EU / USA open skies negotiations

[answer=42]

From the BA website:

British Airways has urged the European Commission to keep its sights high on the ‘open aviation area’ talks between and within the United States and Europe.

Speaking at the European Aviation Club in Brussels, Rod Eddington, chief executive of British Airways, said he was encouraged by the progress made in the first two rounds of negotiations.

However, he said, “The United States’ current proposal falls far short of Europe’s objective of achieving a truly liberal open aviation area.

“It is also essentially unbalanced and would provide unlimited 5th freedom rights* within the European Union for all American passenger and cargo airlines while providing no access at all to the US domestic market for Europe’s airlines.

“It removes operating restrictions between the European Union and the United States, but makes no progress towards achieving a truly liberalised market.”

Real progress could not be made until the United States unlocked its refusal to consider access to its domestic market, agreed cabotage rights* within the United States for Europe’s airlines and the removal of foreign ownership restrictions.

Opening up the Fly America programme*, guaranteeing code-share approvals and removing the restrictions on wet-leasing* were also key objectives for Europe’s airlines, he said.

Signing up to a phased arrangement that gives the United States its negotiating objectives with a promise of turning to Europe’s at a future date would be naïve, he continued.

“History teaches us that there would be no incentive for the US to come back to the table once they have got their model of open skies in place”.

He acknowledged that progress during an election year in America might be difficult and that more headway may be possible in the early term of the next administration when the United States’ economic recovery was more firmly established.

“If it proves to be that there is little prospect of progress in the immediate future on issues which justified giving the commission its mandate in the first place, the best path for the commission to keep its sights high and keep pressing its case,” he said.



worth discussing, I think.

[akerosid]

Very much so, Answer=42.

There is supposed to be a new round of negotiations next week (on the 17th), at which the latest US proposals are to be discussed. The US has mentioned two major obstacles: firstly Heathrow and secondly, the Irish Shannon stopover - my personal area of interest.

Aer Lingus would like to add new routes to the US and given its success in expanding into Europe, their intentions - given the right authority - can't be doubted. However, the Irish government can't be seen to be giving too much away - unless its back is up against a wall - or it will face political difficulties from the powerful Shannon lobby.

[answer=42]

From the European Commission transport website:

Towards an Open Aviation Area with the United States

EU/US negotiations will seek to replace existing agreements between individual Member States and the US with a single comprehensive EU/US agreement, establishing an "Open Aviation Area" between the two territories.

The negotiations will therefore cover all the arrangements governing air transport between and within the EU and US. This will include the rules governing market access (routes, capacity, frequency), how air fares are set, how to ensure effective application of competition rules, and how to ensure maintenance of high standards of airline safety and aviation security.

The negotiations will also address opening up each side’s internal market to the airlines of the other side. A key element in this will be the removal of the special restrictions which currently apply to foreign ownership and control of airlines in the US and the EU.

An OAA will produce a more competitive market than today, generating greater choice of services and lower fares for travellers while taking into account the need to maintain the security and safety of air travel.

It will give EU and US airlines complete freedom to serve any pairs of airports in the EU and US – EU airlines are currently only able to operate between their own Member State and the US and between airports within the EU. Relaxing restrictions on ownership and control will also make it easier for EU and US airlines to enter into mergers and take-overs with each other.

A report by US consultants, the Brattle Group (http://europa.eu.int/comm/transport/air/international/doc/brattle_aviation_liberalisation_report.pdf), has estimated that an EU/US Open Aviation Area would generate upwards of 17 million extra passengers a year, consumer benefits of at least $5billion a year, and would boost employment on both sides of the Atlantic.

[Diesel8]

I do not think, that there is much point in the US getting open skies and I do not think it will benefit the employees or american airlines.

I believe, there are a lot more passengers in the US, so obviously EU carriers would love unrestricted access, but what would the advantage be for the US?

For obvious reasons, I, as a US airline employee, is against it. It will further deterioate the employment landscape here, just compare VA pay to say DAL. Secondly, I am concerned that it will not stop there, but that cabotage, as in what has happened with freight carriers in ANC, will happen on the pax side on a much larger scale. Next ting we know, we will have mainland Chinese airlines flying around with $1000 a month Captains. Then we will see some serious degrading of US payscales. Now you may ask, how does EU-US open skies lead to this, simple, once you open the floodgates, it will happen really quickly.

From the supplied data, we see that on average, the US pilot pay is about 15 percent higher than the EU average. Compounding that disparity is the pay of accession countries such as the Czechs who pay a whopping 1/9 of SAS. Now, they do go on to say, that in the NEAR term, accession countries will not be able to supply many pilots. One must put extreme emphasis on Near Term, because long term they may be able to and then EU pilots as well, will see extreme downward wage pressure. We all know, the beancounters would love it and the pax, well at long as they get low fares, they really could not care.

BA serves IIRC about 12 or more destinations in the US, where as US carriers serves perhaps a dozen in the UK. Of course, US carriers will not gain acces to LHR on a larger scale.

So, I may be off the mark, but tell me again why I should support this?

[bjghi3]

However, there would seem to new intense pressure on the UK and BA with the approval of the KL/AF merger. When they add that to the mix with DL/CO/NW it will be an awesome alliance. It will not begin to compare to Oneworld. BA and LHR will start to lose even more transfer business at LHR to CDG and AMS.
If the UK and BA wait for years for this openskies to come, BA will be a monumental loser.There fore I am saying that maybe this negotiating session or the next one will see some limited progress in opening up LHR to more US airlines. In return BM will get their long sought approval to start some LHR-USA flights.
The stakes for BA, UK and LHR are just too high to wait any longer and they know it.

