BA may give up slots to aid open skies deal

BRITISH AIRWAYS is negotiating a deal with the Office of Fair Trading to give up take-off and landing slots at Heathrow in the hope of breaking the deadlock in open skies talks between the UK and US governments.

However, any surrender of slots by BA to rival US airlines would be tied to a phased implementation of its long-delayed alliance with American Airlines, probably starting with approval for the two airlines to start code-sharing on some transatlantic routes.

The next round of talks on open skies has been pencilled in for 6 July in Washington. UK negotiators hope to present a set of proposals that would allow a gradual increase in the number of US carriers allowed to fly into Heathrow.

The present bilateral agreement only allows four carriers - BA and Virgin from the UK and American and United Airlines of the US to operate services into Heathrow.

However, a whole raft of other US airlines, including Continental, Delta, Northwest and US Airways, are pressing for the right to fly to Heathrow. British Midland has also secured licences to fly from Heathrow to Miami, New York and Boston, which it cannot use until an open skies deal has been reached.

Stephen Wolf, the chairman of US Airways, warned yesterday that if an open skies agreement was not sealed in the next few months there would not be another chance for several years. He said the US and the UK "could be on the verge of an historic breakthrough". There was now a recognition on the part of the US government that there are physical limits to how far its carriers can expand at Heathrow, and an understanding by the UK government that meaningful access for US carriers means a sufficient number of slots being freed up.

US Airways is seeking up to 70 slots a week to operate services from Heathrow to Philadelphia, Charlotte, Pittsburgh and Boston. But with rival US carriers also jockeying for a place at Heathrow, any allocation of slots would need to be scaled back.

The European Commission's terms for approving the BA-AA alliance required the two carriers to surrender 267 slots at Heathrow.

Meanwhile BA yesterday said it had made a pounds 149m profit by selling its remaining stake in the airline ticket reservation system, Galileo. BA has sold its 6.76 per cent shareholding back to Galileo. Originally, BA had a 12 per cent shareholding in the system but it sold 5.3 per cent of this when the business was floated in July 1997.