This article from NYTimes.com has been sent to you by psa188@juno.com. /-------------------- advertisement -----------------------\ Share the spirit with a gift from Starbucks. Our coffee brewers & espresso machines at special holiday prices. http://www.starbucks.com/shop/subcategory.asp?category_name=Sale/Clearance&ci=274&cookie_test=1 \----------------------------------------------------------/ American and British Air Reject Government Terms for Alliance January 25, 2002 By LAURENCE ZUCKERMAN American Airlines and British Airways (news/quote) rejected conditions proposed by Washington today that would have given the two carriers the right to merge their operations across the Atlantic. The announcement by the two airlines effectively ends their second bid since 1996 to win regulatory approval for their alliance, and it is a major setback for consumers because it dashes any hope that London and Washington will soon negotiate a new, liberalized air services treaty that would grant United States carriers greater access to London's Heathrow Airport. British negotiators were scheduled to begin talks on a new air treaty in Washington on Monday but they canceled the meeting today, the State Department confirmed. Whether any new agreement will ever be reached is now in doubt because the European Court of Justice is expected to rule in the next few months on a case that challenges the right of European Union members to negotiate bilateral air agreements. The current treaty between London and Washington is one of the most restrictive in the world. Only two domestic airlines, American and United Airlines, are allowed to fly between Heathrow and the United States. Regulatory approval of the application for exemption from antitrust laws by American and British Airways would have opened up Heathrow to four additional American carriers. But the Transportation Department demanded that American and British Airways make 224 weekly takeoffs and landings at Heathrow available to the new competitors. That was not acceptable to the two carriers. "We made it clear from the start that we would not conclude the deal if the regulatory price was too high," Rod Eddington, the chief executive of British Airways, and Donald J. Carty, the chief executive of American, said in a joint statement. "We will not acquiesce to unrealistic, and in our view, unnecessary demands." The rejection came only hours after the Transportation Department released a 64-page order outlining its terms. This was the culmination of an expensive lobbying campaign in which competing airlines pushed regulators to extract as many concessions as possible from American and British Airways. The result, after millions of dollars was spent by both sides, is that nothing will change. British Airways will continue to dominate Heathrow but it will not be able to coordinate pricing and scheduling with American as other competing airline alliances now do. http://www.nytimes.com/2002/01/25/business/25CND-AIR.html?ex=1013019790&ei=1&en=bc591f61961bf361 HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact Alyson Racer at alyson@nytimes.com or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@nytimes.com. Copyright 2001 The New York Times Company