EU / USA open skies negotiations

[akerosid]

Ireland and the US are currently negotiating a "side" deal, which the Irish government hopes to "stitch into" the new EU/US Open Skies deal once it comes about. Trouble is, it's a bit of a stitch up, because it's not actually Open Skies and will mean access to Ireland is more restricted than to any other EU nation.

Hopefully the EU will be able to stamp out this little plan, but with Loyola now apparently digging her heels in for something the US is determined not to give, I'm just wondering when the EU will next be visiting Planet Reality.

Ireland wants the stopover to continue for another six years, albeit with a phased reduction in SNN flights from the current 1:1, to 2:1 (which would allow EI to add 3 more daily flights) and finally, to 3:1, after which the stopover would be done away with. The Americans say SNN has already had ten years to get used to the stopover being out of the way. Of course, the Irish govt has to play to the powerful SNN lobby, but it is also saying that it doesn't want SNN to have less traffic after the stopover goes than it does now. One would have thought that was down to the marketing prowess of the airport itself.

Lots of fun to come, but hopefully a deal can be done soon. Good to see Willie Walsh sticking up for EI in public as well; previous EI Chief Executives have always hidden under a bunker, for fearing of incurring governmental wrath, but WW clearly sees an advantage in sticking up for his company. Good on ya, W!

[Iron City]

Is the EU a State or not a State in the international sense?


I know it is not a State in ICAO because I looked at the list but how can a State (like the US) have an agreement or treaty or whatever with something like the EU that is not a State?

If the EU is a State fine, then they get a vote and conclude treaties and agreements and the states that make up the EU don't make treaties or international agreements any mre than Nebraska or Ohio do. If they are not a State then they don't get a vote and don't make agreements or treaties.

[bjghi3]

I fail to understand how the EU can think they can negotiate air treaties as a whole when at the UN each country has its own delegation and vote. Perhaps when they speak and vote as a whole at the UN, maybe the US will take the EU more seriously as a whole when negotiating air treaties.
Meanwhile back to the subject of openskies.If by chance somehow the US met all the demands of the UK--allowed cabotage in the US, foreign ownership levels raised to 51% and met all other demands, where would all the slots , gate space etc. etc.come from to allow all US carriers openaccess to LHR? The UK and BA steadfastly maintain that there are no available slots and/or facilities at LHR for expansion of US carriers.So if there are no slots and facilities available at any cost, why should the US meet the demands and wishes of Ba and the UK?

[dusk2dawn]

Is EU a state or is it not a state ? Never mind - the US takes 350 mil. potential euopean customers very serious and consequently the US will talk to the EU. Come to think of it: they are talking....

BTW: You may read this thread from the very beginning.

[steamchicken]

Very simple. The EU member states delegate powers to the EU over some fields of policy. Trade (and that includes open skies) is one of 'em. Clear enough? Imagine, if you will, Germany trying to negotiate preferential tariffs with New Hampshire. Doesn't work. Same principle.

[Iron City]

So it is all EU or nothing. No side agreements with Ireland or whatever, eh. The last agreement I saw between the US and the "EU" had all the countries names on it too and it was definately on trade. At ICAO the EU is an observer organization and has no vote. Bottom line is the EU is a organization that is still being born and growing up to acquire attributes of a state. When it does acquire these attributes it can use them and there will be no more vote for France, Germany, UK, etc, just one EU vote.

As a trade or economic or customs block or union the EU is substantial sized and a factor in global aviation but should not think it has such tremendous leverage that it can make the rest of the world do things that are not in their interest. Why the US should allow cabotage and essentially free access to the US market to EU airlines is beyond me. It is not in the interest of the US to do this if the trade is access to the EU market on the same basis. EU is big but not that big and not that attractive. Air transportation is needed by many more people in the US because the US is a lot bigger geographicly and does not have the passenger rail network Europe does, so the proportion of people in the US that travel by air is much greater than in Europe, so a Euro bellybutton is not as attractive as a US bellybutton (economically, that is...have seen some amazingly attractive Euro bellybuttons)


Maybe it is also time to get rid of thequaint notion that airlines or any other corporation is a national of any particular state except to need someplace to be incorporated. Most all airlines I can think of are not particularly loyal to a State except for the cash, preferential treatment or subsidies that can be extracted. Owners of corporations really don't care about anything but making money in most situations, and what they are doing in the airline business if that is their goal is beyond me. MAybe it is just a ego trip.

[Daysleeper]

EU is big but not that big

total population on 1 January 2004
(millions) 454.9

usa 291

bigger than youse (well more of us anyway)

[dusk2dawn]

Iron City wrote:

The last agreement I saw between the US and the "EU" had all the countries names on it too and it was definately on trade.

...and somehow you've arrived at the conclusion that traffic rights are not a trade issue ?

[answer=42]

The Financial Times reports that:

'Leaders of the European aviation industry are seeking an urgent meeting with Loyola de Palacio, the European transport commissioner, after complaining that the Commission failed to inform them about crucial recent developments in negotiations over liberalising air services between the US and the European Union....'

