Europe Protests British Air Alliance

The dispute over landing rights at London's Heathrow Airport has become not just a transatlantic brawl but also an inter-European squabble.

The European Commission is threatening to take Britain to court if it approves an alliance between British Airways and American Airlines, carriers that together control 60 percent of US-London traffic.

The alliance, proposed last year, has already drawn fire from rival US airlines and from Virgin Atlantic, a British carrier. Now it appears that the resolution of the dispute will affect not only the degree of competition in the London market but also the shape of European regulation of the industry.

The European Commission, the executive arm of the 15-nation European Union, says the deal threatens competition on the key transatlantic route. The two airlines argue that their alliance is comparable to other transatlantic partnerships.

Karel van Miert, the Brussels commissioner for competition, denies charges that he is singling out this one deal. The commission says it will investigate the alliance along with other link-ups: Northwest and KLM of the Netherlands, United Airlines and Germany's Lufthansa, Delta Air Lines and Swissair.

Britain claims that in threatening to take the matter to the European Court, Mr. van Miert is overstepping his authority.

Bill Cash, a leading Conservative member of parliament, accused Van Miert of "abuse of his function."

The Commission is empowered by the EU Council of Ministers to execute policy in the name of the 15-nation grouping.

In the airline industry, however, bilateral "open-skies" agreements have become common between the United States and other nations, including Germany. Britain is negotiating an open-skies deal with the US that both British Airways and American's parent - AMR Corp. - acknowledge will be a key to approval of their alliance.

The drawn-out talks are scheduled to resume in Washington Feb. 4. The last round was held in London Dec. 6.

US carriers are pressing hard for the agreement to give them more slots for taking off and landing in Britain. Some also hope to expand the cities connecting to Heathrow. USAir, the only major US carrier not serving Britain, has applied to fly between Heathrow and Philadelphia, Pittsburgh, Charlotte, N.C., and Boston, but has been turned down.

Virgin Atlantic, whose balloon-adventuring chief Richard Branson has also been crusading against the British Airways-AMR alliance, welcomes the prospect of European Commission intervention.

"There is real competition at stake here, and British Airways should not be allowed to cloud the issue," says Virgin spokesman Bill Whitehorn.

British Airways and AMR have offered to surrender to rival US airlines 168 take-off and landing slots a week. This would be the equivalent of 12 daily flights in and out of London's Heathrow Airport. Opponents say this is not enough.

The deal is "simply a disgrace," designed to keep British Airways profitable at the expense of the traveling public, Barry Simon, Continental Airlines' head of international operations, said as the carriers applied for approval of US antitrust regulators Jan. 10 .

According to Van Miert, the two airlines would have to surrender 400 slots a week for anything like fair competition to be restored.

Brussels-London conflict on the issue is likely to be protracted as conflicting interpretations of European law are batted to and fro. The European Court is the EU's highest judicial authority. If it decides against the deal, Britain, as an EU-member, is legally bound to comply.

But British Airways says the European Commission cannot interfere with the decisionmaking process. A spokesman says that under Article 89 of the Treaty of Rome, the competent regulatory authorities should have the final say. In Britain's case, this would give the last word to the nation's Department of Trade working with the Office of Fair Trading.

"The European Commission could study the proposals and make observations, but it could not decide the matter," the airline spokesman says.

Competitors object that the alliance will leave the two partners in heavily dominant positions on several key routes: London-Boston, London-Chicago, and London-New York.

The debate is tied closely to Britain's already hostile attitude to any extension of the European Commission's power. Prime Minister John Major has pledged to campaign against encroachment on national powers in his coming reelection bid.