MacGregor hints at transatlantic air pact

THE SECRETARY of State for Transport, John MacGregor, yesterday held out the prospect of rapid agreement on further liberalisation of transatlantic air services - especially if Washington approves the proposed dollars 750m (pounds 450m) British Airways investment in USAir.

While emphasising that the two issues were not formally linked, Mr MacGregor told his American counterpart, Andrew Card, that US approval of the BA-USAir partnership would give 'new impetus' to discussions between London and Washington on liberalisation of air travel between the two countries.

The two men agreed to accelerate the bi- lateral talks on improved access to one another's air markets, beginning with a session next month.

However, Mr Card gave no indication of whether he would approve the 44 per cent BA stake in USAir, the sixth largest American domestic carrier, or whether he would make a decision before the US elections on 3 November.

Other US airlines have mounted a ferocious lobbying campaign to shoot down the BA-USAir deal, which, they claim, would give the British carrier the kind of access to the American domestic market that American carriers are denied in Britain and, more importantly, in the wider European market planned after January.

In a speech to businessmen in Washington on Tuesday, Mr MacGregor gave an assurance that he would be 'disposed' to agree to a comparable attempt by an American carrier to acquire a minority stake in a British airline.

Speaking to journalists after meeting Mr Card yesterday, the transport secretary said such a deal would, implicitly, give an American carrier access to the British and European domestic markets.

In practice, however, no British airline, other than British Airways itself, has the developed route system in Europe that USAir has in America.

Mr MacGregor said he made no attempt to negotiate on behalf of BA, since this would not have been proper. But he did repeat to Mr Card the thinly disguised incentive and warning that he made in his speech on Tuesday.

A USAir-BA deal would give new impetus to liberalisation of transatlantic air traffic. On the other hand, rejection of the deal would 'strengthen the hand of those in Europe opposed to further liberalisation'.

British Airways sees the USAir deal as a vital link in its strategy to become a global airline - giving it unparalleled access to the most lucrative domestic air market in the world.

The big three US carriers - American, United and Delta - agree but say such an alliance would give BA an unfair advantage. BA would have the benefits of access to USAir's 55 million passengers a year and extensive American route and hub system. The rules restricting access to the British and European markets prevent US airlines from sharing in the domestic air market within the EC.