12 August 1998

Ministers clash over BA's landing slots sale

Prescott opposes BA move to sell air slots for 500m

The Deputy Prime Minister has come out against plans by British Airways to sell airport take-off and landing slots valued at more than 500 million. By doing so, John Prescott has put himself on a collision course with Peter Mandelson, the Trade and Industry Secretary, who is thought likely to sanction the sale.

BA and American Airlines are being asked to shed 267 pairs of weekly take-off and landing slots at Heathrow and Gatwick airports to secure approval for their planned transatlantic alliance.

BA wants to sell the slots, which may be worth as much as 2 million each, but Karel Van Miert, the EU Competition Commissioner, said that was unacceptable because it would favour established operators. His statement contradicted the Office of Fair Trading, which last month recommended that the airlines be allowed to sell any slots they are forced to cede.

Mr Mandelson is keen for the merger to go ahead. Although he has not yet expressed an opinion on whether the slots should be sold, there is growing speculation that he will agree to the sale. He will give a final ruling on Sept 4 after an industry consultation period.

But Mr Prescott, as Secretary of State for the Environment, Transport and the Regions, is in charge of aviation policy. He indicated that he was against the sale of the slots, which were initially awarded free of charge. Speaking on BBC Radio 4's The World At One, he said: "I have always been clear in my mind: the slots don't belong to BA. The slots belong, I believe, to the community."

Mr Prescott said a final decision would be made between his department and Mr Mandelson, who was in charge of competition policy. He said that he disapproved of the buying and selling of slots behind closed doors: "In my first months in office I made absolutely clear to the authorities that I did not think that was right."

Mr Prescott's intervention will be seen as a further sign of his strained relations with Mr Mandelson. Last summer, when he was left in charge while Tony Blair was on holiday, he clashed with Mr Mandelson, likening him to a crab in a jam jar. If the Government received the money from selling the slots, it would provide extra revenue to finance Mr Prescott's plans to improve public transport.

But BA's rival, Virgin, has insisted that the slots are not BA's to sell. A spokesman said: "When BA was privatised in 1987 the slots were given no value in its balance sheet and were not regarded as an asset for the privatisation because they were not regarded as being under BA's ownership."