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Airlines tackle antitrust issue

Brussels - British Airways, American Airlines and Iberia have offered changes to plans to share more of their lucrative trans-Atlantic routes in an effort to settle an antitrust dispute with the European Union, EU regulators said on Monday.

The European Commission said "it is assessing the effectiveness of proposed commitments" put forward by the three airlines to soothe EU worries that expanding their oneworld alliance may violate rules that forbid companies striking deals that shut out rivals.

It said it would ask rival airlines to examine the changes and would keep probing the deal until it could make a decision on whether to accept the proposal. It gave no details of what the airlines have offered to do.

If BA, American and Iberia manage to reach a settlement with EU regulators, they would avoid cartel fines that can go as high as 10% of global annual revenue.

In the US, the Department of Justice said in December that the tie-up would cause competitive harm and hike prices unless the airlines surrendered some take-off and landing slots. A final decision must be made by the Department of Transportation.

The three airlines currently coordinate how they sell and operate flights between the 27-nation EU and the United States. They now want to expand the alliance to jointly manage schedules, capacity and pricing on flights from Canada, Mexico, Puerto Rico, Norway and Switzerland as well.

The EU probe targets the plans to expand the alliance, not the way it works at the moment. It is not investigating other member airlines that don't fly trans-Atlantic routes.

BA, American and Iberia said last year that the planned new alliance would reduce fares and give passengers more convenient connections and better access to some 500 destinations.

The EU has long been suspicious about how airline alliances such as oneworld and Star Alliance affect prices for flying between Europe and the United States. It said on Monday that it is still investigating the Star Alliance run by Lufthansa, Continental, United and Air Canada as well as SkyTeam which combines Air France/KLM and Delta/Northwest.

Airlines do not compete directly against other alliance partners on some routes and instead may share a code for the same flight and pool some staff and services to lower costs. Such alliances emerged because many national rules discourage airlines from merging for fear of losing exclusive rights to flying routes.

American Airlines and BA have tried twice in the past decade to form a closer alliance, but the carriers withdrew those bids after regulators insisted that they give up sought-after landing and takeoff slots at London's Heathrow Airport, Europe's largest air hub.

- AP

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