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'Open skies' at an impasse
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October 7, 1998: 1:51 p.m. ET
U.S. cuts short negotiations with British, jeopardizing BA-AMR alliance
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NEW YORK (CNNfn) - U.S. negotiators cut short the latest round of "open skies" talks with their British counterparts Wednesday, imperiling approval of a proposed alliance between British Airways and AMR Corp.'s American Airlines.
Under alliances of the BA-AMR variety, airlines typically share costs -- ground services, sales and marketing and databases, along with the profits from routes in the United States and Europe.
But a more controversial aspect of the alliance terms has been a provision allowing each carrier the right to fly to and within another country.
Neil Kinnock, the EC's Commissioner for Transport, has derided these bilateral agreements between U.S. and European countries, saying "open skies" agreements infringe on European law.
Many EU officials fear that the growing number of alliances taking shape as the airline industry consolidates could ultimately erode their ability to negotiate bilateral aviation agreements on behalf of the member countries.
Under an existing agreement between the United States and Britain, American and United Airlines are the sole U.S. carriers permitted to land at London's Heathrow airport, one of Europe's major gateways.
An American-British Airways alliance would command about 60 percent of the joint traffic between the two countries.
The latest round of open skies talks began Monday and was expected to last longer.
The British government said it "regrets the decision of the American negotiators to end the talks after two and a half days of substantive discussions."
The statement added, however, "it was not surprising that our first formal negotiations in a year and a half have not been easy."
A British Airways representative told CNNfn Wednesday that while it was "disappointed" about the impasse, the airline remains "confident that there is a political will to reach an agreement."
BA insisted the carriers expect approval of their alliance in time for the winter 1999 schedule, and that the current logjam doesn't pose a major setback toward that goal.
The U.S. Department of Transportation is set to begin regulatory hearings into the proposed alliance Oct. 26. Those hearings could be postponed, officials said, pending a sign of progress in the open skies negotiations. 
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