Plans by Pan Am and TWA to sell valuable European routes face possible opposition by the British government and key members of Congress, some of whom question whether such exclusive and valuable franchises can be passed on to another carrier.
On Sunday, American Airlines Inc. announced that it had agreed to pay $445 million to acquire Trans World Airlines Inc.'s rights to fly to London. United Airlines Inc. and Pan American World Airways Inc. had announced a similar deal two months before.
While both United and American now fly to London, neither has the right to fly to London's premier airport -- Heathrow -- where access is strictly limited. Only Pan Am and TWA have had access to Heathrow under a bilateral agreement between the two nations known as Bermuda Two.
The question is whether the British government will allow two powerful U.S. carriers, United and American, to take over the routes of two weaker carriers, Pan Am and TWA, increasing the competition for Britain's own flag carrier, British Airways.
U.S. and British negotiators will meet for two days on the issue beginning Thursday. "I think we'll be in a better position to assess the U.K.'s position as the talks resume in London," said Lawrence M. Nagin, United senior vice president.
American Airlines Chairman Robert L. Crandall, who has been fighting for broader U.S. airline access to Britain, said he believes that the succession question should be easily agreed to by the British government "because we do not think we're asking the U.K. for anything very extraordinary."
Still another potential obstacle to the proposed deals is possible congressional objections to the sale of international route authorities, which some legislators view as public property. The Department of Transportation awards carriers the right to fly certain routes that are limited in number through bilateral treaties with other nations. The contests for those rights have been increasingly hard-fought.
"I am adamantly opposed to this sale," said Sen. Jack Danforth (R-Mo.) yesterday. Before Congress adjourned this fall, it set new standards for the sale of international routes, requiring that the U.S. Secretary of Transportation certify that such sales are in the public interest, and that the DOT analyze the financial viability of the airlines involved and the effect of the sale on the U.S. trade position. "This sale would appear to fall short in every respect," said Danforth.
Bill Compton, of the TWA pilots union, said that the union may take legal action against the sale. Compton said that the union does not believe that TWA Chairman Carl Icahn intends to use the proceeds of the sale to build a viable airline. Icahn announced that he would try to merge with Pan Am, using the proceeds of the sale to finance the deal. Pan Am said it is studying Icahn's proposal.