National airlines have monopolistic behaviour written into their DNA. They were created as monopolies in the early days of aviation and it has been only relatively recently that real competition has arrived. When national carriers find themselves up against it they tend to revert to their monopolistic instincts.

British Airways is often accused of trying to control markets rather than compete, and this criticism will grow louder when it announces plans to create an alliance with American Airlines. BA and AA are appling for antitrust immunity this week in a move that would give them control of 63 per cent of capacity between Heathrow in London and JFK in New York - the main airports linking Europe and North America. BA-AA would also control 66 per cent of capacity between London and Chicago and 79 per cent between London and Boston.

It is difficult to see this as anything other than monopolistic, which is why two previous attempts to merge have failed.

The BA-AA partnership will not be a corporate merger but an operational one, potentially allowing cost savings and joint pricing and booking. They will effectively act like a single airline, which is why Sir Richard Branson's Virgin Atlantic believes that the alliance will be bad for customers.

BA, which is also pursing a full merger with Iberia, of Spain, will argue that the world has changed since its previous attempts to merge with AA. High fuel prices are a threat to all airlines and BA-AA will claim that it needs to cut costs to maintain vital Atlantic routes.

BA will also claim that the advent of Open Skies, the latest round of air liberalisation between Europe and the United States, theoretically makes transatlantic routes a free market. Open Skies has made only a small difference so far, however, because of the enormous cost of buying slots at Heathrow. There is a nice irony in BA using Open Skies as a defence for its AA tie-up. It was initially against the proposal because it would allow more competition.

Ultimately, BA and AA would like a full merger, if the US were ever to remove restrictions on foreign ownership of domestic airlines. But even a limited alliance should face tough scrutiny from competition authorities. Aviation monopolies resulted in poor service and high prices in the past and BA-AA will have to work hard to convince passengers that its DNA really has changed.

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