Chris Jasper/LONDON
UK transport secretary John Prescott will meet his US counterpart, Rodney Slater, this week for talks which, according to government sources, will move the two countries further along the path to a new bilateral air services agreement.
Prescott was due to meet Slater during a visit to the USA, with the question of a more liberal "open skies" replacement for the Bermuda II treaty, which was signed in 1977, expected to be high on the agenda.
In October last year, formal negotiations over a new accord collapsed when the US side walked out. A "softly, softly" approach has since been assumed by negotiators, with both sides now talking up the likelihood of a deal.
Any new agreement seems certain to feature a phased introduction of an open skies regime, initially adding only one or two new carriers from each country, rather than the "big bang" transition originally expected.
Following the last talks in February, negotiators agreed to reconsider their relative positions. Sticking points at that time included a complaint from US Airways about flight timings at London Gatwick Airport for services from Charlotte, but that question has been resolved through the award of alternative slots.
Top level sources within the negotiating team at the UK's Department of Environment, Transport and the Regions say that Washington's position favours "a typical US open skies model". This would include fifth-freedom rights for onward travel in Europe, while London demands the equivalent in the USA - effectively cabotage rights - and is also scrapping the freeing of the 25% limit on inward investment in US carriers, as opposed to 49% in Europe. Virgin Atlantic Airways is keen to set up a US domestic airline, but it cannot do so under the current regime.
The possibility of a phased transition to open skies has also been aided by British Airways' decision to seek a gradual development of its own planned alliance with American Airlines.
Both carriers have access to London Heathrow, and Washington had said it would block a full non-competitive alliance on Atlantic routes unless a "Bermuda III" was negotiated.
A recent decision in a UK court on alleged slot trading at Heathrow also seems to favour a phased move to a new regime. Although the court did not formally legalise slot sales, it said effective trading was acceptable under certain circumstances. British Midland chairman Sir Michael Bishop, who needs a new bilateral to launch transatlantic services, believes the decision will aid negotiations in that it should make it easier for US carriers to acquire positions at London's slot-constrained airports. "I expect to see a 'Bermuda two-and-a-half' negotiated," he says.
One potential obstacle to a UK-US accord concerns a threatened US Congressional ban on Concorde, operated by British Airways, in response to European Commission constraints on hush-kitted aircraft, although London believes it can separate the row from the open skies issue.
Source: Flight International