The same source also has a very interesting article (subscription required) about EU air transport policy. Key points are:

'The aim of the [EU-US] talks is to sign a comprehensive agreement that could dismantle the ownership restrictions still prevalent on both sides of the Atlantic. It could include provisions allowing US carriers to fly between European cities, and vice versa, a practice that is still banned. It could, in the end, ease the way for transatlantic mergers to go ahead...'

'In any case, the talks have already increased the likelihood of European mergers, witness the tie-up between KLM of the Netherlands and Air France.'

[dusk2dawn]

ATWonline has something on that meeting too.

...an insider noted, adding that the Americans have discovered that negotiating with Europe collectively is easier than with the member states individually.

Must say that I'm not feeling comfortable with Sra. Loyola...

[dusk2dawn]

EU transport ministers to mull OAA proposal, Heathrow access
Loyola de Palacio "developing her position"
European industry ask the Council not to endorse the agreement
ATWonline

[akerosid]

Personally, I hope a deal can be put together, even if it doesn't include LHR.

The main sticking points appear to be:
- LHR access, which is admittedly a big issue
- Ownership; I believe the Americans are prepared to go up to 49%, a major concession, and
- Cabotage; the Europeans got a much better than anyone might have expected. That's as good as it's going to get: go with it.

Look at what European carriers are getting: unrestricted t/a access between Europe and the US (excluding LHR). It really is a major leap forward. What are the European carriers - and how many of them - objecting to?

From an Irish perspective, our own government is acting up over SNN again (although I suspect that much of that is drum beating ahead of the Euro elections), so as soon as the deal can be done, we get increased access and the SNN stop gets phased out, hopefully very quickly.

Time the deed was done!

[akerosid]

Unfortunately, the deal was rejected today. However, Loyola at least is still holding out hope for a deal within the next two weeks. The main sticking point appears to be US domestic access and of course, Heathrow. Personally I'm surprised that they've got as far as they've got on this, but hopefully they will be able to work a deal. Since the major obstacle is something primarily involving the UK, perhaps GB and TB can talk about it while they're in the US.

Perhaps some of the extra slots arising from the move to mixed mode operations will be allocated to new US carriers? I really don't see how much farther the Americans can go; there's no way they will get cabotage approved in an election year. Were it not for the fact that the Americans are anxious to get increased LHR access, I wouldn't be surprised if they told the Europeans to get stuffed.

What is frustrating is that the prospect of increased access only appeals to a small number of major carriers, so progress for the rest is being obstructed for one or two.

[bjghi3]

There is such intense frustration in the US over the LHR issue that I believe there might be serious consideration given to renouncing Berrmuda II.
This is an election year in the US and there might be some political gain for Bush for doing so.
At one time I thought political pressure might help reslove this issue. The close relationship between Thatcher and Reagan, Clinton and Blair and now Bush and Blair all have not helped on this issue. It is time for the US to get tough--very tough.
Surely the EU must know that they will never get a better deal from Kerry.

[Young Paul]

Well, I can assure you that there is also intense frustration in Europe about the complete asymmetry of treatment of US airlines - the fact that post 9/11 they have been given major subsidies to keep them going when European airlines have had to keep their own houses in order or go out of business - the fact that they expected subsidised fuel if the price increased. Have they never heard of "risk"??!!! The fact that they expect to be able to displace the slots of existing operators at LHR, that they expect to have the right to operate where they choose across Europe when European airlines have limited right of access into the US, let alone inside the US. The fact that the rules are such that European operators have to be basically owned by Americans to allow free access to the US market place. The fact that they can dictate operating conditions to airlines from other nations that are way beyond what local regulatory authorities normally do (flight deck doors [OK, so that was probably for the best] - and the stuff about not allowing queues for toilets - good grief!!!) when their own security systems are clearly not as good as those in some other countries who had to jump when they said. And finally, the fact that once they get what they want, they will simply lose interest in any further negotiations - look at the blatantly unfair situation regarding protected industries and tariffs in other areas. So as far as I'm concerned, by all means negotiate, but get it right first time, because if the US gets what it wants the first time, there won't be a second time.

[mattredd]

http://www.continental.com/vendors/d...59&s=&i=PRNews

If you look at this quote from the news release above.

"Airlines like Continental must be given slots at Heathrow to stem the tide of British Airways' domination."

You can see that the American Carriers' arguments are totally irrational, how would Continental feel if BA released a statement saying that an American carrier at an American airport mustn't be the dominant airline and should yield power to a foreign airline.

Heathrow is a British airport, it will always be dominanted by a British airline, just as much as Continental has the right to be the dominate airline at EWR and IAH.

I think CO, NW and DL should have the rights to fly to Heathrow but the British Government should insure that BA does not have to yield the slots to them.