[Diesel8]

Well, BA may need it, but I still fail to say the benefits to the US, that is other than lower wages and accountants being happy.
Agreements should not be reached, because it helps one side.

Love you guys across the pond, but will do whatever I can to discourage this.

[unmanned transport]

Since the Islands of Britain joined the EU, does their air transportation bilateral rules fall under the umbrella of the EU?

[bjghi3]

After years and years of negotiations between the Uk and US that went absolutely no where on the issue of more access to LHR for US carriers, the UK asked the EU to take over the negotiations ,which they have.
The irony now is that the terms of an offer BA had a few years ago to get US antitrust immunity and to really develop Oneworld into a powerful alliance,probably looks like a sweet deal now.BA passed on the offer and walked away from the table.
I am quite, quite sure they did not imagine that AF/KL would merge and from an alliance with DL/CO/NW in the US. That is an awesome, massive alliance.In the mean time BA sits years away from an openskies that they envision. In the meantime BA can do nothing but sit back and watch a systematic peeling away of their lucrative transatlanit business, mostly their transfer passengers to and from the US via LHR.

[Daysleeper]

I do not think it will benefit the employees or american airlines.

Diesel

More like it will destroy the European Airline industry, despite US pilots earning way more than us we (in the UK particularly) are crippled by the high costs of regulation. In the cargo world we are already being overrun by UPS and others operating N reg aircraft with a lower cost base on intra EU routes. Add to that the threat from the East of ex soviet countries whose airlines stagger from one banning to another yet always seem to pop up with a new name and AOC elsewhere and we bear the brunt. And ont get me started on the Iclandics , pop 300,000 yet 50 large jet transport aircraft able to operate freely throughout the EU.
:sad:

Things should change but not without reform of the european civil aviation administration and a level regulatory field for all.

[Beaver Driver]

Let us not forget, however, that the EU is not a sovereign nation like the US. At best it is a loose conglomeration of trade partners, some of whom share the same currency. It is getting closer to single union sovereignity; and the combining of the ATC funtions and the regualtion of the skies is a step in the direction needed to be one nation.

Nonetheless, until you fire the Queens and Kings and become one sovereign nation. ALL having the same currency (Dump the Pound in favor of the Euro....YEAH that will happen) and laws; and ALL negotiate with ONE Federated voice, then true open skies will not happen.

The US should not open their borders to cabatoge unless and until Southwest or Jetblue is allowed to fly point to point in France, or point to point in Italy, or point to point in the UK.

The EU is NOT a sovereign nation. Flying between France and England is no different than flying between Montreal and Minneapolis. It is a different set of rules, freedoms, and treaties when you fly country to country.

My experience is that most Europeans don't understand the way the US is set up. They seem to think that flying between Florida and New York is the same as flying between Germany and England. This is not the case. The US is one sovereign Federated nation made up of many states but all of them governed by the Federal government.

So as soon as France and England can agree to let Spanish leaders make all of their National rules and regulations, as soon as the Queen of England abdicates in favor of....(whos running the EU now....is it Ireland?), and as soon as the Brits dump the Pound in favor of the Euro; then maybe we can negotiate an open skies agreement. Then it would be time to buy stock in Jet Blue and Southwest.

[dusk2dawn]

Beaver Driver, the wake-up bell rang nov. 5, 2002, when the ECJ passed its verdict in case C-466/98 ( press release (http://europa.eu.int/rapid/start/cgi/guesten.ksh?p_action.gettxt=gt&doc=IP/02/1609%7C0%7CRAPID&lg=EN&display=) ). Your "federation-mantra" will not help you any more.

[Rosbif]

Montreal is in Canada, which IS a sovreign nation.

[Iron City]

Is the head of state in Canada still the Queen (of England,Scotland Wales (UK))?

So I guess this means that Europe (or the EC actually because Switzerland is in Europe but isn't a member) is one entity from a international aviation point of view. Since this is so the EC should get one vote at ICAO but yet they keep showing up pretending they are separate countries. Make up your mind. That ought to take 50 years or so.

[Budgie69]

Beaver Driver

"The US should not open their borders to cabatoge unless and until Southwest or Jetblue is allowed to fly point to point in France, or point to point in Italy, or point to point in the UK."

The whole point of an open skies agreement is just that - a US or EU airline could fly between any city pair in the EU, the US or EU to US. Southwest could set up a route network in England, and Easyjet a network based in say, Florida. In practice I think what is being considered is more on the lines of code share and cross ownership.

"The EU is NOT a sovereign nation. Flying between France and England is no different than flying between Montreal and Minneapolis. It is a different set of rules, freedoms, and treaties when you fly country to country."

That is no longer totally correct. There are common airworthiness standards, licencing etc. More importantly the individual states of the EU have agreed a common policy on cabotage.

Whilst individual airlines may see benefits to an open skies agreement the main driver for the EU will be the consumer - will there be cheaper and better air services?

How would this affect industry staff? A more competitive environment would obviously produce changes. However it worth pointing out that salaries in Easyjet, Southwest etc are not knwn for being particularly low.

[dallas dude]

The US has nothing to gain from the opening up of EU "internal" passenger traffic.

Why would SWA go to the trouble of setting up a parallel EU operation when EZ and Rhino are already entrenched?

Granted, more capacity could lower pricing BUT the trade off would be gridlock, which would benefit no-one (like LGA a couple of years ago, but much worse), and a race to the bottom for the airlines that could offer the cheapest (below profitable) cost.

I can see Leery Micky, Stavros and the big Sir Dick claiming that EU-US open skies would be a win-win.

Kinda like the British auto/motorcycle industry did regarding export, until the Japanese (and others) figured out how to bury it.

