U.S., British Airlines Establish Alliance

As airlines pair off in global alliances, American and British Airways proposed the biggest deal yet Tuesday - and rivals immediately warned of a price-gouging, trans-Atlantic cartel.

American and British Airways disputed the charge, saying they were trying to keep pace with others who have already teamed up, such as United Airlines and Lufthansa German Airlines.

“This is an alliance for now and into the 21st century,” British Airways chief executive Bob Ayling told reporters. He said competition will increase and fares should fall.

But American and British Airways carry about 60 percent of the traffic between the United States and Britain - one of the world’s most lucrative markets. They will no longer compete with one another if regulators approve the deal, but insist they will still face competition.

“If someone comes in and lowers prices and we don’t respond, we won’t have 60 percent,” said American’s president, Don Carty.