US demands open skies deal for BA-KLM link

The US government has warned that it will block a British Airways/KLM merger unless it achieves a breakthrough in the open skies negotiations with the UK.

Dorothy Robyn, a senior White House official, said: “The US will not allow British Airways to use a merger with KLM, the Dutch flag carrier, as a back door to achieve greater access to our market.” Washington made clear that KLM, would jeopardise its own present unrestricted access for flights into the US, if it passed into British ownership without agreement on liberalised air services between the UK and the US.

Ms Robyn, a special assistant to President Bill Clinton on the National Economic Council, said in a speech to the International Aviation Club in Washington: “If KLM comes under effective control of British Airways while Bermuda II still governs US-UK air services, KLM will immediately lose the benefits of the US-Netherlands open skies agreement.”

Bermuda II, the present US/UK bilateral air services treaty, which dates back to 1977, is one of the most restrictive in international aviation and has been a running sore in relations between London and Washington. Under the bilateral treaties that govern international aviation, an airline’s route rights are tied to the identity of its national ownership.

One model that has been under consideration by the two group’s investment bankers would give BA economic control, but would leave majority voting rights in Dutch hands to allow the appearance of continuing Dutch national ownership.

A leading aviation analyst in Washington said on Wednesday: “That would be not acceptable. If it smells of control it will be regarded as ‘effective control’ for the purposes of the Dutch/US open skies agreement.”

US and UK officials have recently held two rounds of talks in London and Washington on Bermuda II. Further negotiations have been scheduled for September. Reuters