History teaches us, be careful what you ask for.

Cheers,dd

[Diesel8]

Daysleeper,

Great, then we agree. You stay on your side and I stay on mine. Deal?

Lets celebrate over a pint :)

[Daysleeper]

Lets celebrate over a pint

sounds great, though it has to be REAL beer , not that yellow pretend beer you guys have over there.:E


sorry couldn't resist it.

[Techman]

One word - Protectionism

[Diesel8]

Protectionism, is that a new british beer? Never heard of it, but okay, make mine a Protectionism.:p

[Techman]

Jesus Kristus, du har vist været på den forkerte side af dammen for længe.:p

[akerosid]

I was just about to say much the same myself, Techman.

Back to the topic, it will be interesting to see what transpires next week. Personally, I don't think access to the US market is a real runner. Although low cost carriers seem to have "levelled out", they still pose a major threat to the majors and consequently, their efforts would probably be best focused on their European operations, rather than opening a whole new front.

Open Skies between the US and Europe would be an extremely positive development for both economies and a major job creator - for airlines as well. There will be downsides, but I think the upside far outweighs it.

[Diesel8]

It was a joke boys:rolleyes:

[Huck]

I have to have 5 years of residence in country and a 10 year FBI background check to go to work, but a flag carrier from any EU country is going to fly the same domestic routes as I? I don't think Tom Ridge is going to sign off on this....

Note that the lawyers on both sides working on this have THE most protectionist profession in the business. Just see what it would take for an EU lawyer to practice in the states!

[Diesel8]

Why would Tom Ridge not sign of on it and how much longer will he be making the decisions?

EU carriers are already flying into the largest cities in the US, from a security point of view, there really is no harm in allowing them to fly onwards domestically, after all, the pax would be screened by the TSA just like today. As a matter of fact, one could argue, that since the US gov is doing the screening, that its as safe. Secondly, it has been a while since a EU airline was hijacked, terrorist prefer US air carriers, since most of their ire is with the US.

Nope, I do not think it is a security issue, otherwise, why did we allow cabotage in ANC. Where was Tom Ridge then?

I think it will be a monetary issue and it will be interesting to see what happens in Euroland, once the accession countries makes it into the EU. They have much lower pay and worse working conditions. Already we have seen issues with regards to Ryan Air and the relatively lax rules from the Irish CAA.

[BillHicksRules]

Diesel8 et al,

The land of the free. Home of capitalism.

Scared of some competition?

Afraid you might be bested by some "johnny foreigner" airline?

You asked about "benefits to the US" but you seem to mean "benefits to the US airline industry". The benefits to the US will be in a better product. I am not saying that the US product is inferior to that in the EU. I am saying that in this industry competition breeds a better product. I also believe the product in the EU will improve greatly as well.

The only ones to lose out will be those companies who cannot compete and to be honest that is no bad thing on either side of the pond.

On a seperate thread I expressed a preference for travelling with BA as opposed to Ryanair. I am in the minority though. Whatever else is said about the low cost carriers , they know how to move with the times and they make money. Surely that can only be a good thing in the long run.

Or is this another of those "special" US things? Like the winners of the Superbowl are "World Champions" and in baseball it is the World Series despite in one case no non-US team can participate and in the other they let the odd Canadian team in IIRC.

Cheers

BHR

[Paul Wilson]

I think Beaver Driver needs to look a bit more carefully at what the EU actually is. It is in fact remarkably similar to the United States. Some interesting points --

When the Declaration of Independance was signed and for many years afterwards the US did not have a common currency.

The EU has the powers to, and regularly does, pass and enforce laws that take precedance over national laws and regulations.

Individual US states can and do pass laws that are contradictory to the next one over. e.g. most US states do not have the death penalty or do not enforce it.

Kings and Queens are an irrelevance, they are figure heads and have no, or only theoretical powers.

There is free movement of residency and employment in the US.

There is free movement of residency and employment in the EU.

Each US state has their own flag.

Each EU state has their own flag.

When you move to a new state in the US you need to go to the local DMV to get a new driving licence.

When you move to a new state in the EU you need to send in your old licence for a new local one.

Car insurance in the US is valid in all US states.

Car insurance in the EU is valid in all EU states(sometimes third party only)

Each US state has thier own army/navy/and or airforce which is under the control of the locally elected head of state (Govenor)

Each EU state has their own army/navy/and or airforce which is under the control of the locally elected head of state (Prime Minister usually)

Every few years the residents of each state select a number of representatives to go to a Parliment and pass laws that bind them and thier locally elected Governments (both EU and US)

The EU has a judicial system that can, and does, overrule judgements made by individual states' judges. (eg European Court of Human Rights)

The US has a judicial system that can, and does, overrule judgements made by individual states' judges. (eg The Federal Supreme Court)

More to the point if any group chooses to give its right to negotiate to a body to do so collectively that should be their right, whether it is the EU or, for example, the Commonwealth. The only proviso should be that once an agreement is reached it is binding on all parties. You cannot give away your rights then decide the result of the negotiations does not suit you.

[Diesel8]

Bill,

I work for an LCC in the US, so really cannot say I am that concerned, but I also realize, that Western countries enjoy a higher pay scale than former eastern bloc countries do. If for eg. CSA is allowed to run rampant through the EU, what do you think it will do to your wages.

Apparently, the latest push comes from BA. Why is the access to US markets so important, because there perhaps money to be made? There is also a lot of money to be made out of LHR, yet only two US carriers are allowed access, something that open skies will not be able to change, because of slot constraints.

