text: Britain sets conditions to clear American alliance. Edna Fernandes 
   LONDON 1996-12-06 
   The British government warned Friday that it would refer the proposed trans-Atlantic alliance between British Airways Plc and American Airlines to Britain's Monopolies and Mergers Commission unless the carriers complied with a number of conditions. Trade and Industry Secretary Ian Lang added that even if the conditions were met by both airlines, final clearance would hinge on an open skies deal between Britain and the United States to liberalise trans-Atlantic air traffic, which would create greater competition on the routes. Lang said he supported conditions proposed by Britain's Office of Fair Trading, which was asked to examine the case last month. " I agree. . . that without suitable undertakings the alliance would be likely to lead to a significant loss of actual and potential passengers, on those routes where BA and AA currently compete and for all passengers on the trans-Atlantic market route between the UK and U. S. , " he said. His comments came just minutes after the latest set of open skies talks ended in London with no deal signed. Industry sources said there was no new date for fresh talks and blamed the deadlock on uncertainty over whether the British Airways-American deal would be cleared. The conditions for clearance of the alliance were that British Airways and American drop 168 slots at London Heathrow airport, the busiest in Europe. American's parent, AMR Corp. , said it did not view the terms as a " deal breaker. " 
   However, it called the conditions " more severe " than those imposed by other regulatory authorities on similar airline alliances. British Airways's initial response was that " unconditional divestiture of slots is unprecedented and if done it must be on the basis of fair market value. " 
   It added that it would be " prepared to take reasonable steps to assist the introduction of additional competition. " 
   The government also wants British Airways to drop a clause in its agreement with USAir that bars it from competing on trans-Atlantic routes, and said both British Airways and American should be prepared to reduce services on the London to Dallas-Fort Worth route in the event that a new entrant wishes to enter. It also suggested losing some slots on the London-to-Boston route. The Office of Fair Trade called for British Airways / American to allow third-party access to their joint frequent flyer programme where the applicant does not have access to an equivalent programme. Lang said responses should be made to the Office of Fair Trading by Jan. 10, 1997.
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