(Updates with American Airlines' statement in the seventh paragraph)
By Josh Mitchell
Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- Two leading U.S. senators on antitrust issues said Tuesday that a plan by British Airways PLC (BAY.LN) and AMR Corp.'s (AMR) American Airlines Inc. to intensify cooperation on trans-Atlantic routes "raises significant competition issues," increasing pressure on U.S. regulators reviewing the plan.
Sens. Herb Kohl, D-Wisc., and Orrin Hatch, R-Utah, expressed their concerns in a letter to Department of Transportation Secretary Ray LaHood and a Justice Department antitrust official, whose departments are reviewing an application for antitrust immunity that would allow American Airlines, British Airways and Spain's Iberia (IBLA.MC) to expand cooperation within the "oneworld" alliance.
"While not expressing any views on the ultimate merits of this application, we believe this alliance application raises significant competition issues and we reiterate our views that the DOT act cautiously," the senators wrote. Kohl is the chairman of the Senate Judiciary Committee's subcommittee on antitrust, competition policy and consumer rights, and Hatch is the subcommittee's ranking Republican.
The senators also vowed to "closely examine international aviation alliances ... and their likely effects on competition."
The senators are the latest to add their voices to the debate over whether to allow American Airlines and British Airways to work more closely on schedules and prices, and share revenue. The Transportation Department has said it expects to decide by Oct. 31 on the antitrust-exemption application.
The high-profile case is viewed by the industry as a test of evolving U.S. aviation and competition policy. Some members of the Congress are pushing to rein in airline alliances, which they say have hurt industry competition. The European Commission recently issued a so-called statement of objections to the proposed partnership.
American Airlines said in a statement that its plan to cooperate with oneworld members has gained support among Capitol Hill lawmakers, governors, mayors, business leaders, nonprofit groups and others. "They all believe that granting the oneworld carriers the right to cooperate more closely on flights between North America and Europe will benefit the traveling public and improve global competition by allowing oneworld to compete on an equal footing with the Star and SkyTeam alliances, which already enjoy broad immunity," the company said.
Attempts to reach officials at British Airways were unsuccessful. A Transportation Department spokesman didn't immediately respond to a request for comment.
The Air Transport Association, an industry trade group representing major U.S. airlines, including American Airlines, issued a statement voicing support for airline alliances.
"Antitrust immunized alliances have enabled international airline alliances to generate important benefits for travelers through better service and lower fares," the ATA said, adding that the partnerships have created U.S. jobs.
-By Josh Mitchell, Dow Jones Newswires; 202-862-6637; joshua.mitchell@dowjones.com