Hopes soar for open skies deal

British and US officials meet this week over lifting of transatlantic flight restrictions

OPTIMISM is growing that an "open skies" aviation agreement between the US and the UK can be hammered out to bring free trade to the transatlantic aviation market.

A fresh round of talks are to be held in London on Wednesday and Thursday. They have been convened following the intervention of John Prescott, the Deputy Prime Minister, and Rodney Slater, the US Transport Minister. It will be the first time the two sides have met since last February when the US walked out of the talks complaining of British intransigence.

Michael Bishop, British Midland's chairman, has also upped the pace of the negotiations by issuing a request to become the third UK airline to start services between Heathrow and New York. Mr Bishop petitioned Mr Slater, arguing that three US carriers are permitted to sell seats on the route while only two airlines can fly to New York out of Heathrow.

Mr Prescott paved the way for this week's negotiations during a visit to the US three weeks ago during which he held talks with Mr Slater.

According to Patrick Murphy, deputy assistant secretary for aviation and international affairs at the US Department of Transportation, there was now enough common ground and willingness to try to resolve differences.

"We've been trying to get the process going since day one of the Clinton Administration," he said. "When people of this level get involved (Mr Prescott and Mr Slater) and think there's common ground, it makes us more hopeful."

Mr Bishop agrees. "There is a new resolution to want to do a deal," he said. "We are trying to suggest practical ways to break the deadlock."

The meetings will take place at senior official level and are being billed as exploratory talks to see if there is enough basis to move forward to formal negotiations in June.

A consensus appears to be growing for a phased-in approach to deregulation.

"We believe the way to solve this problem is an incremental approach rather than a big bang," Mr Bishop said.

The talks are likely to focus on the issues of cargo traffic; the US "fly America" rules which oblige US civil servants to use only US airlines; and the phasing-in of the proposed British Airways/American Airlines alliance.

One thing that is no longer a bone of contention is US Air and Continental's desire for Gatwick slots. Since the talks last February, they have been granted the slots they wanted.

Mr Bishop's request to fly to the US was greeted with apparent enthusiasm by Mr Murphy.

"We welcome it. It's good to have another airline come forth to add to the competition," Mr Murphy said.