A report Monday incorrectly said the Senate would have to ratify any U.S.-Soviet agreement expanding air travel between the countries. (Published 5/30/90)
U.S. and Soviet negotiators have settled on a proposed agreement to expand air travel between the two countries that is expected to be signed during this week's summit between President Bush and Soviet President Mikhail Gorbachev, U.S. sources close to the negotiations said yesterday.
Negotiators worked out the only remaining sticking point in the talks yesterday -- over how many U.S. plane tickets could be sold with payment in rubles. Sources said it is not clear who will sign the agreement: the presidents or Secretary of State James A. Baker III and Soviet Foreign Minister Eduard Shevardnadze. The Senate must also ratify the pact.
"They came to deal," said a U.S. source of the Soviet negotiators, who flew from Moscow this weekend for what was to have been two days of talks. The final agreement was hammered out in a "surprisingly fast" few hours.
Under the agreement, 8.75 percent of the space on U.S. airliners flying out of the Soviet Union may be purchased with rubles, giving the U.S. carriers potential sales to to Soviet citizens who do not have access to dollars or other hard currency.
The United States originally insisted on 15 percent, then dropped the demand to 11 percent. The Soviets said 2 percent and stuck with that figure for months, until it became the only problem holding up the agreement.
Yesterday, the U.S. sources said, the Soviets opened the bidding at 6.5 percent, then edged up to 8.75 percent, just below what the United States had intended to be its final offer. "In our own minds, we were willing to settle for 9," a source said.
Under this section of the agreement, the Soviet airline Aeroflot, acting as agent for U.S. carriers, will sell up to 8.75 percent of available space in rubles. It will then exchange those rubles for dollars, paying the American carriers in U.S. currency. Originally, the U.S. carriers wanted to be paid in rubles that they could use to buy services in the Soviet Union. Now they must buy rubles at an artificially high exchange rate to pay for services -- such as refueling or rent.
But the agreement will give the U.S. airlines access to a segment of Soviet society that would have been barred from flying U.S. planes for purely economic reasons.
The payment question was a small point in an overall agreement that the State Department estimates could triple U.S.-Soviet air traffic.
Currently, only Aeroflot and Pan Am may fly the U.S.-Soviet route, and they may serve only New York, Washington, Moscow and Leningrad.
The new agreement will allow up to six additional U.S. airlines to fly between the two countries, and will allow a second Soviet airline to join the competition if one is formed, which is expected.
Additional U.S. cities that could be served are Anchorage, Chicago, San Francisco and Miami. The cities to be added in the Soviet Union are Kiev, Minsk, Magadan, Khabarovsk, Tbilisi and Riga in Latvia.
In addition, the two sides agreed to allow at least 100 charter flights a year between the two countries on transatlantic routes, and to encourage transpacific charters.
Several U.S. carriers have expressed an interest in Soviet routes. American Airlines and Delta have been among the most active. Both want to serve Moscow and Leningrad.
Delta also wants a route to Tbilisi in Soviet Georgia, which is "sister city" to Atlanta, Delta's headquarters city.
United, Alaska, Northwest and other U.S. airlines have been closely watching the talks, and Pan Am has expressed a desire to expand its route structure in the Soviet Union.
The Soviet market is considered to have a large potential for growth because of Soviet relaxation of emigration and travel restrictions. Already, travel by Soviet citizens has doubled on the present routes.