April 20 (Bloomberg) -- European Union regulators have stepped up antitrust investigations of Continental Airlines Inc., American Airlines and British Airways Plc on trans- Atlantic flights within their rival alliances, probing whether the pacts harm competition.

The airlines coordinate prices, schedules and capacity as part of the Star and Oneworld alliances. EU regulators could force the carriers to sell airport landing slots to open up competition on trans-Atlantic routes, the world’s second biggest market after U.S.-Latin America.

“An alliance is a complex monopoly that’s allowed to exist if it’s not reducing competition more than it’s benefiting consumers,” said Nick Cunningham, an analyst at London-based Evolution Securities.

Carriers are vying to bolster partnerships on sales and scheduling to cut costs amid a slump in demand for air travel caused by the global recession. Airlines worldwide may lose a combined $4.7 billion this year, the International Air Transport Association estimated March 24.

The European Commission, the EU’s competition authority, said in a statement today that it’s started a formal probe of Continental’s plan to coordinate trans-Atlantic flights with members of the Star Alliance, as well as Continental’s proposed joint venture with UAL Corp.’s United Airlines, Deutsche Lufthansa AG and Air Canada.

Increasing Scrutiny

The commission is also increasing its scrutiny of plans by Fort Worth, Texas-based AMR Corp.’s American, British Airways and Iberia Lineas Aereas de Espana SA to operate as a single carrier on trans-Atlantic routes. The EU announced the initial probe in August 2008.

“The level of cooperation in question appears far more extensive than the general cooperation between these airlines and other airlines which are part of the Star and Oneworld alliances,” the Brussels-based commission said in the statement.

U.S. authorities haven’t finished a review of that proposal, which sought immunity to cooperate on some routes between Europe and North America. It’s the third time since 1996 that American, the world’s second-biggest carrier, and British Airways have attempted to form an alliance with antitrust immunity.

Fines

The EU investigations could lead to fines of up to 10 percent of global revenue or a settlement to resolve competition problems.

The commission said it will study wither the joint ventures “may lead to restrictions of competition on certain trans- Atlantic routes.” The regulator said it will consider whether the agreements to jointly manage schedules, pricing and ticket sales benefit consumers.

The EU has been reviewing airlines alliances for several years. The two investigations add to an existing EU review of Delta Air Lines Inc., Air France-KLM Group and five other carriers in the SkyTeam alliance. That probe remains open after the airlines offered landing slots to competitors to resolve the case.

Continental, the fourth-largest U.S. carrier, obtained approval from the U.S. Transportation Department on April 7 to join the Star Alliance after leaving SkyTeam.

‘Routine’ Probes

David Messing, a spokesman for Houston-based Continental, said in an e-mail that the EU investigation is a “routine procedural step” and the alliance should be granted antitrust immunity “because of all the positive consumer benefits it delivers.”

Current regulatory restrictions mean that “immunized alliances are the only effective way for airlines to provide the vital global service that customers require,” said Jean Medina, spokeswoman for Chicago-based United.

British Airways said in an e-mailed statement that the inquiry is a “normal part” of seeking antitrust immunity. The commission, unlike the U.S., doesn’t grant immunity to antitrust rules.

Jonathan Todd, a commission spokesman, told reporters that the commission doesn’t open probes on a “routine basis.”

“It would be misleading to term this opening of the investigation as being routine,” Todd said.

Based on what commission has seen so far, “we think that there may be breaches of the antitrust rules because of the very extensive levels of cooperation on trans-Atlantic routes between these airlines,” Todd said.

Boris Ogursky, a spokesman for Lufthansa in Frankfurt, said the airline is in contact with the EU.

“We continue to maintain our schedule to implement the joint venture as soon as possible,” he said.

‘Cooperating’

American Airlines said in a statement that the probe “is nothing unexpected and just part of the commission’s standard review process. We are cooperating with the investigation.”

Delta, a SkyTeam member, charges $460 for a round-trip, nonstop flight from New York’s John F. Kennedy International airport to London’s Heathrow, departing May 4 and returning May 11. American charges the same amount for the same flight on the same dates.

American, British Airways and United are all charging $483 for round-trip, non-stop flight from Chicago’s O’Hare airport to Heathrow, also departing May 4 and returning May 11.

Delta and Northwest Airlines Corp., which Delta acquired in October, last year gained antitrust immunity to collaborate on international flights in SkyTeam. The group of carriers includes Air France-KLM, Europe’s largest carrier, and Italy’s Alitalia SpA.

To contact the reporter on this story: Matthew Newman in Brussels at mnewman6@bloomberg.net.

Last Updated: April 20, 2009 16:04 EDT