Malaysia calls for flights concession: Row over deals is followed by demand for Heathrow rights

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MALAYSIA is demanding more valuable take-off and landing rights at Heathrow, despite having refused last week to enter into future deals with British companies.

From November, Malaysia Airlines, or MAS, will fly from Kuala Lumpur to Heathrow eight times a week. But MAS officials said yesterday they have requested to operate two more flights and have asked to use Heathrow as a stop-off point for New York. At present, MAS does not fly to the US east coast. In a move which would bring it into head-to-head competition with British Airways, for whom the north Atlantic is traditionally one of its most profitable routes, MAS is asking for permission to drop off and pick up passengers in London before flying on to the US.

A suggestion, by the British government, of using Manchester airport, has been rejected. Bernard Thomazios, MAS deputy managing-director in charge of operations, said that Manchester was not capable of producing enough passengers for Kuala Lumpur-Manchester- New York to be profitable. Another official at MAS said 'statistics show 80 per cent of the market is from London - therefore Manchester has to be less than 20 per cent'. Of the two main London airports, Heathrow and Gatwick, he said: 'Of course we prefer Heathrow. It's much more popular.'

MAS confirmed that negotiations over the 9th and 10th services have been going on between the British and Malaysian governments for some time. The airline also said it expected them to continue, regardless of the mounting tension between the two countries. MAS, which was previously state-owned and still counts the Malaysian government as one of its main shareholders, is a company forbidden to strike future deals with Britain.

The British government has said it will not retaliate against the Malaysian prohibition, which is claimed to be in response to hostile articles about the country and its prime minister, Mahathir Mohamad, in the British press. Demands from some expatriates in Kuala Lumpur for reprisals have been ignored.

Malaysia imposed an earlier embargo on trading with Britain in 1981. That was only lifted after Britain supplied state aid to Malaysia and gave MAS a seventh flight to Heathrow. BA, which controls most slots at Heathrow, was asked to give one up to accommodate the Malaysians. Lord King, then BA's chairman, refused. The issue was settled only after negotiations and a payment by the British government of pounds 2.1m in compensation to BA.

MAS is adding an eighth flight in November which it was entitled to do under the agreement between the countries. Referring to the 9th and 10th slots, an MAS executive said: 'BA is not going to like it.'

A BA spokesman said: 'We have talked to the Malaysians but it is too early to say what the outcome will be.' Part of the problem - even before last week's Malaysian action - is the imbalance between the two countries: BA flies to Kuala Lumpur only three times a week. The US has already agreed to MAS going to the east coast.

The Government's intention not to retaliate against Malaysia's decision to rule out new trade agreements could come under strain in the light of the new demand. Alan Williams, Labour MP for Swansea West and a member of the Commons Public Accounts Committee, said: 'Clearly it could not be contemplated while the Malaysians are blocking any new commercial contracts from British companies.'

Inside Parliament, page 10