Order 00-5-29

United Air Lines and British Midland Airways Limited

We are sensitive to the issues raised by the respondents regarding additional U.S.-carrier access at London's Heathrow airport. We agree with Continental and Delta that additional entry for U.S. carriers at Heathrow is an essential goal, and we are pursuing negotiations with the United Kingdom with this purpose in mind. We do not perceive withholding the authority here, however, as furthering that end, particularly given the removal of the most controversial Heathrow elements from the package of authority sought here.

We also remain unconvinced that competitive considerations compel withholding any of the authority currently being sought. We understand Continental's and Delta's arguments, and agree that further service enhancements of carriers already present at Heathrow could, to the degree that they translate into adverse effects on competition, have a negative impact on the market. We tentatively find, however, that in the particular circumstances of these applications, any such potential problems would be offset because we will be adding competitive benefits by introducing a dynamic additional presence in the U.S.-U.K. and U.S.-third-country markets-a presence that we hope and expect to see augmented by other carrier entry as a result of our ongoing negotiations. Until that additional entry is achieved, we expect that the United and British Midland code-share at Heathrow will facilitate further opportunities for consumers that outweigh the potential effects of any consolidation of their presence at Heathrow, especially in view of British Midland's modest prospective presence in the transatlantic market, where it m, III remain a distant third among the three U.K. carriers.

By:  Bradley Mims

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