EU / USA open skies negotiations
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Er, excuse me.
The Commission has a mandate to negotiate with the US, and also the 'horizontal mandate' which obliges it to get rid of the 'nationality clause' in around 2,000 bilateral treaties which currently restrict operation on a route from country A to country Z, to airlines of countries A and Z. From now on, if country A is an EU member state, then the treaty must be revised to read 'countries A-Y', being the 25 EU members.
Country Z (the poor non-EU state at the other end of the route) is going to say 'Yes, OK' isn't it? The Commission is going to say 'well, you have no option other than to say Yes, because that is now EU law'.
Welcome to planet Europa, they do things differently there.
The Commission has a mandate to negotiate with the US, and also the 'horizontal mandate' which obliges it to get rid of the 'nationality clause' in around 2,000 bilateral treaties which currently restrict operation on a route from country A to country Z, to airlines of countries A and Z. From now on, if country A is an EU member state, then the treaty must be revised to read 'countries A-Y', being the 25 EU members.
Country Z (the poor non-EU state at the other end of the route) is going to say 'Yes, OK' isn't it? The Commission is going to say 'well, you have no option other than to say Yes, because that is now EU law'.
Welcome to planet Europa, they do things differently there.
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I am actually pro-EU generally, but I do think the handling of the whole EU/US could have been better. I do realise that this is the first example of the EU as a whole negotiating bilaterals, but there are certainly lessons to be learned going forward.
On this particular issue, I do think we need clarification from the EU as to what happens if the named countries follow the EU's line and revoke their bilaterals. That's not made clear.
Also, they held us back for a year while insisting on cabotage, which most people knew was not a runner. And yet, while they imposed a condition which wasn't going to work and held everything up, they objected to what would have been a tiny realignment (by the Irish), which would have allowed more nonstops from Dublin.
Hopefully, Barrot will be able to come closer to a deal on Monday.
On this particular issue, I do think we need clarification from the EU as to what happens if the named countries follow the EU's line and revoke their bilaterals. That's not made clear.
Also, they held us back for a year while insisting on cabotage, which most people knew was not a runner. And yet, while they imposed a condition which wasn't going to work and held everything up, they objected to what would have been a tiny realignment (by the Irish), which would have allowed more nonstops from Dublin.
Hopefully, Barrot will be able to come closer to a deal on Monday.
Transparency International
ATW Daily News: European, US airports urge EU-US progress on open skies
Transparency International
EU-US open skies agreement delayed yet again
ATW Online
Tuesday May 16, 2006
EU and US aviation officials concluded aviation negotiations in Brussels last week with predictable results: The pushing back of the deadline to reach agreement on the transatlantic Open Aviation Area.The stumbling block remains limits on foreign ownership in US carriers and the recently revised Notice of Proposed Rulemaking issued by the US Dept. of Transportation (ATWOnline, May 4).
EU negotiators had been expecting a firm proposal last month that, if satisfactory to the member states, would have opened the way to the signing of an open skies agreement at the EU Transport Council in June. However, the US has extended its internal decision-making process, meaning the EU will not receive a firm proposal until later this year. The earliest an agreement could come into force would be the summer 2007 traffic season.
"The issue is whether the US are serious about treating global aviation like a mature industry and facilitating foreign investment into airlines," AEA Secretary General Ulrich Schulte-Strathaus stressed. "AEA members fully support the objective of enhancing opportunities for foreign investment based on their longstanding objective of creating an Open Aviation Area between the EU and the US. We realize that this is a phased process, but it is regrettable that domestic pressures in the US are creating unnecessary delay and give rise to all sorts of speculation."
EU and US aviation officials concluded aviation negotiations in Brussels last week with predictable results: The pushing back of the deadline to reach agreement on the transatlantic Open Aviation Area.The stumbling block remains limits on foreign ownership in US carriers and the recently revised Notice of Proposed Rulemaking issued by the US Dept. of Transportation (ATWOnline, May 4).
EU negotiators had been expecting a firm proposal last month that, if satisfactory to the member states, would have opened the way to the signing of an open skies agreement at the EU Transport Council in June. However, the US has extended its internal decision-making process, meaning the EU will not receive a firm proposal until later this year. The earliest an agreement could come into force would be the summer 2007 traffic season.
"The issue is whether the US are serious about treating global aviation like a mature industry and facilitating foreign investment into airlines," AEA Secretary General Ulrich Schulte-Strathaus stressed. "AEA members fully support the objective of enhancing opportunities for foreign investment based on their longstanding objective of creating an Open Aviation Area between the EU and the US. We realize that this is a phased process, but it is regrettable that domestic pressures in the US are creating unnecessary delay and give rise to all sorts of speculation."
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It's very disappointing indeed and of course, there's no guarantee that everything will be sorted out by next Summer. HOWEVER, the main obstacle - the cause of the US stance - seems to be the US mid term elections in November. Once that's out of the way, some semblance of normalcy will hopefully return.
My main concern, of course, is the Irish situation. Most EU countries' airlines have absolutely no interest in buying into US carriers, so this whole debacle is particularly frustrating.
Ireland did a side deal with the US last year (subject to Open Skies coming into being from this November), but since the Irish agreement doesn't do anything to compromise the competitive position of any other country, it may be able to slip under the radar. With Aer Lingus due to be privatised this September, potential investors will need assurances that it can benefit from new route opportunities as planned.
Even when this US ownership thing is sorted out, there will still be a problem over access to LHR, with US airlines like CO seeking guaranteed access. That could yet cause a further delay.
My main concern, of course, is the Irish situation. Most EU countries' airlines have absolutely no interest in buying into US carriers, so this whole debacle is particularly frustrating.
