Clutching model planes and with the Union flag and Stars and Stripes draped over their shoulders, the bosses of British Airways and American Airlines posed happily for the cameras outside the Waldorf hotel in central London.

The photo call was to publicise a historic alliance between the companies, a merger of their transatlantic operations that was intended to be a first step in the creation of an aviation behemoth that would span the globe.

But the Waldorf photo call took place 12 years ago, when the companies first tried to get the alliance off the ground. The executives who posed for the cameras are now long gone — Bob Ayling stepped down as BA chief executive in 2000, and Don Carty quit American in 2003.

Their replacements, Willie Walsh and Gerard Arpey, together with a new partner, Fernando Conte of Iberia, are now trying to finish what their predecessors started all those years ago — last week BA and American said they had once again asked regulators on both sides of the Atlantic to approve the tie-up.

Arpey, an American Airlines veteran, was on hand for the 1996 photocall.

“I was there even before that, when we had the very first meetings between Colin Marshall and Bob Crandall,” he said.

“We have waited until the time is right, and there is now no rational reason why this shouldn’t go ahead.”

Sir Richard Branson, founder of Virgin Atlantic, has fought the tie-up each time it has been mooted. He remains implacably opposed.

“It will still be bad for passengers, bad for competition, and bad for the UK and US aviation industry,” he said.

Despite the upheaval in the airline industry over the last decade, BA and American’s basic plan has not changed. Together with Iberia, they want a “virtual” merger of their transatlantic operations, bringing them together into a single unit, free to collude on pricing and schedules.

To do this, they need clearance from Brussels and Washington. A full-blown merger, which companies in other industries might have chosen to pursue, is out of the question because of strict airline ownership rules in the US.

The two previous times the companies tried to combine forces, in 1996 and 2001, they were roundly rejected.

Competition watchdogs said that BA and American were too dominant at Heathrow, where they have a tight grip on key routes to big American cities, notably New York, Chicago and Dallas.

Congestion at the airport, where take-off and landing slots are scarce and expensive, also meant that competitors would find it hard to mount a meaningful challenge.

If they wanted to link up, the regulators said, they would have to give up some turf at the London airport.

In 1997, for example, the Office of Fair Trading said that the price would be 168 take-off and landing slots a week at Heathrow, enough for rivals to run 12 return flights a day. Other regulators asked for even more.

This time round, Arpey and Walsh say, the competitive landscape has altered. An open-skies agreement between the EU and the US, which came into force in April, has led to rival airlines crowding into Heathrow, starting 13 new daily flights to the US. Two other big alliances, Skyteam (led by Air France and Delta Air Lines) and Star (led by Lufthansa and United Airlines) have been given the competition clearance BA and American — part of Oneworld — are seeking.

These alliances have built up a strong position at their respective European hubs, Skyteam at Paris and Amsterdam and Star at Frankfurt.

Walsh and Arpey said the other alliances had a much greater share of the EU-US market than that which would be enjoyed by the BA and American link-up. “Open skies has shown that other airlines are able to get slots and terminal facilities at Heathrow,” said Arpey. “Despite the rhetoric from those opposed to our alliance, this is a competitive, contested market. All we want now is a level playing field with the other airline alliances that have already been given the go-ahead.”

The end goal of the alliance, Arpey said, would be a seamless operation where customers of each airline would travel on the other’s aircraft. “We want to be in a position where we are indifferent to which airline is operating the flight.”

Walsh rejected Branson’s criticisms. “Just because this might be bad for Richard Branson doesn’t mean it is bad for British consumers or the British economy. In fact it is good for consumers and the economy,” he said.

Branson maintains that little has changed since 1996 and 2001. In letters sent last week to Barack Obama and John McCain, Branson highlighted the dominance of BA and American on key business routes.

“BA and American would have a combination of a trans-atlantic network that could not be replicated and a frequentflyer programme that would make it impossible for other carriers to compete for time-sensitive corporate or business travellers. The alliance partners will be able to use their leverage on routes where there is little or no competition to tie in consumers on routes where there are plenty of other alternatives. This would inevitably lead to a reduction of choice and higher prices for consumers,” Branson said.

Analysts and airline executives expect the alliance to be approved this time but think regulators will still ask them to give some ground at Heathrow. Using the original, 12-year-old OFT findings as a guide, BA and American might be asked to surrender sufficient slots for perhaps 10 daily return flights.

Arpey is adamant none should be given up. “There is no logic to our having to pay any price in terms of slots,” he said.

With a presidential election looming, America’s domestic politics are likely to have a big say in the deal’s fate.

Crucially, the big US rivals of the deal in previous years have not jumped to condemn it.

United Airlines, which is regarded by US lobbyists as a key player because of its strong presence in Chicago, has declined to comment until it has a chance to study the detail of the BA/American plan.

Walsh and Arpey said they planned to have it approved “on this administration’s watch,” which Washington insiders said would probably mean by November, as outgoing presidents normally steer clear of big decisions in their last months in office.

If the go-ahead is not received by then, a delay of several more months is likely, as the new administration appoints its senior post holders.

“I think then it would be May at the absolute earliest,” said one lobbyist.

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