Edition: U.S. / Global

COMPANY NEWS; Britain Warns of Flight Bans If U.S. Retains Equity Limit

Published: November 18, 1993

In anticipation of the next round of negotiations with the United States over aviation policy, the British Government warned yesterday that it might ban some flights by American carriers into Heathrow Airport.

The move would occur if the United States did not change its decision of last week to limit British Airways' right to coordinate and market some flights with USAir, in which British Airways holds a 25 percent stake.

Taken together, the two announcements point to tensions between the two Governments in their discussions on the so-called bilateral agreements that govern flights between the countries.

The next round of negotiations is scheduled for early December. Higher Investment Limit Sought

In broad terms, the British Government wants the United States to raise limits on foreigners' ability to invest in American carriers; the United States wants American carriers to have more access to Heathrow Airport and beyond.

The British Government said yesterday that on Jan. 12 it would ban one flight a week by American and United Airlines to Heathrow, outside London, if Washington did not change its decision to put a 60-day limit on the decision by British Airways to expand its code-sharing agreement with USAir.

Code-sharing is the industry term for coordinating marketing and schedules so that passengers may fly USAir on one leg of their trip, for example, and British Airways on another, even though the trips are advertised as a single flight.

In March, the Department of Transportation said it would allow British Airways and USAir to begin code-sharing, initially for one year. But extending the agreement beyond that period was contingent upon the carriers' reaching a more liberal aviation agreement. 'Disappointed With Progress'

"This new code-sharing relationship strains our relations as we enter the most sensitive phase of negotiations," said Richard Mintz, a spokesman for the Transportation Department. "We've generally been disappointed with progress of talks thus far."

The bilateral negotiations are being closely watched by many countries. In recent years, countries like Japan, France and Australia have signaled a desire to slow the rapid expansion overseas of carriers such as American, United, Delta and Northwest.

Many industry analysts believe the current talks with Britain may set a precedent for other countries.