US has the highest amount of passengers and there really are not that many US carriers that is wanting to set up shop in EU land. I think Rod is foaming at the mouth, thinking about setting up shop here, just like Richard Branson is. Not sure how much VE pays, but if VA is any indication, he will pay very low wages.

Now, if you also pushed for the acceptance of FAA licenses as complying with JAR, then perhaps we could talk, but from reading these boards an others, it becomes apparent that JAR to FAA is relatively painless, whereas the other way is an absolute nightmare. One could even go so far, as to call that protectionism.

Then of course, we have the fact, that there are not that many americans flying for EU carriers, while plenty of eu nationals here. I think it would be much easier for a frenchman to get hired at AA than an american getting hired by AirFrance.

I could go on, with why I think it is a bad idea for us, but I think you get the point. Open skies, in my eyes, would be great for EU, but would not do much for the US.

[Rosbif]

And even less for Canadians, who are always expected to rejoice at being left the "crumbs " off the US's plate.

[akerosid]

Open Skies talks were to take place today (Tues, Feb 17) between the two sides; haven't heard any outcome so far. If talks extend into a second or third day, it could be a positive move, i.e. that something solid is going to emerge.

The Americans are hoping that some progress can be made with the small number of existing EU countries which haven't already achieved Open Skies with the US (notwithstanding the EU Court ruling). These include the UK, Greece, Ireland and one other, which escapes me right now. This "early harvest" approach could result in a deal with one or more of these countries, while leaving more complicated issues to be dealt with.

As for the US benefiting less than Europe, I'd disagree. The US has always been a leading driver in this process. If there is open skies, there'll be greater competition, therefore cheaper access to the US for European tourists and to the EU for US exports. Sure, ALL carriers (not just US ones) will have to smarten up, but the overall effect for both economies will be positive. I think US carriers would welcome greater access. Fewer restrictions means greater opportunities.

[answer=42]

From Financial Times (http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1075982507981&p=1012571727263) on February 12 (subscription required):
'The leading European airlines believe that the US is offering to accept the change sought by Brussels to a European Union nationality clause for EU airlines to replace the present national identities, in exchange for agreeing to the US model of so-called "open skies" being introduced across Europe.
This would fall far short of the "open aviation area" that the Commission has been mandated to seek by EU member states, and specifically it would still leave the US domestic aviation market completely protected from foreign competition.'

Last December, after the previous round of negotiations, the Association of European Airlines (http://www.aea.be) wrote:
'AEA members are particularly pleased with the fact that both sides have concluded that amending current bilateral Open Skies agreements is not a practical option, and that they have decided to address outstanding issues in the context of an Open Aviation agreement.'

Maybe I'm missing something but I haven't found any reference to the negotiations on the (US) Air Transport Association (http://www.airlines.org/) website or on either the US Transportation or Trade departmental websites.

aeroskid - your post seems to indicate knowledge of the US negotiating position. Is there a source you can quote?

The EU airline reaction to the US 'early harvest' position would be that the US would then have no further incentive for liberalisation.

[answer=42]

The Financial Times (http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1077690843538&p=1012571727263) ran an article (free access) yesterday based on an interview with ALPA's President:

'The largest US pilots' union has dismissed European Union demands for greater access to the US market as a "red herring" aimed at extracting concessions from the US in negotiations on liberalising the transatlantic aviation market.

"I can see nothing but downside from additional competition," said Mr Woerth. "[though]... Consumers may benefit"

"We are a little worried about things being established that provide replacement workers, or US carriers hiring out . . .pretty cheap labour." '

Hope this is interesting.

[BillHicksRules]

Answer,

"I can see nothing but downside from additional competition," said Mr Woerth. "[though]... Consumers may benefit"

I think this is the quote of the topic. It says it all. The US is afraid of competition because they know they are not geared up to compete. It is protectionism of the most obvious kind and is the sort of thing we have come to expect under the Bush Administration.

Diesel,

Good post mate but your last paragraph was what I wanted to hear about. I would like to hear why you think it would be a bad idea.

Cheers

BHR

[Wino]

BHR,

Duane WOrthe is ANYTHING but a Bush supporter, and Bush is anything but a friend of ALPA.

Bush is pushing for liberalization of the market because it will allow him to hammer the US unions.

It is the unions (and their democratic supporters) that are opposed to this liberalization.

To the republicans, ALPA is the great satan of all unions.

Slightly different political landscape over hear mate.

Cheers
Wino

[BillHicksRules]

Wino,

I will bow to your superior knowledge in this case. I was simply calling it as I saw it as a Brit in Britland.

Cheers

BHR

[lamina]

Special report: public services
Darling rejects US open skies plan

Andrew Clark
Wednesday March 3, 2004
The Guardian

Transport secretary Alistair Darling has told his counterpart in Washington that America's latest proposals to create transatlantic "open skies" for airlines are unfair and would damage the interests of British carriers.

On a visit to the US capital, Mr Darling stepped into negotiations over liberalisation of the aviation industry which have been conducted to date by the European commission.

He met the US transportation secretary, Norman Mineta, to object to plans that would let American airlines fly freely within Europe while continuing to prevent European carriers from operating domestic flights in the US.

A spokesman for Mr Darling said: "What's on the table at the moment is not something we can accept."

Negotiations towards "open skies" have been under way between Brussels and Washington since last June. They followed a decision by the European court that Britain was acting illegally in only allowing four airlines to fly on lucrative routes between Heathrow and the US.

The European transport commissioner, Loyola de Palacio, has been arguing for complete liberalisation of the skies on both sides of the Atlantic, allowing any airline to fly anywhere.

However, the US has so far refused to hand over "cabotage" rights, which would allow European airlines to pick up passengers for flights between cities within America.

