The latest U.S. government effort to get more airlines flying between the United States and Britain apparently came up short today as British Airways said it has no intention of giving up the huge competitive advantage it enjoys because of its extensive landing rights at London's Heathrow Airport.
U.S. government sources said the U.S. Department of Transportation would reject the request from British Airways and American Airlines for the antitrust immunity they need to expand their long-planned joint operating alliance, known as Oneworld. Without the legal immunity, Oneworld won't be able to coordinate prices and schedules the way other airline groups already do.
Industry officials and analysts here viewed reports of the DOT decision as an effort to pressure British Airways into giving up some of its cherished slots at Heathrow. The U.S. government message appears to be no slots, no immunity.
British Airways officials certainly read the leaks that way. But the carrier responded with a statement saying, in effect, that it would rather give up the full-bore alliance with American than cave in on the landing slots.
"We will not accede to demands that do not make sense for our company," said British Airways chief executive Bob Ayling. Instead, Ayling said, British Airways and American will try to "develop activities that don't require antitrust immunity."
American's chief executive, Don Carty, said the two carriers remain committed to their alliance. But without legal immunity in the United States, the Oneworld members can't coordinate the way other major alliances do. The biggest airline groups are the Star Alliance, created by United Airlines and Lufthansa, and Wings, the joint endeavor of Northwest Airlines and KLM.
Accordingly, Carty said that "our alliance may now evolve somewhat differently than originally proposed."
In theory, the two issues at stake are separate.
Approval of the British Airways-American Airlines operating alliance is supposed to be determined on the basis of antitrust laws in the United States, Britain and the European Union.
The long-stalemated effort to let more airlines fly U.S.-Britain routes is a matter for negotiation between the governments of the two nations. In those negotiations, Washington is demanding rights for more U.S. flights to land at Heathrow. The British side is demanding more access to the U.S. market. This has been going on for 15 years, and so far nobody has blinked.
But the two issues have become tangled together. For some time, the U.S. side has made it clear that the British Airways-American Airlines alliance won't get the government's seal of approval unless more landing slots at Heathrow are made available to U.S. carriers.
A Transportation Department source said: "We are going to dismiss their petition formally tomorrow [Friday], not on the merits, but simply because it is clear that an impasse has been reached at which it is no longer in anyone's interest to maintain this docket."
Of London's four big airports, Heathrow is the closest to downtown--an easy 15 minutes on the sleek new Heathrow Express train--and the most popular for business passengers. Because of allocations going back decades, only four airlines (British Airways, American, Virgin Atlantic and United) can fly transatlantic flights into and out of Heathrow. British Airways has more of these slots than any other carrier.
Some industry analysts here said the DOT leak, and the tough response from British Airways, might throw the airline talks back into stalemate for months or years to come. But others said they expect the reported DOT decision to prompt a counteroffer from the British side, which could get negotiations going again.
Staff writer Cindy Skrzycki contributed to this report from Washington.