UK and US fail again to agree `open skies' air links

TALKS BETWEEN the British and US governments broke up yesterday after failing to break the deadlock over liberalising the air transport market between the two countries ended.

The sides agreed another meeting but set no a date. "It is slow ahead rather than coming to a halt," said a source.

US negotiators rejected a UK proposal for a phased move to full "open skies" liberalisation of the current agreement, including access to the US domestic market, from which foreign airlines are excluded.

"The UK was disappointed that the US government could not accept its proposal and asked the US to give it further thought," said a UK transport department spokesperson.

The Americans laid out general principles for structuring a transition to a new open skies agreement, to replace the Bermuda II pact in operation since 1997. This allows two airlines from each side - BA and Virgin, American Airlines and United - to fly between London/Heathrow and the US.

Patrick Murphy, deputy assistant secretary for aviation and international affairs at the US Department of Transportation, said on Wednesday that the US still favoured an immediate agreement on open skies rather than the phased-in approach favoured by BA and American, which feel that would spark a price war just as the economy softens.

The talks also failed to resolve demands by US carriers Continental and US Airways for acceptable takeoff and landing slots at Gatwick for two new transatlantic routes.

Britain told the Americans that under European Union law, allocation of runway slots was not in the Government's gift but was a matter for the industry's slot scheduling process.

The talks were the first since negotiations ended abruptly in October when the US delegation walked out, ending BA's hopes of cementing its pact with American. A BA/AA business alliance would be one of the fruits of an open skies agreement. Under EU plans it would free up 267 slots at Heathrow.

It had been hoped the talks would move on after BA and AA said they were moving towards developing the "oneworld" global marketing group of airlines and settle for a phased development of their own alliance.