An unexpected snag for BA's link-up

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The Independent Online
British Airways' proposed tie-up with American Airlines would appear to have hit a pocket of turbulence that neither side had been expecting. It is well known that the President of the Board of Trade, Ian Lang, the Office of Fair Trading and almost every airline in Britain and the US other than the bride and groom have the deepest of reservations. But at least it seemed that Sir George Young, the Transport Secretary, was on BA's side. Until now.

The go-ahead for the BA-American alliance is contingent upon Britain and the US agreeing a wider "open-skies" deal across the Atlantic after some five years of on-off negotiations. Without one, the other cannot happen since the price for allowing the two dominant transatlantic carriers to jump into bed is to give everyone else, notably other US airlines, a better crack at the market.

Sir George's negotiators, however, appear to be playing hardball with their opposite numbers in the US. In advance of resumption of talks next week, they have told their American counterparts that the deal being demanded by the US - fifth freedom rights to fly into Heathrow, pick up and then continue on to anywhere in Europe - is unacceptable unless the US grants cabotage to UK airlines - that is the right to operate domestic US services.

Now this may simply be posturing, a negotiating stance to extract the best deal for Britain. But the UK dropped cabotage from its wish list many moons ago and so it is not an issue, except to Virgin Atlantic. All very odd.

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