15 Aug 2008

BA seals alliance with American Airlines

7:43 am on 15 August 2008

British Airways has sealed an alliance with American Airlines that will allow the two carriers to fix fares, routes and schedules together.

The move will also include Spain's Iberia, which is merging with BA.

Under the agreement, the three airlines will co-operate on flights between the US, Mexico and Canada and the EU, Switzerland and Norway.

However, Virgin Atlantic, owned by Sir Richard Branson, said the plan would reduce competition in the airline industry. Virgin says the proposal would create the world's biggest airline.

The airlines are apply to the US Department of Transportation for immunity from US anti-competition rules and will also notify European regulators.

They previously failed to win an exemption because of their dominance at Heathrow, where BA and AA control nearly half of all the landing and take-off slots to the United States.

Earlier this week, Sir Richard said he had written to presidential hopefuls Barack Obama and John McCain to warn that the proposed alliance between BA and American Airlines would severely damage competition on transatlantic routes.