Outlook: Open skies

THE UK and US governments should have been sitting down in Washington today in an attempt to thrash out an open skies agreement to liberalise air travel across the Atlantic. However, the talks were postponed last week after the UK decided it needed more time to work out its negotiating position.

To weary followers of the great open skies saga, this latest delay will have come as no surprise. The two sides have been at it now for more than three years and still no breakthrough is in sight. The US and the UK are the two most liberal air markets in the world, and yet the agreement which governs air travel between them is one of the most restrictive. Only four airlines - two British and two American - are allowed to operate flights from Heathrow to the US. The rest can go to Gatwick, go to Stansted or go hang.

Understandably, the two UK incumbents, British Airways and Virgin Atlantic, guard their privileged positions at Heathrow jealously. The principal reason for the lack of progress is the UK government, at the behest of BA, insists any opening up of Heathrow be accompanied by anti-trust approval for BA's alliance with American Airlines. Until then, it will not surrender any of its priceless runway slots at Heathrow.

Right now, with the airline market becalmed, it suits BA and Virgin for fortress Heathrow and their duopoly to remain in place. It hardly needs saying that this is not in the interests of passengers. The transatlantic leisure market may be fiercely competitive. But for business class passengers, which is where all the money is made, fares are becoming so exorbitant that BA is installing beds in club class so that passengers can lie down and get over it.

Now British Midland's Sir Michael Bishop has come up with a novel solution. Why not sign up to open skies, allow BA to keep all its slots and let the market decide whether there is sufficient room at Heathrow to support rival transatlantic air services? The idea is self-serving, since British Midland just happens to be the second-biggest slot holder at Heathrow and has four US route licences just waiting to be used.

But since nothing else looks like resolving the impasse over open skies, why not give it a go? Just think of the blow Tony Blair would be striking for the UK consumer, who, as his government never tires of telling us, is overcharged at every turn.

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