BA rival carriers excluded from 'open skies' transatlantic talks

Airlines campaigning against the proposed alliance between British Airways and American Airlines have been excluded from attending the next round of "open skies" talks between the UK and US governments.

The third set of talks begin in Washington next week and in the previous two stages the leading British and American carriers, including BA and Virgin, have sent observers to report back on developments.

The UK Department of Transport is understood to have insisted that these observers are to be barred from the next round of talks, a decision which has infuriated rival carriers who are opposed to the alliance.

A spokesman for one US airline, who did not want to be named, said: "It is usual for carriers to be there to keep management fully briefed. Privately we are extremely unhappy about this. We find it alarming and very worrying ... A deal could be stitched up behind closed doors which doesn't meet our needs."

The "open skies" talks are aimed at liberalising access to Heathrow airport, currently blocked to most US airlines wishing to operate on transatlantic routes under a treaty signed in the late 1970s. The US has insisted on concluding such a deal before it can give regulatory approval to the BA- American tie-up.

It is thought that the Department of Transport has suggested the third round of talks are "procedural" and that it is not necessary for industry observers to attend. However, the explanation did not satisfy other carriers. "We might just want to waste our time and attend the talks anyway," one said.

The alliance would give British Airways and American 60 per cent of capacity on routes between the UK and the US. On certain transatlantic routes it would increase BA-AA's share of the market to 100 per cent.

Since BA and American announced the deal, which involves no equity stake by either carrier, a number of obstacles have developed. There are several regulatory investigations underway, including an investigation by the Office of Fair Trading, which has said the alliance might constitute a merger.

In addition, BA is facing legal action by its existing partner, USAir, in which the British operator has a 24.6 per cent stake. USAir alleges the deal is anti-competitive.

The key stumbling-block in the talks is thought to be the granting of so-called beyond rights for US carriers to fly on from Heathrow to other European destinations. The UK is believed to be insisting that British airlines should be given rights to fly on domestic US routes.