President Carter said yesterday he will consider retaliating against British Caledonian Airways in two weeks if the British government continues to oppose low fares proposed by Braniff Airways on its new route to London.
Last weeks, the Civil Aeronautics Board urged the president to suspend the Houston-London flights of British Caledonian for as long as the British continue to reject the low air fares proposed by Braniff on flights between Dallas and London.
In a letter to CAB Chairman Alfred E. Khan, President Carter said he agreed with the board that British refusal to approve Braniff's proposed fares violated Bermuda II, the U.S.-U.K. air agreement signed last year. But he asked the board to withdraw its order suspending B. Cal's operations pending the outcome of negotiations with the British government, scheduled for this week and next here.
"I am confident that during these negotiations the British government will adopt a position consistent with Bermuda II . . ." Carter said. However, he warned, "If a satisfactory resolution with the British is not reached by March 17, I will reconsider the need for unilateral action by the United States."
Kahn said yesterday he "couldn't be happier" with the president's decision. "It's just exactly what I would have had him do."
Braniff was to have started daily service between Dallas/Ft. Worth and London last Wednesday. It cancelled the inaugural indefinitely until the two governments settle their air fare dispute.
Braniff had proposed a package of roundtrip fares on its new route ranging from $399 to $1,456 for reserved-seat travel and a $349 roundtrip standby fare. The CAB would have permitted the fares to take effect, but the British insisted that Braniff forego the standby fare altogether and raise its other fares from 2 to 10 percent to a range of $435 to $1,546.
Braniff then submitted a new fare package at the levels the British said they would approve, but the CAB declined to approve the proposal.
In the order submitted to President Carter, the CAB noted that Bermuda II specifically provides that "individual airlines should be encouraged to initiate innovative, cost-based" fares. Although the British government has made "conclusory allegations" that Braniff's proposed fares were uneconomic, it had made no "factual showing" that could justify disapproval, the board said.
In addition to halting B. Cal's Houston-London flights, the CAB order would have required B. Cal - once service was resumed - to trim its fares to the levels Braniff proposed for one year.
The British have made it clear that they want to confine low-fare operations to the New York-London route. In the last few weeks, the British declined to approve proposals by Pan American World Airways and Trans World Airlines to extend low-fare standby and budget fares to other cities.
The U.S.-British talks originally were scheduled to discuss a charter services agreement between the two countries. Now it is likely that the Braniff issue and the U.K. rejection of other discount services will dominate the discussions.