The Bush administration is thought to be keen to appear tough with foreign businesses during an election year. It has so far refused to raise the limit of foreign shareholdings in US airlines beyond 49%.

British Airways' chief executive Rod Eddington last month attacked the US proposals as "essentially unbalanced". He demanded an end to the "Fly America" policy, which requires all US government officials to fly on home-owned carriers. He called for relaxation of rules covering the leasing of aircraft and crew by one airline to another.

Mr Darling has also met the US homeland security chief, Tom Ridge, to discuss terrorist threats which have caused the cancellation of a succession of BA flights.

He will report back to his European colleagues at a meeting of transport ministers next Tuesday, where he is likely to express reservations about the Charleroi ruling, which concluded that Ryanair was benefiting from illegal state aid.

[dusk2dawn]

EU Transport Council to discuss progress in talks with US
ATW, Monday March 08, 2004

The EU Transport Council tomorrow will discuss the progress the European Commission has made in its negotiations with the US on achieving a transatlantic Open Aviation Area.

During the third round of talks in Washington last month, US authorities expressed their desire to reach an interim deal before summer. "Given that both sides agree on [only] a limited list of items, such timing is optimistic," an insider told ATWOnline. He added that despite the limited scope of agreement, "the US side has become more concrete and is willing to accommodate some of the [EC's] requests."

Reportedly, the US has proposed to permit an EU carrier to operate to and from the US from any international point provided the route also includes a destination within the EU. As a consequence, the US would allow all mergers between EU airlines without restricting their access to bilateral transatlantic services--which is essential for the nearing Air France acquisition of KLM. In return, the US wants unlimited fifth freedom for US airlines within and among EU nations.

The US continues to oppose cabotage, however, while the prevailing view in the EU is that fifth freedom rights in the EU are equivalent to cabotage in the US. Even were US negotiators to approve cabotage, it would take an act of Congress to change US law.

The US also proposed unlimited capacity for all US and EU carriers over the Atlantic and no restrictions would exist on routes or access points, with no carve-out on London Heathrow or Gatwick. Charter airlines would enjoy at least the same rights as scheduled carriers and all-cargo operators would benefit from worldwide seventh freedom rights.

On a visit to Washington last week, UK Transport Secretary Alistair Darling told US Transportation Secretary Norman Mineta that the latest US proposals are unfair and would damage the interests of British carriers, The Guardian reported. "What's on the table at the moment is not something we can accept," a spokesperson for Darling said. AEA also has voiced concern "whether the US proposal for interim agreement provides for added value for the European airline industry."

According to information obtained by ATWOnline, the EC has threatened to terminate existing fifth freedom rights if the US blocks cabotage. The US position has been that the EC does not have the authority to renounce treaties between sovereign nations.--Cathy Buyck




EU Transport Council tells EC to keep negotiating with US
ATW, Thursday March 11, 2004

EU Transport Council asked the European Commission to continue its negotiations with the US aimed at achieving a transatlantic Open Aviation Area and said it will review the situation during its June 10-11 meeting. The call to pursue a fourth round of talks, scheduled for the week of March 29 in Brussels, is a de facto rejection of the latest US proposal for an interim deal that would put the transatlantic bilaterals into conformity with EU law (ATWOnline, March 8). The US had offered more flexibility of ownership restrictions, which at present limit the participation of voting stock of US airlines held by foreign capital to 25%. "The progress, while encouraging, falls short of the objectives of the mandate given by the Council," the Commission said. As expected, the EC also asked the Council for a mandate to negotiate with the countries of the western Balkans as well as Morocco, Jordan and Lebanon. No firm decision was made by the Transport Ministers but the issue is under examination.--CB

[dusk2dawn]

Flight Intl. 13-19 APRIL 2004:

AIR TRANSPORT JUSTIN WASTNAGE / BRUSSELS

USA warns Europe over Open Skies

EC calls for fuller access to US domestic market rebuffed

The USA will probably never fully liberalise its aviation market and Europe should stop holding out for a better deal in transatlantic Open Skies talks, says US Secretary of Transportation Norman Mineta.

Mineta used a joint meeting of the European Aviation Club and US Chamber of Commerce at the European Parliament in Brussels last week to counter European calls for access to the US domestic aviation market.

Mineta says the European Commission negotiating team has presented several "innovative" versions of the same request for improved market access for European carriers. Mineta's team had to reject each one, he says, as every version "still looked like cabotage". One senior US official involved in the talks says the USA is angry that Europe is holding out for "something that was never on the table".

Meanwhile, Karan Bhatia, US Department of Transportation (DoT) assistant secretary for aviation and international affairs, says: "The [US] proposal should be recognised for what it is: a great deal".

Changes to US laws banning foreign carriers from flying US domestic routes are strongly opposed by labour organisations and, as such, existing rules will be almost impossible to change before the forthcoming elections in the USA, says Mineta (Flight International, 23-29 March). "Not only this November, but one, two, three years from now and perhaps forever, Congress's feelings will be no different," Mineta says. The DoT is urging Europe to accept early adoption of the US proposal or risk derailing the negotiations.

Mineta says the EC "must seize the moment or else risk losing the window of opportunity for a long and unforeseeable time".

The European Parliament's transport committee has already opposed the US proposal, under which the USA would permit carriers to fly from any EU point to any US destination and would raise the foreign control limit for US carriers to 49% from 25%.

Europeans fear that accepting a quick "mini deal" risks giving the USA the prize of London Heathrow airport access, while delivering little progress on its aims to loosen ownership, cabotage and state aid rules in the USA, says Jacqueline Foster, a member of the European Parliament specialising in aviation legislation.

