British Airways and American Airlines have announced that they will not accept the conditions for approval of their proposed trans-Atlantic alliance imposed by the US Department of Transportation.

In a joint statement, the two companies said that their preliminary review of the DoT's order indicated that the price for approval is unacceptable. As a result, the UK has pulled out of the "open skies" talks due to take place in Washington which were aimed at drawing up a new bilateral air treaty.

Forum Response: British Airways

Rod Eddington, chief executive of British Airways, told ePolitix.com: "We will not do this deal at this price. We made it clear from the start that we would not conclude the deal if the regulatory price was too high. Regrettably this has proved to be the case.

"It is a disappointment for both airlines, shareholders, and for the many staff who have worked extremely hard to ensure that the deal would be a real success for the flying public.

"The conditions laid down by the US government do not make sense for either company. We will not acquiesce to unrealistic, and in our view, unnecessary demands. For us, the price is just not right.

"We simply sought to have the same commercial advantages and deliver the same consumer benefits that rival airline alliances and their passengers already enjoy. Consumers will now be denied the substantial range of benefits that would have arisen from a closer alliance between our two great airlines."

Forum Response: Virgin Atlantic

A spokesman for Virgin Atlantic told ePolitix.com: "The breakdown of the proposed deal between British Airways and American Airlines makes it clear, now more than ever, that there should not be an Open Skies deal based on the commercial needs of two airlines. It further proves that the government should not negotiate a deal based on this tie-up. We believe that the only way for a proper liberalisation of the skies is for the European Commission to negotiate with the US government."