US and UK announce 'open skies' mini-deal

BY RUSSELL HOTTEN

The UK and US governments have broken years of deadlock over liberalising transatlantic air travel by signing a deal that should enable British Airways to expand its business in America.

Cheaper air fares and more competition were forecast under the agreement, which opens Heathrow to another American operator and gives BA the chance to expand its code-share deals in the US.

Anglo-US negotiators have been trying to agree an "open skies" accord for five years, and this agreement is designed to pave the way for wider talks.

The so-called "mini-deal"was signed in Washington late on Friday night, but details were released only yesterday. Even the UK's Department of Transport was saying at the weekend that further talks would be needed before an agreement.

Under the pact, a second US airline, United, will be able to fly between Chicago and Heathrow, in competition with American Airlines. BA has receive approval for additional permanent access between London and Philadelphia, and will be able to extend its code-sharing deal with USAir to a further 40 destinations. There will also be a liberalisation of access between UK regional airports and the US.

The US has also relaxed its "fly America" policy on key domestic routes. Until now US government officials have only been allowed to fly with US carriers, a restriction that particularly angered BA. "US carriers had always been able to pitch for UK government business. Now we can pitch for theirs," a BA spokesman said.

BA has a code-share deal with USAir covering 65 destinations, but applications to include 40 more destinations have languished at the US Department of Transportation for 18 months.

Yesterday's agreement will pave the way for more comprehensive talks to discuss fares, charter services and cargo flights. Further talks are scheduled for 19 June in Washington, where negotiators will discuss granting US airlines more access to Gatwick and Heathrow.

Gerald Greenwald, chairman of United Airlines, said: "The consumer benefits of our London-Chicago route will be immediate, real and tangible. The true beneficiaries will be the passengers."

However, American Airlines has been a vociferous critic of a mini-deal, arguing that the piecemeal approach favours UK airlines more than US ones. A spokeswoman said: "This mini-deal once again displays the inability of the US to negotiate a meaningful quid pro quo for US airlines. Clearly the British are gaining more than they are giving as a result of these talks."

For years UK and US airlines have been restricted over where they can fly to and from by complicated and archaic rules. The current round of talks was the third since 1993, when US negotiators walked out.