Ireland did a side deal with the US last year (subject to Open Skies coming into being from this November), but since the Irish agreement doesn't do anything to compromise the competitive position of any other country, it may be able to slip under the radar. With Aer Lingus due to be privatised this September, potential investors will need assurances that it can benefit from new route opportunities as planned.
Even when this US ownership thing is sorted out, there will still be a problem over access to LHR, with US airlines like CO seeking guaranteed access. That could yet cause a further delay.
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Back on track!
It looks as if my doubts about the US Congress were unfounded! As the attached from Airwise suggests, Congress will not block increased investment, as CO had been lobbying for. I may well be over-optimistic in this, but it appears - from my reading of the attached - that we may now be back on course. With the appropriate will on both sides, the original November deadline may now be achievable?
http://news.airwise.com/story/view/1149809760.html
http://news.airwise.com/story/view/1149809760.html
Transparency International
Open skies hopes fade as Congress, Spinetta, weigh in on DOT proposal
Friday June 16, 2006
The tentative open skies agreement negotiated last year between the US and EU was dealt a potentially fatal blow Wednesday when the US House of Representatives voted to delay by a year a DOT rulemaking that is seen as key to winning European support for the air service agreement, while Air France-KLM Chairman Jean-Cyril Spinetta said he does not believe European policymakers will find the rulemaking palatable in the wake of recent changes by DOT.
The tentative open skies agreement negotiated last year between the US and EU was dealt a potentially fatal blow Wednesday when the US House of Representatives voted to delay by a year a DOT rulemaking that is seen as key to winning European support for the air service agreement, while Air France-KLM Chairman Jean-Cyril Spinetta said he does not believe European policymakers will find the rulemaking palatable in the wake of recent changes by DOT.
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This latest move seems to conflict with what happened last week. Not quite sure what the position is now, but I am becoming increasingly fearful about this whole process. There needs to be political will on both sides to make it happen and I feel that, particularly on the US side, this isn't happening.
Unfortunately, the worst aspect is that this really only affects a handful of big EU countries (UK, France, possibly Germany) whose airlines might have a remote interest in buying into a US carrier. The other 22, whose airlines have no such interest, are being held back.
What is the way forward; it certainly looks as if no progress will occur before the US election. My immediate reaction would be that Open Skies would be available to all except CO, as they seem to have lobbied most fiercely against it! However, the ATW report suggests that there is a possibility that even next year, 2007, the Open Skies project could be stalled.
Ultimately, I think EU govts - particularly those without Open Skies agreements with the US, such as Ireland - are going to have to look to protect their own countries' positions.
Unfortunately, the worst aspect is that this really only affects a handful of big EU countries (UK, France, possibly Germany) whose airlines might have a remote interest in buying into a US carrier. The other 22, whose airlines have no such interest, are being held back.
What is the way forward; it certainly looks as if no progress will occur before the US election. My immediate reaction would be that Open Skies would be available to all except CO, as they seem to have lobbied most fiercely against it! However, the ATW report suggests that there is a possibility that even next year, 2007, the Open Skies project could be stalled.
Ultimately, I think EU govts - particularly those without Open Skies agreements with the US, such as Ireland - are going to have to look to protect their own countries' positions.
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Originally Posted by akerosid
Ultimately, I think EU govts - particularly those without Open Skies agreements with the US, such as Ireland - are going to have to look to protect their own countries' positions.
There are three markets here:
The US;
The EU;
And the transatlantic routes between the two.
The US wants to liberalise the third one of these.
The EU wants to group all three into a great big single market with a (more or less) common set of rules. It has proved (in Europe) that a cross-border single market can function perfectly well and is fired with evangelical zeal to export the concept around the world.
Personally, I think it's right, as regards the US market, although probably not appropriate for some of the other countries they are dealing with. I think a single Free Trade Area would benefit US and European airlines, US and European consumers - although not necessarily in equal measure.
If the single-market option is politically unacceptable to the Americans, that's not to say that the transatlantic-only option would not be beneficial, as long as there was a coming-together on things like state aid, anticompetitive behaviour etc.
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What Does Open Skies mean?
US has always been odd about transport-open market. In marine there was a law involving "bottoms". Churchill and FDR clashed on open-skies in 1944 - "US' vainglorious ambitions for its airlines". It's all to do with cabotage-sabotage. In the days of Clipper-luxury, US' fear was of superior F/J service, not from surly Swiss, but Singapore girl - would you pay up to be snarled at Transcontinental by an AA grandmother if a flirty had domestic add-on legs? (mind wanders). Now its cheap Asian/Latino labour undermining all the ts&cs so harshly secured. It's not local add-ons by BA/LH, certainly not AF, that US fears, but a deluge of EK, Mex. and WhereStanAir claiming me-too and depressing domestic yield. Frequent Flyer bribes dont work anymore. This is why US' perception of open-skies has intra-EU as international up-for-grabs, intra-US as sovereign, so mine. Canucks have suffered 5th.Freedom discrimination for most of a century.
Protectionism will lapse here, as anywhere, when movers and shakers see net benefit. The new ingredients are demise of the post 9/11 "insurance" subsidies, and IRS attention to gates/slots-as-assets. US Legacy carriers, minus these, are profoundly loss-making, so need to build on Alliance sector-pooling, which is the cheap, invisible way of improving utilisation, loads and yields. "Ownership" is irrelevant.
Protectionism will lapse here, as anywhere, when movers and shakers see net benefit. The new ingredients are demise of the post 9/11 "insurance" subsidies, and IRS attention to gates/slots-as-assets. US Legacy carriers, minus these, are profoundly loss-making, so need to build on Alliance sector-pooling, which is the cheap, invisible way of improving utilisation, loads and yields. "Ownership" is irrelevant.
