clock menu more-arrow no yes

Filed under:

WHITE HOUSE SHOULDN'T GIVE AWAY THE STORE IN AIRLINE NEGOTIATIONS

Major players in the U.S. airline industry fear that the Bush administration, with its free-market and open-skies leanings, will give away the store in dealings with foreign airlines.

Specifically, they worry that the White House and Transportation Department will grant foreigners easy access to the huge American market while U.S. carriers will continue to face semi-closed markets abroad.The most important move in this game came July 21 when British Airways agreed to invest $750 million in USAir in return for working control of that troubled domestic carrier.

There are positive aspects to the bargain. Most important, money-losing USAir is having difficulty competing with the domestic giants, American, Delta and United. And without its British big brother, it may be forced out of business.

But linking USAir's domestic routes with British Airways international ones would form the world's largest carrier, serving 80 million passengers a year in 339 destinations in 71 countries.

What's wrong with that? Plenty. British Airways, in effect, would gain the right to fly anywhere in the United States, the richest aviation market with half the world's passengers. This would be tolerable if American carriers got the reciprocal right to fly anywhere in Britain.

Unfortunately, the British government (which used to own British Airways and fostered its dominance among British carriers) is protectionist in aviation matters. It limits the cities U.S. carriers can serve and bars them from Heathrow, London's most convenient airport.

Good sense dictates that President Bush and Transportation Secretary Andrew Card play a little hardball. They should approve the BA-USAir linkage only after Britain opens its skies and airports to Yankee competitors.

If Bush and Card count on London's good faith and give BA what it seeks without quid pro quo, they will lose the leverage to pry open Britain's protected skies.

BA is not the only foreign airline moving to buy its way into the American market. KLM Royal Dutch Airlines purchased 20 percent of Northwest Airlines and hopes to run the two carriers as one in all but name.

The White House will permit this because the Netherlands has signed an open-skies treaty with the United States. But the pact hardly is favorable to this country. It allows KLM to serve numerous U.S. cities, while there are only two profitable destinations in Holland.

Nevertheless, U.S. officials hope the open-skies agreement with the Hague will become a model for treaties with other countries.

Germany soon may have to open up. Its national airline, Lufthansa, is thinking of joining California billionaire Marvin Davis in buying bankrupt Continental Airlines. Bush and Card should know how to extract concessions.

From all the courtship going on, it's clear that an era of global aviation is approaching. Ideally, a qualified airline of any nationality should be able to fly where it wants, pick up passengers and take them where they want to go.

The major U.S. carriers can thrive under that kind of competition. Those that survived the fierce struggles stemming from deregulation are more efficient, lower-cost carriers than their foreign brethren. What they must be wary of is unfair treaties that leave them hobbled.