British Midland in Open Skies plea

BRITISH MIDLAND, the country's second largest airline, is pressing the Government to save faltering talks between the UK and US designed to open up trans-Atlantic air routes to greater competition.

The bilateral negotiations, known as the Open Skies talks, were dealt a serious blow on Friday when the US Department of Transport confirmed it was refusing British Airways and American Airlines the immunity from US competition law that would allow them to integrate their trans-Atlantic businesses.

The Open Skies talks had been linked by officials in London and Washington to clearance on both sides of the Atlantic for the planned BA/AA link- up announced in 1996.

"We hope we can still get a modified agreement," said a British Midland spokesman.

The company's chairman, Sir Michael Bishop, is calling for a less ambitious version of Open Skies. He wants the two governments to increase the number of air carriers on either side of the Atlantic permitted to fly between the two countries from two each to three each. Until now, plans to increase the number of air carriers permitted to fly between Heathrow and the US from four to six have been bogged down in tortuous efforts to get BA to surrender as many as 300 landing and take-off slots - the equivalent of 22 flights a day from Heathrow and Gatwick - in return for clearance on its link-up with AA.

BA estimates the required loss of slots would cost it more than pounds 250m a year. As a result, BA and AA last week abandoned their plans for an alliance requiring government approval. They said they would co-operate at a lower level.

Aside from the BA/AA hurdle, the Open Skies talks have run the risk of collapsing from sheer complexity.

Competition authorities in Brussels as well as London and Washington have been in-volved.

British Midland wants to simplify things by getting the Governments to agree to allow it and one US airline to compete against BA, Virgin, AA, and United Airlines for trans-Atlantic passengers - without raising the issue of scarce slots at Heathrow.

"We already have slots at Heathrow," a British Midland spokesman said. "There are ways for the new American carrier to get slots at Heathrow without having to get a major agreement."

New slots become available when marginal airlines downgrade their flight schedules, and also when airport authorities revise their schedules.