The United States and the Soviet Union have broken off negotiations for resumption of airline service between the two countries because of "considerable economic disagreement" about how Pan Am and the Soviet carrier, Aeroflot, would divide the revenues, the State Department said yesterday.
Department spokesman Bernard Kalb said no date has been set for resumption of talks, effectively ruling out the possibility that an air travel accord could be reached in time for signature by President Reagan and Soviet leader Mikhail Gorbachev at their summit meeting in Geneva Nov. 19-20.
Both sides had expressed hope that the summit might see some limited steps toward improvement of U.S.-Soviet relations through the signing of agreements on such non-nuclear areas of cooperation as science, cultural exchanges and air travel.
U.S. officials said hopes for an accord had foundered because of Soviet insistence on terms that would have caused Pan Am, a private U.S. carrier, to suffer heavy financial losses.
Pan Am, which operated routes to the Soviet Union in the 1970s, stopped flying there in 1978 because, as one U.S. official put it, "they were losing their shirt financially." The United States barred Soviet flights to this country following the 1981 Moscow-approved crackdown in Poland, and the Aeroflot offices here were ordered closed in 1983 after the Soviets shot down a Korean civilian jetliner.
The officials said the effort to get a new agreement failed because the Soviets insisted on essentially the same terms that had proved unacceptable to Pan Am in the 1970s. Specifically, the officials said, the Soviets wanted a system that would not permit Pan Am to compete on equal terms with Aeroflot and that would guarantee Aeroflot a disproportionately larger share of the revenues generated.
According to the officials, Pan Am would have been barred from selling tickets in the Soviet Union. Pan Am also would have been at a disadvantage in competing for Russian passengers, who are in effect forced to use Aeroflot because of travel restrictions and a requirement that they pay in rubles, which have limited value outside the Soviet Union.
In addition, the workings of the state-controlled Soviet tourist system generally force non-Russian travelers to use all-inclusive "package tours" that include plane reservations and hotel accommodations, and that enables the Soviets to steer the business to Aeroflot.
To make a resumption of service economically viable for Pan Am, the United States had sought a formula for division of the revenues collected by the two airlines. But the Soviets rejected that idea, and the officials said that as long as Moscow takes that position, there is no point in continuing talks because no American airline would be willing to risk the anticipated heavy financial losses.