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American Airlines-British Airways

House Judiciary Committee to hold hearing on AA - BA deal

Aug 09, 2009

LONDON - U.S. lawmakers plan to review efforts by British Airways PLC and American Airlines to secure anti-trust immunity for their Oneworld alliance in a move that could reopen political rifts about oversight of competition policy in the industry.

The House Judiciary Committee will hold a hearing on the joint application on Sept. 16, with Virgin Atlantic president Richard Branson, a long-time opponent of the proposed pact, among those called to testify, according to a person familiar with the matter.

A Congressional source also confirmed the hearing, which comes amid a spat between officials from the U.S. departments of justice and transportation about competition policy in the industry. The transportation department has already approved antitrust applications from two of the three global airline alliances, SkyTeam and Star, though the latter provoked strong objections from justice department officials amid a broader crackdown on competition policy by the Obama administration.

DOT's recent approval for the Star alliance to be expanded to include Continental Airlines Inc. (CAL) came despite criticism from some senior lawmakers and continuing efforts to revoke antitrust immunity pending a review of competition policy. DOT overruled most of the objections made by the justice department. European regulators are also reviewing the impact of existing and proposed airline alliances, but any effort by the U.S. to block Oneworld could impact the next round of open skies talks between the U.S. and the European Uniuon.

American, a unit of AMR Corp. (AMR), and BA have already tried twice to secure antitrust immunity, and expect to have an initial decision from U.S. transportation officials by Oct. 31. They have said they are confident of winning approval by year-end, and argue they would be left at a competitive disadvantage if left unable to match the cooperation afforded to SkyTeam and Star members. BA's long-haul rival, Virgin - which is not a member of any global pact - has previously argued granting anti-trust immunity to BA, American Airlines and three other Oneworld members, would make it difficult for them to compete on some transatlantic routes.

The Oneworld carriers have asked DOT to approve a joint business agreement to form a closer relationship, allowing them to share revenue and coordinate schedules and marketing, mirroring approvals already granted to SkyTeam and Star members. In April, U.S. regulators said the airlines' application for anti- trust immunity was substantially complete. BA said Sunday that it wasn't aware of the proposed hearing, while officials from AMR and Iberia Lineas Aereas de Espana (IBLA.MC) - another Oneworld member - were not immediately available.

Paul Charles, director of communications at Virgin Atlantic, said: "Rightly, politicians and regulators are taking a very close look at the anti-competitive aspects of BA and AA's proposals. The Congressional Hearing will enable the true facts about the dangers of a potential alliance to consumers to be well and truly explored."

House Judiciary Committee to hold hearing on AA - BA deal
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