Over To You

JUST MAYBE, THERE IS A CEASE-FIRE IN THE GLOBAL air wars. As a first step toward easing transatlantic tensions, the U.S. Department of Transportation has tentatively approved the proposed merger of Northwest and KLM Royal Dutch airlines. The endorsement comes as Washington and European countries spar over "open skies" agreements. Britain, for instance, is pressing the U.S. to okay a proposed alliance between British Airways and USAir. The Americans are also squabbling with France and Germany over airport landing rights. U.S. airlines have generally opposed making any concessions unless European countries reciprocate by opening their markets to American carriers. By giving the green light to KLM, Washington is hoping the Europeans will make the next move and return the favor.

If the KLM-Northwest deal flies, it would mark the first time in the U.S. that a foreign and a domestic airline would be allowed to function as one company. KLM and NW will consolidate their fleets, fare structures and sales forces. But the merger may be too little, too late for financially troubled NW, which is struggling to avoid bankruptcy. Meanwhile, the U.S. airline industry remains a dangerous battleground. MGM Grand Air, a three-year-old luxury carrier, withdrew from scheduled passenger service last week after it failed to stem financial losses.