'Open skies' window all but closed

WASHINGTON - The Bush Administration has formally dismissed an application by American Airlines and British Airways to deepen their transatlantic ties, underscoring the futility of years of "open skies" talks between the United States and Britain.

The US Transportation Department did approve an alliance application by United Airlines and British Midland Airways, but the decision was subject to successful completion of air liberalisation talks with Britain within six months.

Both countries indicated that no accord was on the horizon. No new negotiations are even scheduled and there has been no movement recently by either British or US transportation officials to revive them.

Those talks collapsed in February after American, a unit of AMR Corp, and British Airways asked US authorities to withdraw their application for immunity from antitrust laws that blocked airlines from coordinating schedules and ticket prices.

The carriers could not live with a US Transportation Department requirement they yield 16 daily round-trip transatlantic flights from Heathrow to other airlines as a condition for final approval of their immunity proposal.

Access for more US carriers to Heathrow, a lucrative business travel destination, has long been the "deal buster" in "open skies" talks. The issue has now twice undercut antitrust immunity bids by American, the biggest airline in the world, and British Airways, the largest airline in Europe. The previous proposal fell apart more than four years ago.

American said the failure of its latest antitrust immunity application with British Airways was unfortunate, and said the window for "open skies" prospects with Britain had all but closed due to legal and political change in Europe.

A European court decision that is due soon may outlaw bilateral aviation negotiations by individual European Union member states.

If that happens, the United States and Britain could not strike their own deal.

Separately, American announced that it was seeking antitrust immunity to broaden its alliance with Finnair, Finland's national carrier. The two airlines already have a code share agreement. American has no direct service to the Scandinavia.

Finland signed an "open skies" agreement with the United States in 1995.

- REUTERS

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