Britain sets conditions to clear American alliance .
Edna Fernandes
LONDON 1996-12-06
The British government warned Friday that it would refer the proposed trans-Atlantic alliance between British Airways Plc and American Airlines to Britain 's Monopolies and Mergers Commission unless the carriers complied with a number of conditions .
Trade and Industry Secretary Ian Lang added that even if the conditions were met by both airlines , final clearance would hinge on an open skies deal between Britain and the United States to liberalise trans-Atlantic air traffic , which would create greater competition on the routes .
Lang said he supported conditions proposed by Britain 's Office of Fair Trading , which was asked to examine the case last month .
" I agree ... that without suitable undertakings the alliance would be likely to lead to a significant loss of actual and potential passengers , on those routes where BA and AA currently compete and for all passengers on the trans-Atlantic market route between the UK and U.S. , " he said .
His comments came just minutes after the latest set of open skies talks ended in London with no deal signed .
Industry sources said there was no new date for fresh talks and blamed the deadlock on uncertainty over whether the British Airways-American deal would be cleared .
The conditions for clearance of the alliance were that British Airways and American drop 168 slots at London Heathrow airport , the busiest in Europe .
American 's parent , AMR Corp. , said it did not view the terms as a " deal breaker . "
However , it called the conditions " more severe " than those imposed by other regulatory authorities on similar airline alliances .
British Airways 's initial response was that " unconditional divestiture of slots is unprecedented and if done it must be on the basis of fair market value . "
It added that it would be " prepared to take reasonable steps to assist the introduction of additional competition . "
The government also wants British Airways to drop a clause in its agreement with USAir that bars it from competing on trans-Atlantic routes , and said both British Airways and American should be prepared to reduce services on the London to Dallas-Fort Worth route in the event that a new entrant wishes to enter .
It also suggested losing some slots on the London-to-Boston route .
The Office of Fair Trade called for British Airways / American to allow third-party access to their joint frequent flyer programme where the applicant does not have access to an equivalent programme .
Lang said responses should be made to the Office of Fair Trading by Jan. 10 , 1997 .