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for the ‘open skies’ agreement that would
lead to more flights and lower fares. If, as
expected, the deal gains US Congressional
approval, the new rules would take effect
on 28
th
October.
The accord would allow European airlines
to fly into the US from anywhere in the
27-member bloc, not just from their
home countries.
Restrictions on US airlines flying to
Europe would also be liberalised. Notably,
authorisation to fly into Heathrow Airport,
near London, UK, would be broadened.
Under current rules, only two US carriers
– American Airlines and Delta Air – have
that right.
The agreement has existed in broad
outline since November 2005, but was
held up by the request of officials in
Brussels for a change in US rules limiting
equity ownership by foreign airlines in
American carriers to 25% of the voting
stock.
Eager for the open-skies deal, President
GeorgeW Bush tried to persuade Congress
to change the rules. But opposition from
labour unions and some domestic airlines
caused the administration to abandon the
effort last December.
Now, both parties have somehow
managed to finesse the problem, at
least enough to justify a preliminary
announcement.
The European Commission said that the
US and Europe have agreed on ‘rights in
the area of ownership, investment, and
control of US airlines by EU investors’
– although it provided no details.
But a European official told Nicola Clark,
of the
Washington Post
(3
rd
March) in
Paris, that the US had consented to
allow European airlines to acquire more
than 50% of the total capital of a US
airline without risking a legal challenge.
Under current rules, for reasons of
national security Washington may block
investments that exceed such limits.
(‘US and Europe in Accord on Air Routes,’
3
rd
March)
If Washington seems to have made
a rather large concession here,
the potential benefits of an open-
skies policy are also considerable.
According to the International Air
Transport Association, a Geneva-based
❈
trade group, the transatlantic market
represents 60% of global air traffic.
The IATA said it welcomed the
announcement of a draft aviation
agreement between the US and the
EU as a ‘first step in the right direction’
for liberalisation of the industry,
but called for more. IATA’s director,
Giovanni Bisignani, said: “Airlines
are businesses. In any business, the
ability to respond flexibly to consumer
demand is critical to success. [This
agreement] is a good start, but both
sides must think bigger and lead
the way.”