Don’t Listen to BA on Open Skies, Bmi Tells Ministers
By Robert Lea, Evening Standard, London
Mar. 6–The British airline with most to gain from deregulation of transatlantic flights, bmi, has warned ministers not to listen to “protectionist rhetoric” from British Airways.
A draft “open-skies” agreement between Washington and Brussels, signed last week, could if ratified see transatlantic passenger fares from Heathrow tumble as competition is promoted.
European Union ministers are due to sign off the deal later this month, giving a green light to airlines currently barred from flying to the US from Heathrow.
In the vanguard will be bmi, the former British Midland, whose 65-year-old founder and chairman Sir Michael Bishop has made it his life’s work to break up BA hegemony at the world’s busiest airport.
Bishop’s company is currently Heathrow’s second-largest airline, accounting for around one flight in seven. But arcane British-American treaties ban bmi from flying from there to the US. Its long-haul flights from Heathrow are restricted to the Middle East and India, and its north American services have to fly out of Manchester.
“We have been waiting for this for a long time,” Bishop lieutenant and bmi director Tim Bye said of the proposed new deal. “It is an unmissable opportunity which will bring us significant opportunities.”
In a thinly veiled attack on BA, however, he warned the vested interest of those in “privileged positions” could yet persuade British ministers to block the draft proposal despite UK officials being party to it. “We must ensure the UK government does not listen to the protectionist rhetoric of the incumbent airline,” he said.
Other airlines are also telling Transport Secretary Douglas Alexander to drive through open skies.
Lawrence Hunt, chief executive of Luton-based Silverjet, the transatlantic business class start-up, said: “We are not able to compete fairly with the larger entrenched incumbents, who use their grandfather rights and fortress protections at Heathrow and Gatwick to block out competition and distort the market.”
If confirmed, the open-skies deal will not simply be about exercising a previously denied right to fly to the US. It would have an incendiary effect on the market for take-off and landing slots at Heathrow.
Airlines such as bmi and Aer Lingus — now Heathrow’s fourth-largest airline — could sell hugely valuable slots at the airport to American carriers or European aviation giants like Air France and Lufthansa, which already has a substantial presence at Heathrow.
“Those who do not have slots at Heathrow will find a way of getting them, while those who do have them will find themselves in an interesting position,” commented bmi’s Bye.
BA is lobbying against the proposed open skies terms because, it says,they would give American carriers access to European airports while preventing EU airlines gaining full rights in the US.
HOW EU-US DEAL WOULD CUT RESTRICTIONS
Flight rights between the US and Europe are entrenched in Byzantine restrictive agreements with separate nations, designed to protect the interests of incumbent national airlines.
Transatlantic flights to the UK, for instance, are governed by the confusingly named Bermuda II treaty. This allows just four airlines — British Airways, Virgin Atlantic, American Airlines and US Airways — to fly between Heathrow and US gateways.
Open Skies is meant to scrap these separate treaties and treat the European Union as a single jurisdiction.
By its broadest definition it would allow a European airline to fly from any European airport to any airport in America, it would allow that airline to fly within the domestic US market and it would allow it to fly on from a US airport to another country. Open Skies would work similarly for US carriers flying to, within and beyond Europe.
Open Skies has also envisaged allowing European airlines to own US carriers and vice-versa.
—–
To see more of the Evening Standard, or to subscribe to the newspaper, go to http://www.thisislondon.co.uk.
Copyright (c) 2007, Evening Standard, London
Distributed by McClatchy-Tribune Business News.
For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
BAB,