New blow to BA's plan for US deal

THE long quest by British Airways to establish a trans-Atlantic alliance with American Airlines suffered a fresh set-back last night when the US Justice Department said the deal should be blocked unless both carriers are persuaded to give up precious take-off and landing slots at Heathrow Airport.

In a negative opinion that was released just after the close of the New York markets last night, the assistant Attorney General, Joel Klein, said that such an agreement could significantly harm competition between carriers on the lucrative routes between Britain and the United States, and "result in air travellers paying significantly higher fares for travel between the United States and Great Britain".

The opinion is likely to have an important bearing on the consideration of the proposed pact by the US Transportation Department, which is expected to make a decision later this year. The European Commission, which has also be scrutinising the deal, indicated only this week that it would probably issue its decision on the alliance by the end of next month.

Mr Klein, whose week has also been marked by the launching of a landmark anti-trust suit against Bill Gates and his Microsoft Corp, said that approval should be contingent on the signing by the British and US governments of an "open skies" pact that would open up routes between their countries to new entrances and free competition.