UK-US air talks to resume

Date: 16/07/1998

By Tim Jones

AMERICAN and British officials have confirmed that they will resume negotiations in the early autumn aimed at putting together an ambitious 'open skies' civil aviation agreement.

In the wake of last week's tentative go-ahead from the European Commission for the mega-alliance between British Airways and American Airlines, Washington is determined to ensure that other US carriers win unfettered access to Europe's largest airport at London Heathrow.

The two sides reached a mini-deal two summers ago, but this merely provided one extra take-off and landing 'slot' to a US airline at Heathrow and a handful of extra flights for BA on its London-Philadelphia service.

However, in return for clearing the BA/AA alliance, the Commission has made it clear it will demand the surrender of 220 slots at Heathrow and 47 at the less popular Gatwick Airport south of London. Competition Commissioner Karel van Miert still insists that these slots - with an estimated current 'grey market' value of 2.5 million ecu - should not be sold but given away.

But Washington is convinced that, with more than 80 airlines operating out of Heathrow, some would be happy to sell their slots to US airlines and move operations to Gatwick or Stansted.

KLM Royal Dutch Airlines, which operates across the Atlantic in alliance with US carrier Northwest, has already expressed an interest in some of the 220 slots at Heathrow. AA has said that slots used for lower-profit regional routes would be the most likely to be given up.

BA's behaviour since the Commission's announcement has indicated a willingness to sacrifice some of its short-haul business out of Heathrow and move it to Gatwick or to its newly established low-cost carrier Go at Stansted.

The UK flag-carrier is said to be considering a bid for CityFlyer Express, a regional airline operating between Gatwick and Jersey, Guernsey, Amsterdam and Cork, in a bid to recoup some of the slots it will have to surrender.

In seeking an early resumption of talks, US officials want to ensure that the main beneficiaries of this traffic shift will be their leading carriers, Delta, Continental and USAir, which have been queuing up outside Heathrow for more than a decade.

Talks on a full-scale UK-US bilateral deal broke down in August 1996 because of the Americans' insistence that the recently signed open skies deal with Germany should be used as a model.

Under this agreement, German airline Lufthansa was given access to all US destinations, and mutual restrictions on flight frequency, capacity, charter traffic and code-sharing were removed, the price regime for passenger flights was abolished and cargo traffic liberalised.