[dusk2dawn]

The Independent, 09 May 2004 (http://news.independent.co.uk/business/news/story.jsp?story=519386)

[dusk2dawn]

Aviation Daily, 11MAY04:

De Palacio Issues Ultimatum For U.S.-EU Negotiations (http://www.aviationnow.com/avnow/news/channel_aviationdaily_story.jsp?id=news/pal05114.xml)

[Ignition Override]

The US Congress has already allowed more foreign cargo aircraft access to Anchorage, AK.

As Wino correctly stated, the GOP will do almost anything possible, in order to hammer US unions-even cut off more than its nose, just to spite its face.

Never mind US jobs-the government must also be interested in major long-term loss of CRAF capability-the Civil Reserve Air Fleet. Such emergency airlift goes far beyond that which Air Force C-130s, C-141s, C-5s and C-17s and relatively few Navy/Marine planes can carry. :ouch:

[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! :ok:

[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 :D (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 (http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1084907845159&p=1012571727221) 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 (http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1059480559368&p=1012571727221) (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 (http://www.atwonline.com/indexfull.cfm?newsid=4209) 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 (http://www.atwonline.com/indexfull.cfm?newsid=4242)

[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/default.asp?SID=E659F85AF73C4E9895B9F93716F3F259&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.

[Carnage Matey!]

I think you're right, but equally if anyone thinks that the UK/EU are going to permit Uncle Sams state-subsidised hordes to descend on LHR and wipe out the home market of the UKs longhaul carriers in return for the right to fly unrestricted , unprofitable point-to-point routes to the US then they are just as mistaken.

[hobie]

its such a relieve, despite some of the previous posts, to understand that "Shannon and the Irish Goverment" are not the "one and only" ingredient threatening to bring these negotiations to a stumbling halt!!! :p :p :p

[akerosid]

Despite Hobie's inexplicable ;) doubts about the gravity of the Shannon stop, I'll pass over that and focus on what baffles me about the current position.

Originally, we started with the idea that any airline from either the US or EU could fly transatlantic between any two points. Now I know LHR is a big issue, but I don't think cabotage is on the table; indeed, I'm surprised (a) that the Americans have granted as much as they've granted and (b) worse still, that the Europeans should even want to fly domestically in the US. I mean, the fight against low costs is not much different in the US than it is here; the big airlines are being hit left, right and centre by low cost carriers like Air Tran, Spirit, JetBlue and that lot from Texas. If European carriers were to be thick enough to wade through all the formalities of getting into the US, they'd be setting up a full service airline, marketing to get their names better known and then, the low cost carriers, which can move a lot faster than the big boys, would cut the two feet from under them. Why would they possibly WANT to do this? Wouldn't they be far better advised to focus on the fight they're currently involved in, rather than opening up a new front?

So, this raises a question about what the hell Loyola and the Brussels lot are playing at? Yes, US carriers want more access to LHR; yes, it's slot restricted, but if they want this, why not trade like for like; give bmi its coveted routes, allow access to more US cities from LHR (such as those like DFW, CVG, ATL and IAH currently only served from LGW) and focus on transatlantic flying. The second biggest tragedy of this silliness is that the chance of building the world's biggest open aviation area is being impeded by something that even if won, may never be used. The biggest tragedy would be that some airline might actually use and lose thousands of jobs and have to shut down as a result. So, stop arsing around and get the deal done.

[Flip Flop Flyer]

So if I understand you correctly, and since the EU should be treated as one big "domestic" market, then N-reg. UPS and FedEx aircraft will be barred from performing the sort of flying that they currently do? Don't have a problem with that ....

[The Sandman]

So the logical answer is to cancel all outstanding intra-EU traffic rights enjoyed by any US entity (ie UPS, FEDEX, etc...).

Wonder whether the EU powers-that-be have the cojones for that??

[Diesel8]

Been absent for a while, but good thread.

A few points to ponder:

How many major airports in the US are served by BA? How many major airports are served in the UK by a single US airline?

I think BA serves 11 airports in the US, where as I think AA serves three or four in the UK, with UAL even less. VA probably serves more destinations in the US than any US carrier does in UK.

There is one airport in the UK that all US airlines wish to go to, LHR. How about we restrict VA, BA and BMI to one major US airport!

The RPK's generated by less people in the US is larger than more people in the EU. There is just more flying in the US than anywhere in the world.

The US airlines are not really the ones psuhing for open skies, they have litle to gain, call it protectionism if that makes you feel better, but it is just the way it is. We do not prohibit EU airlines from serving the US, we just wish to get something in return and there is not much being offered, since the US have the largest market. Someone said that BA should not be forced to give up slots at LHR, well, cannot have your cake and eat it too, but that is what it appears to be the EU wants.

Yes, some airlines were subsidized as a result of 9/11. Most EU airlines, through the times, have been state subsidized because of poor economics, a few still are, so lets just call that an even draw. Heck, BA certainly gained from being state owned.

So I ask all my friends from across the pond: "How would open skies be a benefit to US airlines and perhaps more importantly, why are the EU airlines so keen on geting it?

[Daysleeper]

There is one airport in the UK that all US airlines wish to go to, LHR. How about we restrict VA, BA and BMI to one major US airport!

Again missing the point that the EU is a single market. How many EU cities do Delta/ United et al fly to?

[Mick Stability]

Perhaps no-one in America knows that there is anywhere else in the UK but London. Ya'll know, Buckingham Castle in Londonshire?

[Young Paul]

Diesel8 - your post misses the point in all sorts of ways. Firstly, bmi have the slots at LHR but currently can't fly to anywhere in the US from there - the right for them to fly to one airport would be an improvement.

