An American Airlines jet taxies past the British Airways maintenance headquarters at Heathrow Airport. (AP/File)

By Julie Johnsson | The third time looks to be the charm for American Airlines and British
Airways, which have sought since the late 1990s to form a partnership
to closely coordinate flying across the North Atlantic.
 
The U.S. Department of Transportation on Saturday granted tentative
approval to the carriers’ application for antitrust immunity, filed in
2008 with Spain’s Iberia, to share flying, prices and revenues on
trans-Atlantic routes.

Federal regulators nixed two earlier bids by American and British Airways out of concern that antitrust immunity would give them the market clout to distort pricing and lock other airlines out of London’s Heathrow International Airport.
 
To gain final approval, the carriers must agree to give up four landing slots at Heathrow so competitors can launch new service between the U.S. and U.K. by the summer of 2011. That’s a contrast to the hundreds of slots that Transportation officials had demanded the carriers relinquish as condition of approval in 2001, when they last sought antitrust immunity for a North Atlantic partnership.

It drew immediate criticism from Sir Richard Branson, president of Virgin Atlantic. He has long contended that allowing the dominant British and American carriers to combine in the U.K.-U.S. market would crush competition and harm consumers.

“This preliminary decision beggars belief,” Branson said in a statement. “Four slot pairs is a complete joke and those responsible for this decision should hang their heads in shame.”
 
American and British Airways must also win approval from the European Union, which is investigating potential anti-competitive harm caused from the venture.
 
The U.S. Justice Department also raised concerns about giving the Oneworld alliance partners control of nearly 50 percent of landing rights at perennially congested Heathrow.
 
Justice officials, who don’t have regulatory oversight of international airline ventures, warned in December that the reduced competition would result in rate hikes on a half dozen key trans-Atlantic routes, including flights from Chicago to London.
 
Saturday’s decision is the second major victory scored by American CEO Gerard Arpey in less than a week.
 
In a surprise move, Japan Airlines rejected an overture from Delta Air Lines and its SkyTeam partners on Tuesday and elected to remain in American’s Oneworld alliance.
 
American and JAL filed an application Friday night for antitrust immunity to form a joint venture across the Pacific. United Airlines, Continental and Japan’s All Nippon Airways have asked regulators to bless a competing partnership between the U.S. and Japan.

Those proposed ventures are expected to be approved by regulators because the U.S. and Japan are opening the air travel market to greater competition through an Open Skies agreement, which is expected to be finalized this fall.

Transportation officials frowned on the earlier American-British Airways partnerships in 1997 and 2001 because they weren’t accompanied by a relaxation in trade restrictions that would make it easier for competing airlines to challenge them. After the U.S. and E.U. opened air travel markets in 2008, U.S. regulators granted wider antitrust immunity to ventures involving United, Continental, Lufthansa and other Star partners as well as SkyTeam’s Delta, Northwest and Air France-KLM Group.

“American and its Oneworld partners are looking forward to competing for business over the Atlantic on a level playing field,” said Will Ris, American’s senior vice-president for government affairs.