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British Airways Throws in the Towel

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  • British Airways Throws in the Towel

    The Georgian Messenger
    23 March 2004

    British Airways throws in the towel

    By Allison Ekberg
    Despite an announcement in February that after a one-year break in service,
    British Mediterranean would restore air traffic between Tbilisi
    and London in March, senior managers from the carrier were unable to
    finalize the resumption of services during a visit to Tbilisi last week
    and have announced that the company will not return to Georgia. "In spite of
    the ongoing and resolute efforts of the British Embassy in Georgia, the
    British government, the new Georgian government and British Mediterranean
    Airways to resolve this situation, the Georgian Civil Aviation Authorities
    [CAA] remained determined to obstruct the resumption of air services between
    Georgia and the United Kingdom by British Mediterranean Airways," reads the
    statement issued on Monday. British Mediterranean Airways (BMed), which
    operates under a
    franchise agreement with British Airways argues that the reasons given by
    the CAA over the past year for denying their permit have constantly
    changed and that most recently they demanded "an exceptionally high number
    of documents including some that are not permitted under the Air Service
    Agreement (ASA)." The ASA is the International Treaty that governs air
    services between countries. The British carrier also objects to requests for
    a commercial agreement with Airzena arguing that under the recently
    negotiated Air Service Agreement "there is no
    requirement for us to enter into commercial cooperation in any form."

    While British Airways states that it would be willing to discuss mutually
    beneficial cooperation with Airzena after flights are resumed, they
    "will not however cooperate in a manner that financially and commercially
    disadvantages our company." "These facts have been communicated to the
    Georgian government at the highest levels," says British Airways. Despite
    the fact that a decree was signed by the
    current Speaker of Parliament Nino Burjanadze when she was interim
    president, the return of the airline remained the subject of controversy.
    Opponents maintain that local companies are short-changed by this agreement,
    though others note that the issue is of political and economic importance to
    Georgia and that resolving it in this way is in the strategic interests of
    the country and its future economic development, including attractiveness to
    investors. The new government has repeatedly stated its interest in
    re-establishing relationships with foreign companies. "I am not afraid of
    lobbying for British Airways and Turkish Airlines because I believe that
    settling this issue is crucial for our integration into Europe," Parliament
    Speaker Nino Burjanadze told journalists in February. The speaker told The
    Messenger that while she already signed the decree, she would fully legalize
    it by passing it through Parliament as well. The outgoing Parliament failed
    to approve the decree this year due to the lack of a quorum. In March 2003,
    British Airways and Turkish Airlines (Turkish later re-turned) were forced
    to discontinue flights to and from Tbilisi when the Parliament voted not to
    extend their flight permits. The reason for this was complicated but
    included disagreements over the
    nature of Commercial Agreements and observation of the "parity principle"
    between foreign and domestic companies. According to this principle, if
    Georgian Airlines did not carry out as many flights as a foreign carrier,
    the latter was obliged to pay financial compensation.
    Some Georgian authorities also alleged that the British and Turkish
    companies received extra privileges and as a result Georgia did not
    collect the tax revenues it should according to international practices.

    It was also reported at the time that BMed had problems with the Georgian
    Tax Department. On Monday the companysaid that the taxation is-sue raised by
    the previous government "never had any substance." The company adds that
    through meetings with the Ministry of Finance and Tax Department "we have
    agreed to a satisfactory resolution of this issue." Reached at the time for
    comment, Temur Tetradze, Head of the Transportation Department of the CAA
    told The Messenger, "we are following the decision of the
    Parliament.Parliament issued the order to restrict the flights." Just last
    week the former head of the Civil Aviation Administration Zurab Chankotadze
    was sentenced to three months pre-trial detention in connection with
    charges that he exceeded his official duties, is guilty of mismanagement and
    stole over GEL 750,000 from
    the state budget. British Airways claims that due to many years of
    continuous difficulties with the Georgian Civil Aviation Administration it
    has been unable to increaseits investment in Georgia where it previously
    operated three flights a week compared to seven flights a week to Baku.
    While it would consider resumption of services if there are "positive
    changes in the Civil Aviation Administration," it adds that "if the business
    environment does not significantly change, it is unlikely that we will
    resume flights between Tbilisi and London.

    British Airway's Tbilisi office will remain open through March 31, 2004
    after which passengers should contact the British Airway's office in