Next, to the best of my knowledge, there are no restrictions on US carriers operating to anywhere in the UK with the exception of LHR - so if they want to fly to Bristol, Blackpool or Biggin Hill, then they can.

Next, in trade terms, we aren't comparing UK with US, we are comparing EU with US. And whilst AA may only fly to three or four destinations in the UK, they fly to considerably more than that in the EU.

Next, you can't call it a draw when there are definite losers. There are private companies in Europe who have never had subsidies, and never sought them. You are saying that the huge US airlines - privately owned! - ought to be compared to the inefficient products of bureaucracy that are the state airlines in the EU? Privately owned airlines in the EU either survive or disappear - and there have been more than a few that have tried to get into the US market that haven't managed it. bmi is only the latest. Privately owned airlines in the US get state subsidies when they can't turn a profit - and if that isn't enough, then they stop paying their creditors for as long as it takes to sort out their finances again.

In the real world of finance, rather than the protected world that is the US (and secondarily, the restricted world that is Bermuda II), UA would have had to sell assets to survive bankruptcy - in a much more compact shape than before - and some of its best assets are its slots at LHR, which held their value. That would have allowed airlines who thought they could make a go of it to buy them and do something with them. In the real, demand-led world of economics, rather than the supply-led regime that exists at LHR and through Bermuda II, airlines would have to set fares to compete with each other - which would make access to LHR a lot less desirable, anyway - it is only because there is a restricted marketplace that the London-US routes are so lucrative - with business class fares typically 50% higher than comparable unrestricted routes elsewhere in Europe, and oddly enough, almost the same for the four airlines that operate on the routes (according to old British Midland press release).

[Diesel8]

First off, the thought that americans have no clue about EU land is getting a bit tiresome and secondly, I was born and raised over there.

Yes, Delta et al serves a decent amount of EU destinations. However, due to travel patterns, for every one destination a US carrier serves in europe, that corresponding country's carrier serves 2-4 in the US. Case in point, SAS serves three US destinations, where as no US carrier serves Copnhagen. Not because of lack of access, at least that I know of, but lack of passengers. I know, that UAL, a member of the star alliance, wanted to serve CPH from Dulles, but apparently that was opposed strongly by SAS. SAS of course being a partnership
of Denmark, Norway and Sweden.

The point here being, that while many US carriers do have atlantic flights, it is not the lifeblood of the airlines, the domestic US market is more important.

LHR is not the only airport in the UK, but I think we can agree, that it is the most desireable in terms of getting access. As we have seen, it does command a fare premium. So, one could say, that not getting meaningful access, would indeed be a advantage to BA. Not only on the atlantic portion, but even domestically.

Carnage says:"I think you're right, but equally if anyone thinks that the UK/EU are going to permit Uncle Sams state-subsidised hordes to descend on LHR and wipe out the home market of the UKs longhaul carriers in return for the right to fly unrestricted , unprofitable point-to-point routes to the US then they are just as mistaken."

As far as state subsidies goes, I am curious what US airlines we are talking about and whether we are talking post 9/11? The US is not in the habit of subsidizing airlines, owning them or having shares in them. The list of airlines in the EU that recently have been or still is subsidized, owned or in part held by the repsective goverment is rather long. So, while I do not think UAL should be granted a loan guarantee, I also feel that vis a vis EU airlines, that it is a moot point and in the case of the vast majority of US carriers, it was a direct result of 9/11, not an ongoing thing.

So my question is again, why should the US airlines push for open skies? What advantages would they gain? It is notable, that the big push is coming from EU airlines, not the US ones, so something tells me, that companies like BA sees an advantage, where as DAL does not.

[Young Paul]

BA wants the status quo. That is why they are pushing so hard for a "comprehensive" agreement - meaning complete, meaning unachievable - to kick the ball out of touch for as long as possible. This means they can continue to use their restricted access to LHR to keep fares high. Incidentally, suppose there was much more access to LHR - what do you think would happen? My guess is that airlines would stop making money on business routes to the US, and the number of connections at LHR (which is what make it so attractive to business travellers in the first place - let's face it, it has few other redeeming features!) would fall.

With regard to UA, who do you think is the dominant airline in Star? I'll give you a clue, it's not SAS.

"However, due to travel patterns, for every one destination a US carrier serves in europe, that corresponding country's carrier serves 2-4 in the US. Case in point, SAS serves three US destinations, where as no US carrier serves Copnhagen"

These two sentences are meaningless. Do you mean, "If a US airline flies to city XXX, then the flag carrier that is based in city XXX will fly to 2-4 US cities"? I think that's kind of what you mean. If so, this says nothing about the level-ness of playing fields or otherwise. I mean, it wouldn't surprise me if the reverse applies as well - "If a EU airline flies to city YYY in the US, then a US airline will fly from there to 2-4 EU cities."

I know that people in the States have got used to justifying anything by reference to 9/11 - but why should US airlines have received subsidies as a result? Before you answer that, bear in mind that European airlines generally don't receive subsidies now - certainly nothing like the billions of dollars that were thrown at US carriers in the last couple of years - and didn't as a result of 9/11. There are countries who have lost their flag carriers since then whilst all the dinosaur US carriers - not flag carriers, just businesses exploiting their dominant market position and fortuitous location - are still lumbering along.

"Lack of passengers" - low cost airlines make their own passengers! Or do you think that we - or the federal government - should pay US airlines to operate on more routes that they can't make profitable?

[Diesel8]

"The French state injected about 20 billion francs (3.05 billion euros, 3.54 billion dollars) in Air France subsidies between 1994 and 1997."

"The recent reported statement by the chairman of Alitalia claiming that government help is needed to prevent the bankruptcy of the Italian flag carrier." (Again??)

