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“UNITED STATES-UNITED KINGDOM AVIATION RELATIONS” mentioning the U.S. Dept. of Transportation was published in the Senate section on pages S5442-S5443 on May 21, 1996.
The publication is reproduced in full below:
UNITED STATES-UNITED KINGDOM AVIATION RELATIONS
Mr. PRESSLER. Mr. President, I rise today to discuss significant recent developments in our aviation relations with the United Kingdom. If handled properly by the administration, these developments could finally lead to full liberalization of United States/United Kingdom air service, our largest international aviation market.
Last week I spoke at some length in this body regarding my great frustration with the current state of aviation relations between our two nations. In those remarks I predicted a time would come when the British truly would want some significant aviation rights or regulatory relief from the United States. When that time came, I said I fully expect the administration to demand a very high price. I welcome reports that time may be at hand.
Mr. President, I am referring to published reports that British Airways, which presently controls a greater share of the United States/
United Kingdom air service market than all United States passenger carriers combined, is close to announcing a major business alliance with American Airlines. In anticipation of that announcement, British negotiators came to Washington yesterday to assess the price tag for the regulatory relief the new alliance would require. I am pleased initial reports indicate the Department of Transportation [DOT] reaffirmed its longstanding position: Nothing short of full liberalization of the United States/United Kingdom air service market would be acceptable.
Let me emphasize a critically important point. If the administration stands firm, as I believe it must, the current restrictive United States/United Kingdom bilateral aviation agreement will be cast into the great trash heap of protectionist trade policy where it belongs. This would be very welcome news for the U.S. economy, all U.S. air carriers and consumers. If the situation is handled poorly, however, we will have to explain to future generations why we squandered our best opportunity in decades to liberalize the United States/United Kingdom air service market.
Since my remarks last week, I have been asked several questions I wish to address.
First, am I surprised my prediction has come to pass so quickly? No, not in the least. For nearly a year I touted an open skies agreement with Germany as the ideal competitive tool to pry open Britain's significantly restrictive air service market. In combination with open skies agreements already in place with 10 other European countries, the United States/German open skies agreement--which goes into full effect later this week--is having precisely that effect.
Simply put, the possible British Airways/American Airlines alliance is a competitive response to the United States/German open skies agreement and the grant of antitrust immunity to the United Airlines/
Lufthansa alliance. If the Delta Air Lines alliance with three smaller European carriers is granted a final antitrust immunity order later this month, that alliance--in combination with the United and Northwest alliances--will mean nearly 50 percent of passenger traffic between the United States and the Europe will be carried on fully integrated alliances. I have predicted for some time British Airways would have no choice but to respond. It now appears to be doing so by seeking to ally itself with the strongest U.S. carrier available and, ultimately, to seek antitrust immunity for its new alliance.
Second, to what am I referring when I say the British should be required to pay a high price for the regulatory relief British Airways' new alliance would require? I believe the price tag must be nothing less than immediate open skies.
In the past, the British have been prone to redefine the term ``full liberalization'' to mean ``a balanced exchange of opportunities.'' Therefore, let me make clear what I mean when I say open skies. To avoid any misunderstanding, I believe the administration should make very clear to the British we expect at a minimum open third, fourth and fifth freedom rights for all our passenger and cargo carriers. Of course, this means that nothing less than open access to London's Heathrow Airport be included in the package.
Is this price too high? No, based on the recent history of United States/United Kingdom aviation relations, I believe it is just about right. For instance, I remember all too well how the British Government treated the United States in late 1990 and early 1991 when Pan Am was on the brink of shutting down operations and needed immediately to sell its Heathrow routes to survive. The British government showed not one iota of sympathy. Instead, at the urging of British Airways, for months the British Government squeezed our government for maximum compensation in exchange for approving that transaction as well as the sale of TWA's Heathrow routes. I hope we remember well the lessons of the so-called Heathrow succession agreement.
Is it realistic to demand the British Government open Heathrow airport to our carriers? Absolutely. The British always seem able to find space at Heathrow for non-U.S. carriers who pose less of a competitive challenge to British carriers. For instance, according to DOT, 24 of the airlines operating at Heathrow in July 1995 did not have any services there in July 1990. In addition, British Airways controls 37 percent of the slots at Heathrow. It clearly is in a position to help resolve the access to Heathrow challenge. In short, British Airways controls its own destiny if it truly wants DOT approval for its proposed new alliance.
Mr. President, let me conclude by saying a truly historic opportunity may be at hand to finally force the British to join us on the field of free and fair air service competition. The Administration must stand firm and make clear to the British Government that nothing short of an open skies agreement is the price tag for any regulatory relief British Airways might seek in connection with its possible new alliance. A fully liberalized United States/United Kingdom air service agreement is critical to our economy, United States airlines and consumers and I fully expect we will not squander this opportunity.
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