NWA: U.S. war ties to Britain could influence airline debate
Tony Kennedy
Star Tribune
Published Nov 8 2001
With America indebted to Britain for its unwavering military
support in the war against terrorism, Northwest Airlines fears
that foreign policy considerations will overwhelm opposition to
the proposed alliance between American Airlines and British
Airways.
Northwest, Delta Air Lines, Continental Airlines and US
Airways have come out strongly against the proposed alliance
between two of the world's largest airlines, saying it would deal
a severe blow to transatlantic competition.
But Northwest President Doug Steenland said in an interview
this week that there's a chance the proposed joint venture will
be granted antitrust immunity by the U.S. Transportation
Department before the year is out. On Wednesday, Northwest
Chief Executive Officer Richard Anderson joined other airline
executives in testifying on the issue before a Senate Judiciary
subcommittee.
Opponents fear the Bush administration will approve the deal
even though it will pair the two biggest competitors on seven
routes between the United States and London's Heathrow
International Airport, the desired close-in airport for
high-paying business travelers, Steenland said.
The seven overlapping routes would give American and British
Airways a whopping 60.7 percent share of U.S.-Heathrow
passenger traffic annually, Northwest argued in a filing with
the U.S. Transportation Department.
When the proposal first came before the Transportation
Department four years ago, it was viewed as untenable because
British Airways refused to give up takeoff and landing slots at
slot-constrained Heathrow.
In the current political environment, Steenland said, there is a
risk that the United States might soften its position in
deference to the British government, which broadly supports
British Airways.
Steenland also said sympathy for American Airlines may color
the debate. Two American jetliners were lost in the Sept. 11
terror attacks, and the airline is reeling financially from the
terror-related business disruption.
Like other opponents of the proposed American-British
Airways alliance, Northwest wants permission to launch flights
into Heathrow to break up the combined market share of the
two carriers. Currently, NWA serves London exclusively from
Gatwick International Airport, which is more than an hour's
drive from downtown London.
The proposed alliance would produce an increase in market
concentration 12 times greater than the Justice Department's
threshold for the presumption of market power, Steenland said.
If antitrust immunity for the alliance is approved, Northwest
wants enough slots at Heathrow for seven daily transatlantic
flights as a remedy. Delta and Continental deserve even more
slots, according to Northwest.
If given the slots, Northwest said Wednesday it would begin
nonstop service to Heathrow from Minneapolis-St. Paul,
Detroit, Memphis and perhaps Seattle. But in congressional
testimony, Anderson said antitrust immunity for the British
Airways-American alliance should be rejected.
"Even with substantial slot divestitures," Anderson said, "it
would be unlikely that new entry [to Heathrow] by U.S. carriers
could offset the competition lost by approving the American
Airlines-British Airways alliance."
American Airlines Chairman and CEO Don Carty testified
before the congressional subcommittee Wednesday that
American is merely asking for something that Northwest and
United Airlines already have.
The Northwest-KLM Royal Dutch Airlines alliance was the
first aviation partnership in the world to be granted antitrust
immunity. The United-Lufthansa Airlines alliance also has
received antitrust immunity, and the Delta-Air France
alliance reportedly is on the brink of receiving the same
treatment.
"Ironically, the same companies arguing for our alliance to be
delayed have been actively moving forward on their own
alliance plans," Carty said.
He said American is at a disadvantage without similar
regulatory approval, especially since two of its smaller alliance
partners -- Swissair and Belgian-based Sabena -- have been
forced into bankruptcy.
On the issue of slot constraints at Heathrow, American and
British Airways have said that competitors are wrong to assert
that the airport is closed to new entrants. Since 1996,
American has said 10 new carriers (none from the United
States) have gained access to Heathrow.
The request for antitrust immunity for American and British
Airways is intertwined in aviation treaty talks between the
United States and Britain. The two countries are seeking an
open-skies agreement that would allow carriers from either
country to fly anywhere within their boundaries, depending on
airport capacity.
The issue is on a relatively fast track because Britain soon could
lose its authority to negotiate an aviation treaty. That's because
the European Union is threatening to assume that
responsibility.
-- Tony Kennedy is at tonyk@startribune.com .
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