[akerosid]

So, we're left with the (very predictable) situation whereby access to Heathrow is the stumbling block. The Americans are expected to give access to their domestic routes, which is simply not a runner, in an election year of all years and - please correct me if I'm wrong - everyone else is held up until LHR is sorted out.

The sides appeared to have been close together a few weeks back, but we now seem to be back at Square One. This makes it extremely unlikely that a deal can be done by the 25th June, as was hoped for; hopefully, individual governments can reach some deals, but the Americans are thought to feel that negotiations with the EU as a unit is better than negotiations with every side.

My understanding, originally, was that we were aiming for a situation where all European and all US carriers could fly between any two points in each region, i.e. unlimited transatlantic flights. While I understand that LHR access is a sticking point, surely this is something the US and UK governments could hammer out between themselves, or will the deal on LHR be expected to allow all European carriers to fly from LHR? Surely there is some way this obstacle, which has long been anticipated, can be separated?

[lamina]

It would appear this is going nowhere fast-

LUXEMBOURG (Reuters) -- European Union transport ministers have rejected a U.S. offer for a landmark aviation agreement and want further negotiations, said the European Transport Commissioner Loyola de Palacio.

Further talks on an "open skies" pact would focus on gaining more access for EU carriers to the U.S. domestic market.

"We are going to continue negotiations to try and improve the current situation," de Palacio told reporters.

She said the EU would try to win more concessions on the market access issue before an EU-U.S. summit later this month.

U.S. Transportation Secretary Norman Mineta said in a statement he was disappointed by the decision, calling it a missed opportunity to open access to each others' markets.

"We remain committed to opening up transatlantic aviation markets," he said in a statement. "However, given today's unfortunate decision, we must now review how best to achieve the objective."

Talks between the EU, now 25 nations strong, and the United States began after an EU court ruled that U.S. bilateral agreements with individual EU states broke European rules that create a single internal market for the bloc.

The United States has agreed to let EU investors own up to 49 percent voting stock in a U.S. carrier, up from 25 percent. But it balked at allowing European carriers to fly U.S. domestic routes, known as "cabotage."

Under current bilateral agreements with individual EU countries, U.S. airlines have this right in some cases. De Palacio said this created an "imbalance" in the market.

Part of the agreement as it currently stands addresses this problem. For example, EU carriers would be allowed to charter U.S. aircraft or space on U.S. aircraft for domestic flights, provided the flight was ultimately operated by a U.S. carrier.

"This is considered not enough," she said.

Britain crucial
Nonetheless, European Commission officials have said the United States was unlikely to grant domestic flying rights anytime soon.

Ludolf van Hasselt, head of the EU executive's air transport policy unit, said this week that cabotage was a non-starter for U.S. negotiators and waiting for a potential change in administrations would not strengthen the EU's hand.

Britain, crucial to any EU open skies deal because of its large share of the transatlantic market and because U.S. carriers are anxious to gain more access to London's Heathrow airport, has said it would not support an agreement without better access to the U.S. domestic market.

"We are not going to make a deal with the Americans without the United Kingdom on board," Commission spokesman Amador Sanchez Rico said.

De Palacio said ministers from other nations were more supportive.

A UK spokeswoman said Britain did not see a summit later this month as a necessary deadline for an open skies agreement.

De Palacio said she was determined to reach a deal but added: "It's going to be very difficult." She said the current situation, in which 15 EU nations have bilateral agreements that do not comply with European rules, was "not sustainable."

She also said she had the impression that European airlines were getting cold feet about an accord.

European aviation lobbying groups oppose a quick deal that does not free up the U.S. market.

Current proposals would give European carriers the right to fly to U.S. destinations from any EU member state, easing the way for possible EU airline mergers in the future.

[bjghi3]

"She also said she had the impression that European airlines were getting cold feet about an accord."

Reading the above entire article again gave me some new insight.
The other Eoropean airlines getting cold feet at a deal tells me that KL,AF,LH etc. are afraid of opening up LHR and BA possibly getting US anti trust immunity for Oneworld.
As things stand now KL,AF,LH etc. etc. etc. all have open skies and US anti trust immunity and thus have a very strong advantage vs. BA and Oneworld. So it is not to their real advantage for there to be a US/EU openskies now or ever.
At least thats the way I see it.

[Iron City]

Air traffic rights are of course a trade issue of the first order.

The best I could do in finding european statistics to make my point (seems the published stuff I could find is all differences from previous year or sliced in various ways) was an undated paper (presume it is 1999) titled "The European airline Industry: From Single Market to World-Wide Challenges" on the EU web site (europa.eu.int/comm/transport/ais/rules/doc/com.1999 182en.pdf) Table on page 9 states:

Europe Domestic market % of world RPK 7.76%
North America Domestic Market % of world RPK 24.42%

Youse got more bellybuttons but don't fly as much

If anyone in Europe thinks the U.S. is going to give free access to the U.S. domestic market to foreign airlines they are very, very mistaken.