The UK Government has dropped some key demands in its negotiations with the US for an open skies "mini deal".
The UK is now concentrating on getting agreement on antitrust immunity for an alliance between British Airways and American Airlines.
The UK's Department of the Environment, Transport and the Regions (DETR) says that previous demands for the USA to change its rules on cabotage, foreign ownership of US airlines, wet leasing and the "fly America" programme for US public servants were now seen as "long term" goals as they would require changes in US legislation which could take a number of years.
Virgin Atlantic boss Richard Branson expressed his disappointment at what he saw as a caving in from the UK side following a visit by UK transport secretary John Prescott to Washington in May.
Officials from the two sides met in London in June for what were described as "talks about talks" and more discussions are due in July. No immediate agreement is imminent, however.
Meanwhile, cargo representatives from both sides were making intensive efforts to get their views across, but those views seem as far apart as ever.
Fred Smith, chairman of FedEx, visited London on 24 May to give testimony to the UK's parliamentary committee on transport, a move that aides say shows the importance he attaches to getting cargo included in the deal.
"Let us say that having made that effort, he would find it difficult to imagine UK-US open skies progressing without cargo being part of the solution," says one FedEx source.
That chimed with remarks made by US transportation secretary Rodney Slater in London on 1 June, when he said that he expected a passenger and cargo deal before the end of the year.
However, the British Cargo Airline Alliance is equally convinced that it has persuaded the UK Government to make no concessions to the USA on fifth freedom rights for FedEx and other cargo carriers unless the US grants cabotage rights within the USA and lifts the ban on its carriers wet-leasing foreign aircraft.
Steve Guynan, secretary of the BCAA, says if such concessions are not forthcoming, it would prefer a pure passenger deal. "At least then we would not have given any more concessions to the USA," he says.
US moves on wet-leasing or cabotage seem unlikely as Slater has ruled out discussions on matters requiring a change in US law.
However, Smith did tell the parliamentary committee that the USA had offered seventh freedom rights to UK carriers, something he says FedEx is not demanding in return, along with a redefinition of the charter rules that would allow de facto wet-leasing of UK carriers by US airlines.
Source: Airline Business
