Victory over the Atlantic

Britain bows to U.S. pressure for lower airfares

It was not quite an aerial replay of the Battle of Yorktown, but the U.S. did win a significant victory over Britain last week. Since mid-February, the two countries had been deadlocked in a tense and sometimes bitter confrontation over transatlantic air fares: Washington wanted them cut. London said no. But faced with the threat that the U.S. would start restricting British flights to the rich American market, the U.K. gave in. It will now allow U.S. airlines, and presumably its own. to fly passengers between London and 14 American cities--including Atlanta, Chicago. Dallas and Seattle--at budget and stand-by fares proportionately as low as those already in effect on the New York-London route. Sample fare: $171, Chicago to London, one way. President Carter, announcing the agreement himself, called it "a major step forward . . . to provide the traveling public with a wide choice of low fares."

The new fares were first proposed by four U.S. airlines--Pan Am, TWA, Delta and Braniff. The Carter Administration heartily approved: its policy is to encourage minimum fares and maximum competition among airlines at home and abroad. But British officials insisted that extending cheap fares to so many cities before a longer trial period on the New York-London route was a dangerously uneconomic policy that might end up bankrupting some airlines, especially their own.

The battle left Braniff stranded. On March 1, it flew a 747 loaded with celebrities to Britain for what it had planned as a gala inauguration of its new run be tween London and Dallas-Fort Worth. The Life Guards band turned out at Gatwick airport to serenade the orange jumbo jet with The Yellow Rose of Texas. But the British government would not let Braniff fly passengers back to the U.S. at the new low fares, and the U.S. Civil Aeronautics Board refused to let Braniff charge the high fares. Result: the plane flew back with its nonpaying passengers, and Braniff suspended its new service.

Although CAB Chairman Alfred Kahn had originally opposed giving Braniff the Dallas-London route (he wanted it to go to Pan Am), he moved quickly to defend the Texas-based airline. In a plea to the White House. Kahn denounced Britain's action as a "fundamental and flagrant breach" of the Bermuda II pact, which governs air travel between the two countries. He urged Carter to retaliate by suspending British Caledonian's flights between London and Houston, that airline's only service to the U.S.

The proposal expectably made the State Department nervous, but Carter saw no need to move immediately. He did warn that the U.S. would retaliate in some manner if the British did not agree to new low fares by March 17. Nothing was ever said publicly about possible U.S. restrictions on flights by the state-owned British Airways, a far more important carrier than Caledonian, but the threat was certainly there. As one British embassy spokesman put it: "Carter hung a St. Patrick's Day sword of Damocles over our heads."

By early last week, British Airways itself was proposing some new low fares, and only the details of an agreement remained to be wrapped up. By Friday they were, and Braniff planned to start its Dallas-London flights over the weekend.

Some international tension over air fares will remain. Japan and most European countries continue to resent and resist Carter's attempt to promote more competition and lower fares on international routes. Scandinavian Airlines System President Knut Hagrup accuses the U.S. of "imposing its domestic policies abroad. It forgets that the airlines have got to make money to stay in business." The U.S. answer: airlines in the long run can increase their revenues and profits substantially by creating a new mass market for travel, and to do that they need to tempt more people to fly by cutting prices.

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