atlantic routes and lead to higher fares.

The U.S. Department of Transportation has a policy of approving such alliances only if there is an open skies agreement allowing liberal access for airlines flying between the United States and the countries involved.

Assistant Secretary Charles Hunnicutt said formal talks with Britain had been temporarily halted by the recent British election and competition reviews by London and the European Union. But Hunnicutt said progress had been made and the United States was insisting on a competitively effective presence of U.S. carriers at Londons Heathrow Airport. The existing U.S.-Britain air agreement excludes all airlines except American Airlines and United Airlines from flying to and from Heathrow.

The General Accounting Office, the investigative arm of Congress, presented a plan to the committee under which the six U.S. airlines seeking access to Heathrow would get at least 23 daily round-trips.

While some Heathrow slots could become available in the short term, it would take several years for slots to open up at Heathrow, which is generally operating at maximum capacity.

As a practical matter, therefore, in addition to acquiring some slots under current procedures, the six U.S. airlines will likely need to have slots transferred to them from American Airlines and British airways, the GAO said.

But Robert Crandall, chairman of American Airlines parent company, AMR Corp., was cool to such a transfer. We are not going to sell or make available sufficient slots to provide 23 rotations, Crandall told Reuters before the hearing. Crandall later told the hearing that American had already said it would sell 13 daily slots and the others were already available to competing U.S. airlines through the alliances they had already formed with other European partners. The GAO said the potential alliance of American and BA, the two largest carriers in the U.S.-Britain market, raises significant competition issues. In 1996 the two airlines accounted for 60 percent of the scheduled passenger traffic between the United States and Britain.

US Airways Chairman Stephen Wolf told the committee that unless sufficient slots and facilities were available at Heathrow, my view is we would be dramatically worse off allowing this (alliance) to go forward.

But Crandall said: I think we shouldnt so lightly pass by an opportunity to improve the situation even though it does not become utopia.