U.K. GRANTS FEDEX CARGO RIGHTS; BRIT CARRIERS ENRAGED

   In a surprise move that has incensed British all-cargo airlines, U.K.
transportation authorities have granted Federal Express the right to fly
from Prestwick airport in Scotland to destinations in continental Europe.
   FedEx has sought the so-called "onward" or "fifth-freedom" rights from Scotland to fly its freighters from the United States, through the United Kingdom, to its European hub in Paris. Governments often limit the fifth-freedom rights of foreign carriers to protect markets for national
airlines.
   British cargo carriers lashed out at U.K. authorities for granting the
rights, which the airlines wanted to use as leverage in bilateral aviation
negotiations with the U.S.
   "The decision has undone years of negotiating by handing over one of
Britain’s trump cards without obtaining any quid pro quo from the other
side," said Christopher Foyle, Chairman of all-cargo carrier Air Foyle.
"The process is extraordinarily murky and leaves a bad taste in the mouth."
   The British Cargo Airline Alliance, representing the four largest U.K.
cargo carriers including Air Foyle, have demanded that U.S. authorities
grant U.K. airlines the right to provide wet-lease freighter services to
U.S. carriers. U.S. airlines are not permitted to lease foreign aircraft,
although foreign airlines often lease aircraft from U.S. carriers, such as
Atlas Air.
   The British airlines had hoped to include new wet-lease freighter rights
in an "open-skies" agreement that U.S. and U.K. officials were negotiating in relation to a proposed alliance between American Airlines and British Airways. That avenue was blocked after the U.S. Justice Department dismissed the antitrust immunity application of AA and BA, effectively scuttling the airlines’ plans to forge deep ties.
   Now, British cargo carriers feel they have lost all leverage. "The BCAA is appalled that the British government has sold out its own cargo
industry," Foyle said. "If the British government is willing to give way on
a fundamental case of this kind, then we must seek protection from the
European Commission."
   Foyle called the FedEx award a "blatant political manipulation and an
attempt to buy Scottish votes."
   He demanded that British Prime Minister Tony Blair launch an
investigation into the process by which the route awards were granted.