U.S. seeks more detail from American/BA on tie-up

WASHINGTON Sun Dec 21, 2008 3:18am GMT

An American Airlines plane is seen parked at LaGuardia Airport in New York November 25, 2008. REUTERS/Shannon Stapleton

An American Airlines plane is seen parked at LaGuardia Airport in New York November 25, 2008.

Credit: Reuters/Shannon Stapleton



WASHINGTON (Reuters) - The U.S. government has asked American Airlines, British Airways Plc and Spain's Iberia to supply new information about the potential impact of their proposed alliance on competition.

In an order on Friday, the Transportation Department sought more information on the airlines' plans for a limited tie-up, especially as it concerns business at London's Heathrow airport, where British Airways is a powerhouse and American is strong. The government is also looking for more details about their plans for Pacific and Latin American markets.

The department is reviewing the bid by American, a unit of AMR Corp AMR.N, British Airways Plc BAY.L and Iberia IBLA.MC to form an alliance that would be exempt from some antitrust provisions under U.S. law.

"Additional information is required to ensure that the record in this case is substantially complete," the agency wrote in its order, which seeks a response from the carriers by January 15, 2009. The Bush administration, which is currently overseeing the review, leaves office five days later.

The administration also wants an update on how pricing and capacity decisions might be affected by potential merger scenarios involving British Airways and Iberia as well as BA and Australia's Qantas Airways (QAN.AX).

British Airways and Qantas ended talks this week without a deal, but the DOT said the possibility of resuming talks "has not been foreclosed." Long-running talks between Iberia and British Airways are ongoing.

Access to Heathrow, among the world's premier destinations for business travel, is coveted and remains a major question in any deal involving American and British Airways.

A previous antitrust immunity attempt by the pair foundered several years ago over U.S. regulatory concerns about access to Heathrow for other airlines.

Antitrust immunity allows carriers to share routes, pricing and scheduling data without actually merging. Transatlantic rivals like Britain's Virgin Atlantic Airways have expressed concerns that competition would suffer and passengers pay higher fares if the deal is approved.

American and BA argue that a U.S./EU treaty reached last March relaxing restrictions on airport access and transatlantic service will boost competition across the Atlantic, benefiting passengers and carriers wishing to begin or expand service.

The Bush administration's request for more information was partly based on appeals by Virgin Atlantic, which has pressed regulators on the potential impact of any American/BA alliance on competition between London and New York, and Air France.

The immunity application was submitted in August.