BA and AA fasten their seat belts for a bumpy ride

British Airways and American Airlines; Green with envy; Cheque mate
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The Independent Online

There was a powerful sense of déjà vu in the air yesterday after British Airways and American Airlines resurrected their plans for a transatlantic tie-up. Seasoned plane-spotters remember their previous failed attempt five years ago to merge their services between Heathrow and the US. It crashed on take-off after the regulators lobbed a very large obstacle on the runway but not before the then BA chief executive Bob Ayling and Bob Crandall of American had spent two years banging their heads against a brick wall in Brussels and Washington.

Rod Eddington, the plain-speaking Aussie who now holds the joystick at BA, and Don Carty, his opposite number in Dallas, reckon things will be different this time around. First there is so much more competition between airline alliances that BA and American will have to surrender hardly any slots at Heathrow. Second, Heathrow itself needs the competition that an "open skies" deal would bring if it is to survive against Charles de Gaulle and Schipol. It also needs a fifth terminal and a third runway but that's another matter.

Third, the Star Alliance, which includes British Midland among its partners, has decided to camp on BA's doorstep and develop its own hub operation out of Heathrow to match the one it already operates at Frankfurt.

Stephen Byers, the new Transport Secretary, has had his ear bent. So has his opposite number in Washnington, Norman Mineta. American's trump card is that Mr Carty and George Dubya go a long,long way back to the days when the President was just a hick Texan governor. Mr Eddington is probably hoping that Mr Byers is too distracted making his train set work to see the impact on competition a BA-American link-up would have.Perhaps the most powerful incentive for the US and UK to strike a open skies deal is that if they don't do it soon then Brussels could find itself being granted the authority to negotiate on their behalf. But don't book a seat just yet. This continues to be the long-haul flight to beat them all.

Green with envy

It has been a bad week for the caribou and the polar bear. George Bush wants his friends in the oil industry to be allowed to drill all over their habitat and on Thursday the US Congress duely gave the go-ahead for exploration in the Arctic National Wildlife Refuge.

But over here there has been some much better news for the environmental brigade. ScottishPower has signed up to build the biggest windfarm in Europe, Innogy has teamed up with Friends of the Earth to pump eco-friendly electricity into our homes and yesterday the Government gave the go-ahead for a scheme which will see 10 per cent of Britain's energy needs met from renewable sources by 2010. Brian Wilson, the nuclear-loving energy minister, hinted that an even more ambitious target was likely to be adopted in due course but his officials sat on him before he could start talking actual numbers.

Mr Wilson's Renewables Obligation (effectively a subsidy for wind, hydro and biomass generators) will cost householders £600m a year. But they will get a lovely green glow from knowing that two and a half million less tonnes of carbon dioxide will be rising into the atmosphere.

Even this, however, will make only a small contribution to the fight against global warming. Britain's commitments under the Kyoto Protocol require greenhouse gases to be cut by some 32 million tonnes from their 1990 levels.

The green movement says the Renewables Obligation could be doubled to 20 per cent. But that looks about the limit. Because Britain is an island nation, the most promising form of renewable energy looks to be windpower. But there is a limit to how many turbines can be erected before they begin to cause serious environmental damage themselves. No-one wants to live next to a noisy and unsightly onshore wind farm and there there comes a point when offshore farms begin to clog up the shipping lanes.

Inevitably, the dirty word "nuclear" has got to enter the debate. In response to the Prime Minister's new energy review, Mr Wilson's department slipped a document onto the Cabinet website this week suggesting that maybe, just possibly, it would be be economic to build a new generation of nuclear stations.

Its back-of-a-fag-packet calculation is that while new nuclear capacity would cost up to 4p a unit – nearly twice the current cost of gas and coal – the economic benefits could bed worth £100m a year for a station the size of Sizewell.

By 2020, nuclear's contribution to the UK's energy mix will have shrunk to 3 per cent compared with 25 per cent now unless the current generation of stations begins to be replaced. Even if renewables were to replace every megawatt of current nuclear capacity, the UK would struggle to meet its Kyoto targets. Nor would it solve the problem of the country being held to ransom by high-priced gas from unstable regions such as Algeria and Russia as Britain increasingly becomes a net gas importer.

The one big drawback to a nuclear renaissance remains waste disposal. No-one has come up with an answer to that and it remains the hardest nut for Mr Blair's energy review to crack. Until someone comes up with a solution, the nuclear industry can only be green with envy at the wind-assisted charge of the renewable brigade.

Cheque mate

It's hard to get excited about cheque clearing, unless you are Don Cruickshank, who made regulating payment systems a key proposal of his report into the UK banking industry. The Treasury has rejected his appeal for a dedicated regulator, in favour of boosting the powers of the Office of Fair Trading instead and forcing the two principal banks involved – Barclays and Royal Bank of Scotland – to disclose cheque clearing times and charges for handling money transfers. The Treasury can't say when parliamentary time will be found to empower the OFT, which is already begging for more cash for all those dawn raids. The impression remains that the Cruickshank report has been condemned to a slow death by consultation.

m.harrison@independent.co.uk

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