SSK, your absolutely correct for flights between the EU and the east. Going west EU consumers will have to decide between US/Canadian airline flights and longer flights on EU carriers.
IATA has said that most, if not all, EU airlines are in dire straights. A 'war' like this is going to put them closer (if not over) the brink.
Hopefully someone at the commission soon realise that their stubbornness is going to cost the EU dearly, both in monetary terms and jobs.
Lose some face and back off for a while, or keep face and lose your shirt.