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The head of British Airways PLC (BAY.LN) warned Wednesday that the transatlantic airline market could turn into an "untouchable duopoly" if regulators reject the company's plan to intensify cooperation with AMR Corp.'s (AMR) American Airlines and Spain's Iberia.

The comments by BA Chief Executive Willie Walsh are part of a lobbying push by members of the Oneworld Alliance ahead of a key decision from U.S. regulators this month. The Oneworld airlines are seeking antitrust immunity from European and U.S. regulators so they can cooperate on scheduling and revenue-sharing on flights across the Atlantic.

Walsh, in prepared remarks before the International Aviation Club in Washington, said the plan would level the playing field with members of the rival Star and SkyTeam alliances, which have been granted antitrust immunity.

"If Star and Skyteam remain the only immunized alliances across the Atlantic, we could end up with an untouchable duopoly," Walsh said in his remarks. "I do not believe that customers would want that".

Walsh said that Oneworld's plan would strengthen competition and benefit consumers.

But the plan has split U.S. lawmakers and drawn criticism from some competitors who argue that expanding alliances could hurt competition.

The U.S. Department of Transportation has said it will issue a ruling on Oneworld's application by Oct. 31.

"We continue to consider this case and expect DOT to issue a preliminary decision soon," a DOT official said this week. "This is an important and complicated application and we want to make sure that we are taking the time necessary to do a thorough review."

While DOT has the final say, the Oneworld partners remain concerned about possible intervention from the U.S. Department of Justice, which weighs in on the process and has at times taken a tougher stance on antitrust immunity than DOT.

BA wants to expand its existing pact with prospective merger partners Iberia Lineas Aereas de Espana SA (IBLA.MC) and American Airlines, coordinating fares, schedules and marketing to improve efficiency and access to business fliers.

European competition officials - who have twice effectively blocked a similar application - have expressed reservations about the plan.

People familiar with the situation said that officials in Brussels have cited potential competition issues with flights from London and Madrid to the U.S.

Walsh sought to defuse concerns that congestion at Heathrow limited competition, noting that rivals had secured takeoff and landing slots at the airport when the U.S.-E.U. open skies pact liberalized access.

"Slots at Heathrow are available - just ask the Star alliance," he said.

Heathrow's slot coordinators told DOT earlier this year that slots are available, though only in the secondary market. The noted it was "probable" that the cost of slots has fallen back from the "exuberant market of 2008 with open skies."

-By Doug Cameron and Josh Mitchell, Dow Jones Newswires; 312-750-4135; doug.cameron@dowjones.com