4 September 1998

Kinnock boost for BA in row over selling landing slots

By Stephen Castle in Brussels

Neil Kinnock, the European Transport Commissioner, yesterday promised moves to allow airlines to sell their landing slots - one of the most sensitive issues surrounding the proposed alliance between British Airways and American Airlines.

Mr Kinnock's intervention comes weeks after BA was told by the European Commission that it should not be allowed financial compensation for the 267 slots it is being asked to relinquish to allow its proposed alliance with American Airlines to go ahead.

Under current EU law, agreed by the Council of Ministers in 1993, the sale of slots is not permitted. That position was contradicted by the director-general of fair trading, John Bridgeman, who argued: "I remain firmly of the view that grandfather rights have a substantial monetary value which, one way or another, is recognised now when slots change hands." That advice was published a month ago by the new Secretary of State for Trade and Industry, Peter Mandelson.

Yesterday Mr Kinnock appeared to be siding with the OFT. In a passage highlighting the BA/AA case, the Transport Commissioner told a conference in London: "I will, in due course, be publishing reform proposals in order to permit financial payment for slots under terms which will safeguard market entry and competition.

"Such legal changes are, however, not likely to be rapidly agreed and the reality that will prevail for at least another two or three years is that the sale of airport slots in the European union is not legal."

Although the initiative does not hold out any direct prospect of a change of heart in the time scale needed by BA, it will strengthen the airline's argument. A source within the BA said: "We have always advocated that the most efficient way of allocating this scarce resource is to have a market in it. If you can sell milk quotas why not landing slots?"

Mr Kinnock's comments underline the long-standing tension between himself and Karel Van Miert, the Competition Commissioner. Mr Van Miert has taken a tough line against the sale of slots, arguing that it would undermine attempts to increase airline competition. Mr Kinnock, whose speech called for greater liberalisation of European aviation, has long been known to favour trading in slots.

Last month BA ordered aircraft worth up to 5.5bn from the European supplier Airbus, dealing its usual US supplier, Boeing, a blow. That prompted speculation that the airline might receive favourable treatment from regulatory bodies.