Clinton approves British Airways' USAir link

BRITISH AIRWAYS' dollars 300m tie-up with USAir was approved by the Clinton administration yesterday despite fierce opposition from the three biggest US carriers, alarmed at the foothold it will give BA in the world's biggest air travel market.

But announcing his decision, Federico Pena, the US Transportation Secretary, warned that in return he expected the existing highly restrictive treaty governing air services between Britain and the US to be renegotiated to give American carriers greater access to the UK.

Under the USAir agreement BA will be allowed to code-share with its US partner. This means that flights from USAir destinations to cities served by BA will be shown as single through services.

Approval for the deal is a key step forward for BA's global ambitions, giving it an important toehold in the US market, which accounts for 40 per cent of world air travel. However, Mr Pena made it clear that the right to code-share is only conditional and that the arrangement will be reviewed again in a year.

Sir Colin Marshall, chairman of BA, expressed delight at the announcement, saying it would mean simplified booking and check-in procedures for passengers on a global route network.

USAir, America's third biggest domestic carrier, handles 55 million passengers a year and flies to 210 destinations. Under the agreement BA has the right to code- share with USAir on 38 of these.

Initially BA will code-share on only three routes. But Sir Colin added: 'We look forward ultimately to linking more domestic flights on USAir to our own worldwide network, providing substantial benefits to the travelling public.'

The decision was greeted with a mixture of disappointment and dismay by the three US airlines opposing the tie- up. One executive at American Airlines, the most vociferous opponent, said it was a classic case of the stable door being locked after the horse had bolted.

Mr Pena's decision not to revoke unilaterally the air treaty between Britain and the US - an option that had been urged on him in some quarters - was welcomed by Virgin Atlantic.

Had the agreement been revoked, Virgin would not have been able to go ahead with plans to expand its US flights this year, starting with a new service from Heathrow to San Francisco.

Existing US law precludes foreign control of US carriers, and Mr Pena said BA's initial investment - it plans to invest an additional dollars 450m in USAir over the next five years - 'does not impair USAir's citizenship' under the current treaty. But he added that the new administration 'has had no role in shaping these laws or negotiating these agreements', hinting strongly that Washington will not renew BA's joint services with USAir unless the UK agrees to important concessions in a new bilateral treaty.

The administration has sponsored a special airline commission that will review US policy towards foreign investment in American carriers, and will make recommendations for a new aviation law to the US Congress later this year.

Meanwhile American Airlines confirmed it might pull out of the under- used Stansted airport unless more flights were allowed there from the US.