United/BMI Request Immunity, Other Majors Protest

A month after American Airlines and British Airways submitted a request for an immunized transatlantic alliance, Star Alliance partners United Airlines and British Midland BMI yesterday applied to the U.S. Department of Transportation for their own immunity. According to BMI chairman Sir Michael Bishop, the newest request--which also would expand on immunization already in place between United, Lufthansa, SAS and Austrian--will foster competition against other alliances, namely BA/AA, Virgin/Continental, Northwest/KLM and Air France/Delta/Alitalia.

"Unlike the proposed BA/AA alliance, our application for antitrust immunity with United presents no competition issues, as BMI does not operate long-haul services from London," Bishop said. "There will be no elimination of competition as there are no overlapping routes." United and BMI are the second-largest carriers in their home markets, behind American and British Airways, respectively.
Continental, Delta and Northwest--all locked out of London Heathrow under the rules of the 25-year-old Bermuda II agreement--again voiced opposition to both the United/BMI and the AA/BA immunity requests. In a joint statement, the three carriers said approvals would lead to the four airlines in question controlling "a staggering 83 percent" of departures between Heathrow and the United States. Such a development, they said, would "permanently destroy competition" at Heathrow.

Potential approval for both AA/BA and United/BMI hinges on a more liberalized Open Skies pact between the United States and the United Kingdom, a development that for years has eluded regulators on both sides of the pond. Continental, Delta and Northwest said a new Open Skies deal only would be effective if it included guaranteed Heathrow access to other players.