UK says to propose limited "open skies" deal to US
Wednesday July 31, 2:04 pm Eastern Time
Reuters Company News
UK says to propose limited "open skies" deal to US
By Mark Potter
(Adds U.S. Transportation Department comment in paragraphs 6-7)
LONDON, July 31 (Reuters) - Britain will propose a limited deal with the United States next month to open up their airline market to greater competition, a UK government official said on Wednesday.
The two countries have been haggling for years over a so-called "open skies" deal to lift restrictions on the number of airlines that can fly between London's Heathrow, the world's busiest international airport, and the United States.
"We would like to see a full liberalisation of the UK-U.S. market, but so far we have not been able to persuade the U.S. to open up its own market," said James Thomson, a spokesman for Britain's Department for Transport.
"So we are proposing a more limited deal which will introduce more competition while preserving leverage to obtain more liberalisation at a later date," he told Reuters.
Thomson declined to say what a limited deal might entail.
A spokesman for the U.S. Transportation Department confirmed the two governments had scheduled talks for August 15. He said the U.S. position on open skies had not changed.
"We do not have any details of the proposal at this point," the department's spokesman said. "We hope it's something that moves the process forward."
Two carriers from each country can currently operate the lucrative Heathrow-U.S. routes and media speculation has centred on the possibility of adding a few more.
Under the present deal British Airways (London:BAY.L - News) and Virgin Atlantic from Britain and U.S.-based American Airlines (NYSE:AMR - News) and United Airlines (NYSE:UAL - News) enjoy exclusive rights to operate direct services between Heathrow and the United States.
Operators such as British Midland , the UK's second-biggest airline, and U.S. package carrier FedEx (NYSE:FDX - News) have been lobbying both governments to let other firms fly the routes.
MIXED REACTION
Britain's leading airlines gave a mixed response to the government initiative, after talks between them earlier in the day.
British Midland, most likely to benefit if more carriers are allowed to fly the routes in question, was positive.
"All airlines that are able to provide transatlantic services from Heathrow ought to be able to do so," a spokesman said. "But an incremental deal, and one that would hold out the prospect of further progress, is better than no deal."
Virgin Atlantic, run by colourful entrepreneur Richard Branson, was less enthusiastic.
"If we give U.S. airlines access to Heathrow, which is all they're really interested in, in exchange for limited access to the U.S., we've lost our only bargaining position," a spokeswoman told Reuters.
British Airways also called for full liberalisation.
"We would like to see talks on full liberalisation between the European Union and the United States, with the UK playing its part," a spokeswoman said. (Additional reporting by Peter Kaplan in Washington)