Capt.Picard From , joined Dec 1969, posts, RR:
Reply 2, posted (14 years 3 months 6 days 10 hours ago) and read 1989 times:
Some info on BII (from a reply to another thread):
I think it's due to the fact that BA want cabotage rights within the USA, and the US Government is not willing to allow such exploitation of it's domestic market, that has thrown one of many spanners into the works, so to speak.
I think part of the problem is BA want to protect their monopoly at LHR by keeping out potential competitors.
The other part of the problem is that US Gov't wants to protect their airlines' domestic ops from foreign (or UK) competition.
Some extracts from the Virgin Atlantic website:
He reiterated Virgin Atlantic’s commitment to a complete liberalisation of the transatlantic aviation market and his desire to see all unnecessary regulations removed once and for all. No other mature industry is as restricted and in no other domestic industry has the United States maintained such an impenetrable trade barrier preventing airlines like Virgin Atlantic from operating there.
Richard Branson called upon John Prescott, the Deputy Prime Minister and Secretary of State for Transport, to continue to stand up to the bullying tactics of the US administration and to reject their one-sided deals. He attacked the “mini-deal” proposal which would surrender Heathrow to American carriers on the basis granting anti-trust immunity to two alliances (BA/AA and British Midland/United). In effect both alliances would be given permission to collude on fares and would stop actively competing against one another.
More on their views!!!
Opening up the skies to greater competition
Transatlantic routes need more competition. We want to be able to build on the successes that Virgin Atlantic has already achieved and extend the benefits of competition that we’ve brought to more British passengers on more routes to the United States. But the British Government is now facing great pressure to throw away the one card in its hand that can win the best deal for all British passengers, passenger airlines and cargo carriers - access to Heathrow, the world’s busiest and most important airport.
The UK and the US both want liberalisation. But each has different needs and starting points. The US protects absolutely its enormous domestic market while at the same time demanding, and often getting, access to the liberalised European aviation markets for its own carriers.
US carriers are making large demands in the UK. They want unrestricted access to an already crowded Heathrow, coupled with slots there - even though United and American Airlines both already have more slots at Heathrow than Virgin Atlantic.
US carriers also demand unlimited Fifth Freedom rights from the UK - that is, the right to pick up passengers and cargo at UK airports and fly them to other destinations.
They could use these, together with similar rights they already enjoy in other EU countries such as Germany, to increase their services within the EU home aviation market.
But UK carriers would still have no access as of right to the US home market, which is equivalent to the EU single aviation market.
Virgin agrees that the UK should open up Heathrow and offer unlimited Fifth Freedom rights to the US. But there is no point in doing this unless the United States is prepared to unlock its protected domestic market by offering opportunities comparable to US access to the EU single market. And the US is not going to liberalise its markets if the UK has no negotiating leverage left to bargain with.
That is why Virgin favours a once-for-all genuinely liberal aviation agreement between the US and the UK. This is entirely achievable, provided the UK holds its nerve, hangs on to all the levers it has, and negotiates patiently.
The UK is not as weak as the US seems to believe. Britain is a world leader in aviation, with leading airlines - and the world’s busiest and most important international airport. Access to Heathrow is the single most valuable asset the UK controls: we should not open it up in return for a piecemeal deal.
We recognise that some of the liberalisation that we and other British airlines want to see in the US will take time to implement.
So, any deal which our Government negotiates now may have to come into effect in stages. Those stages will have to involve equivalent benefits to both sides.
But the end result must be a cast-iron timetable for full liberalisation which benefits everyone - the UK’s passenger and cargo airlines, its regions, and above all its consumers.
Negotiating with the US
There are two great truths about negotiations: the apparently stronger party will always use its muscle to try and wring concessions from the smaller; and the perceived weaker party will only achieve its aims by hanging on to its negotiating levers as long as possible.
Nowhere are these truths more applicable than in the continuing saga of air services between the UK and the US. There is certainly no problem identifying the stronger party in this negotiation.
The United States has the world’s largest aviation industry, accounting for something like 40% of world civil aviation. Three of the world’s four largest passenger airlines, and the two largest cargo airlines, are all from the US.
Given this immense strength, the US is in the best position to make all sorts of goodwill gestures to foreign countries in order to open up aviation markets.
But the maxim above holds: the US, so liberal when it comes to other markets, is highly protectionist in aviation. It allows foreigners to own only 25% of any US carrier, it keeps foreign carriers out of the market for US government passengers and cargo, and it prevents UK carriers from leasing planes with crews for operation in the US - in all these areas, US carriers have greater access to UK markets.
At the same time, the US uses its strength to extract concessions from other countries while offering as little as possible in return.
Indeed, the US does not even acknowledge the goodwill gestures offered by other governments, such as the British Government’s recent decision to allow Federal Express and Polar Air Cargo rights to fly cargo from Prestwick to other points in the world.
Lord MacDonald stated quite clearly on 25 August 99 that “this decision in relation to Prestwick should also be seen as a sign of the Government’s commitment to increased competitiveness and the liberalisation of trade”.
There can be no doubt that the British Government intended this as a goodwill gesture. The US government is not, however, going to reciprocate.
Speaking on Radio 4’s Today programme on 2 September, the Minister for Economic Affairs at the American Embassy, Charles Ries, maintained that the British Government’s decision was not a gesture of kindness to the US government, but was made simply because it was in British interests to do so.
A former public affairs manager at BT, Peter Wynne Davies, recently wrote to The Times: “Precedent shows that an easing of UK rules in the hope of reciprocity in the US is a philosophy of British fair play that never finds an echo in an America determined to win at all costs.”
So, the key to negotiating with the US does not lie in goodwill gestures, but in negotiating from strength. The UK is uniquely placed in the aviation world to do this, thanks to the position of Heathrow as the world’s busiest international hub.
US carriers have long sought completely unfettered access to Heathrow.
Our government must now use this ace in the pack to the best possible effect, using it to lever genuine liberalisation from the US - not the one-sided deal the US wants in order to expand opportunities for its airlines while denying opportunities to the UK’s carriers."