[Congressional Record Volume 142, Number 72 (Tuesday, May 21, 1996)]
[Senate]
[Pages S5442-S5443]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            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

[[Page S5443]]

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.

                          ____________________