US carriers turn down British air pact proposals

TALKS ON the liberalisation of air services between Britain and the United States ended in deadlock yesterday after US carriers rejected proposals put forward by UK negotiators.

After two days of discussions in Washington, the UK Department of Transport said it had presented 'serious and detailed proposals for a programme of total liberalisation for UK-US air services'. However, the offer was contingent upon the US authorities approving British Airways' dollars 750m ( pounds 450m) purchase of a 44 per cent stake in USAir.

But United Airlines described the offer as neither detailed nor serious. 'It embodies a unique concept of further regulating a market that is by today's standards already restrictive and protectionist,' a spokesman said.

Robert Crandall, chairman of American Airlines, said it would only drop its objections to the BA- USAir deal 'when the British government is prepared to provide for us the same rights and facilities that BA has'.

The next round of talks is scheduled to take place in London on 20 October but it remains unclear whether further progress will be made since a US decision on the BA-USAir deal will almost certainly have to await the outcome of the US presidential election in November.

The Department of Transport said that its offer contained a 'substantial range of liberalising measures which can be taken in the short term'. If approval for the BA-USAir agreement was rejected or delayed, it would be an illiberal signal and would inhibit the timetable.

According to some sources, the British proposals would allow US airlines more rights to fly to regional UK airports but prevent them expanding services to London for a further three years.

The US carriers are now pressing for complete access to the UK airline market as the price for allowing BA to proceed with its investment in USAir.

BA maintains that its investment is fully consistent with US law and should be treated separately from the bilateral negotiations taking place over the UK-US air services agreement.