Continental Airlines Calls Tentative AA/BA Approval A Significant Blow To Competition

25th Jan 2002

Continental Airlines warned that today`s tentative approval by the U.S. Transportation
Department of an alliance between American Airlines (AA) and British Airways
(BA) is a significant blow to trans-Atlantic air competition that will lead to
higher airfares and poorer service for consumers on both sides of the

If final approval is granted and American Airlines and British Airways are
allowed to jointly fix prices and schedules across the North Atlantic, air
transportation, particularly between the U.S. and the U.K., will be
irreparably harmed.

While we support the idea of Open Skies, we believe it is terribly unfair
for a government to require such an onerous, anti-competitive and anti-
consumer alliance as a condition to an Open Skies agreement,” said Continental
Airlines Chairman and Chief Executive Officer Gordon Bethune.  “The world`s
largest airline and Europe`s largest carrier contend they can`t compete
without the ability to fix prices and schedules and dominate the world`s
largest business market.  The reality is their deal is bad for consumers, bad
for competition and bad for communities.  This is a deal that just should not
be approved under any circumstances.

“We are very troubled with today`s tentative decision, which if finalized
would effectively allow the North Atlantic`s two biggest competitors to
merge,” Bethune said.  “The Justice Department has warned that the market
concentration and decreased competition between the U.S. and the U.K.
associated with this deal far outweigh any potential benefits AA and BA can
dream up.”

The proposed remedies, which seek to offer a handful of takeoff and
landing rights at London`s Heathrow Airport to new-entrant carriers like
Continental, do not go nearly far enough to protect consumers.  Under the
terms of the tentative decision, itself subject to an Open Skies bilateral
agreement to liberalize air service between the U.S. and the U.K., legal
barriers that prevented American and British Airways from fixing prices and
schedules will be torn down.


“Of all of the global airline alliances, only American`s pairing with
British Airways has as its European base a slot-restricted airport with no
room to grow,” Bethune said.  Additionally, evidence shows conclusively that
travelers who begin or end their trips at London`s Heathrow Airport pay
significantly more than those who fly to or from London`s Gatwick Airport or
other major European airports.

“For these reasons alone, this anti-competitive agreement should have been
rejected outright,” Bethune said.  “The way to protect consumers is by
encouraging competition, not market dominance.”

broad coalition of elected officials including 27 U.S. Senators,
34 members of the U.S. House of Representatives, six governors, two attorneys
general and four mayors joined the U.S. Justice Department, the International
Brotherhood of Teamsters, Continental Airlines and several other U.S. and
British carriers in criticizing this alliance as anti-competitive.




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