The US Transportation Department has conditionally approved an alliance between American Airlines and British Airways.

The companies want to work together to set rates and routes and sell each other's tickets. The airlines must give away 224 takeoff and landing slots for travel between US cities and Heathrow Airport, before they can get antitrust immunity for their alliance.

Forum Response: British Airways

Andrew Cahn, director of government and industry affairs at British Airways, told ePolitix.com: "The Department of Transportation order is a substantial legal document that requires a thorough review before British Airways or American Airlines can comment in detail on its contents.

"Our analysis will take into account the impact of the proposed conditions and the competitive position of our companies. In addition, both airlines will be conducting a review of the US government order in the days ahead.

"We believe our alliance will deliver more choice, better products and better prices for transatlantic air travellers and will put both airlines on a level playing field with other alliances."

Forum Response: Virgin Atlantic

Sir Richard Branson, chairman of Virgin Atlantic Airways, told ePolitix.com: "The US Department of Justice found that a BA/AA alliance would result in 'immediate competitive harm' and 'a substantial loss of competition and higher prices for a large number of consumers'. The US Department of Transportation's proposed remedy (of the divestiture of 224 slots on seven of the proposed nine routes - of course for US airlines only!) would be both ineffectual and inadequate when compared with the anti-competitive impact of this alliance.

"If the UK government agrees a new Open Skies deal on this basis it will simply be selling out to the US. British aviation is bigger than BA and the interests of British consumers are not the same as those of BA's beleaguered shareholders.

"No one is more committed to genuine Open Skies than Virgin Atlantic but only if that means full liberalisation of all regulations governing air services within and between Europe and the US. Among other benefits to consumers it would give US carriers the right to fly within Europe and British carriers like Virgin the right to fly within the US.

"This is only a prelude to the battle for true 'Open Skies' and I'm confident that the Office of Fair Trading and the European Commission's decisions on this alliance will be more rigorous. I expect both to agree that this proposal is profoundly anti-competitive and should not be allowed to proceed without more substantial and significant remedies."The key argument in this entire debate is Heathrow access. Open Skies is being held up as a panacea by American and BA in this respect. Any form of liberalisation of outdated bilateral agreements should be welcomed, and no-one has lobbied stronger than Virgin Atlantic to replace the current restrictive Bermuda II agreement governing air services between the US and the UK by a truly open competitive regime. But in respect of Heathrow-US services Open Skies will make no difference at all. Put simply Heathrow is full and there are no prospects of capacity increases in the foreseeable future.

"In order for Virgin Atlantic and the US carriers to compete effectively in trans-Atlantic markets more slots are needed at Heathrow, and the associated terminal facilities that go with the slots. But the slots are simply not there. Not from the slot pool; not from partner airlines; and not on the open market. If slots were available, then Virgin would not have had the struggles that it has had to obtain more slots in recent years.

"The only way that the regulators can ensure access to Heathrow is to divest American and BA of significant numbers of slots at the airport. And not just any old slots. They must be slots at the optimal times for trans-Atlantic travel - not at the margins of the day."