Correct but then the use of the term transatlantic is funny.

This issue is about Heathrow and anti-trust. The US authorities position is that BA retains a dominant position in the 'market' that is LHR, and that LHR in turn is the dominant transatlantic hub. Ergo the alliance with AA ex-LHR as part of OneWorld creates a situation that allows unfair domination of the transatlantic market.

The same logic applies to FRA and CDG, but in each of those cases the US/EU carriers involved successfully applied for anti-trust immunity from the Commerce Department (along with Justice and a rubber stamp from Congress) and so were able to codeshare, merge FF benefits etc.

BA tried to do this with AA several years ago and got the agreement of Justice. They argued that other airlines did the same thing, that other hubs had grown in importance vs LHR, and I think they even argued that LGW shouldn't count (rememeber when they moved a bunch of transatlantic flights there?). However Commerce, spurred by lobbying from DL and UA, insisted BA/AA give up an unreasonable number of slots ex-LHR in exchange and ignored the LGW argument. The straight calculcations were that BA/AA would be worse off with immunity than carrying on business as usual so the bid was dropped.

Hence the inability for anti-trust reasons to act as alliance partners ex-LHR/LGW. However, for the terms of the current deal, ex-MAN does not count as 'transatlantic' (dig hard enough and you'll find that somewhere). Equally, this concerns the US and therefore is irrelevant as far as Canada is concerned.

The frustrating thing about the entire episode was the hypocrisy of it, and the willingness of Commerce to pander to vested interests. The large majority of US transatlantic gateways have one or two carriers more dominant than BA at any of its hubs, and yet are not of interest to Commerce (DL in ATL, US in PHL...). Even Branson ranted against Commerce because they insisted ALL of the slots BA/AA were required to give up had to go to US airlines, to the detriment of VS, BD and anyone else hoping to compete directly ex-LHR.

The whole thing is utter BS, but will not get resolved for a while as immediatly after the bid failed, the EU took over responsiblity for air traffic negotiation from national governments, and quite apart from the happy situation for France and Germany's national carriers, the new open skies agreement is being negotiated EU-wide. Expect this one to run, and run, and run, and run.....