"1996, under the eagle eye of Commissioner Kinnock, Iberia received state aid of £460 million and that was approved under the market economy investor principle. We shall see how that works out. In other words, the flag carriers of six European Union member states out of 15 have between them received £6.364 billion of state aid over the past five years. Forty per cent. of EU states have received that grotesquely large amount of state subsidy--and some, such as Air France and Iberia, have repeatedly come back for more."

"On Wednesday, Ms de Palacio announced a limited package that would allow European governments to help airlines, after the 11 September attacks pushed the crisis-bound industry into turmoil."

Should I go on?

Yes, that sentence came out a bit backwards. What I meant by travelpatterns, is that a lot more europeans travel to the states than vice versa. People in the US seem to fly more domestically. While that is certainly no ones fault, that is just how it is and as such, I cannot see why open skies would be advantageous to US airlines, just like opening LHR would be disadvantageous to BA.

SAS, can because of their network, profitably serve the US, but only by pulling people from all over Scandiland and to a limited extent EU. But, in the reverse, no US carrier serves CPH, because there simply is not enough americans going there. Sure, a american carrier could, after open skies, set up the same network, but I doubt it will happen, since US carriers are more concerned about domestic ops.

(In case of Star, from what I can see, Lufty and UAL are the big dogs)

As much as this pain you, there are a lot more people wanting to visit the states, than visit EU. Europeans tend to travel on EU airlines and to a limited extent, prefer their own national brand.

Again I must ask, because I never get an answer, why should US airlines push for open skies? The fact that I canot seem to get a response to that, tells me, that EU airlines has lots to gain and US most to lose.

[Wino]

Young paul

Tell me European airlines of comperable size to PANAM, EASTERN, MIDWAY, TWA and BRANIFF that are not in existance in a similar time frame?

European airlines are FAR more subsidized than US airlines that have to pay health insurance and retirement costs for their employees far above what a European airline would have to pay because of the Nanny state.

Then of course you have the direct cash gifts to European airlines that DWARFS anything that goes on in America

Deisel 8, You forgot Olympic airways. Just got another round of grants.


Cheers
Wino

[Carnage Matey!]

that have to pay health insurance and retirement costs for their employees far above what a European airline would have to pay because of the Nanny state.

I think you'll find my employer pays an awful lot of pension and National Insurance contributions for me, not to mention private healthcare. Wouldn't want to live on the $100 per week state pension now.

Diesel8s quotations on EU subsidies are rather disingenuous. AF had susbsisdies ending in 1997. Iberia got the cash in 1996. Alitalia are banging the begging bowl but the Italian government has repeatedly said no. Olympic haven't had any cash for a long while. The quote about 40% of EU states paying subsidies is undated.

What is clear is that since 2001 the US carriers have received billions of dollars in direct subsidy from the ATSB, plus free security enhancements (flight deck doors for example), Chapter 11 protection and still they appeal for assistance because of the high price of oil. Since 2001 AFAIK no European airline has received any state subsidy. Somebody mentioned that more Europeans visit the USA than vice versa and they prefer their own national carriers. Well if thats the case then why are US government permitting the subsidies to be spent on international routes? By all means take the cash if thats what it takes to maintain an essential domestic air network, but using it to compete with unsubsidised airlines on your loss making international routes is nothing other than pure protectionism.

[Young Paul]

Second that about the cost of employment in the EU. Do you know how much the "nanny state" costs??!! I do payroll for 2 people, and the cost of employing them is as much as a third person.

[redtail]

Are there any comparisons showing that the EU airlines are competitive with the US airlines as far as operating costs are concerned? Would the inter-US market be profitable for foreign carriers?

[akerosid]

I'm sure there are comparisons available, but I think the key issue is that European carriers have enough on their plate trying to fend off the likes of FR, EZY, etc., without opening up a new front. It's not the "majors" they need to worry about; it's the likes of Southwest, Jetblue, Airtran, etc, which are not only a lot more efficient, but can move a lot faster. So, the danger is that a European carrier could go to all the trouble of setting themselves up, marketing etc, only for a low cost like Southwest to come in and make mincemeat of them. And where would they base themselves? A major city, to which they fly internationally, which isn't already a hub of a major carrier or which isn't coveted by a low cost carrier. Let me know if you find one!!

To cut to the chase; winning this concession would only be equalled as a disaster by some European carrier actually using it.

[akerosid]

I was just wondering if anyone had heard any progress on this; is it completely impossible that a deal might be done in time for this weekend's summit in Ireland?

I read this week (can't remember if it was Airwise or ATW news) that there was a dispute between various EU members (possibly along the lines of the EU constitution talks this weekend), where the Germans and others were objecting to having to wait for the LHR issue to be sorted out.

What's most frustrating is that everyone knew that the LHR issue would be a fraught and incredibly difficult one to deal with; I still don't understand why cabotage has to be brought into it; a third UK airline wants to fly to the US and more US airlines want to fly to LHR; can't they just agree two allow one from each country and a progressive growth in the number of cities served and frequencies. This could go on for years otherwise, holding everyone else up.

[hobie]

quote

"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."

and

"I was just wondering if anyone had heard any progress on this; is it completely impossible that a deal might be done in time for this weekend's summit in Ireland? "

don't know if this is a good sign or a bad sign for SNN but guess where the Summit meeting between President Bush and the EU leaders is to be held? ...... yes!!!! ... Shannon !!!!

[akerosid]

It is a cruel (but much deserved - and even more enjoyable ) irony that the deal, if it is done, to end the SNN stop could be signed a mere 8 miles from Shannon itself!

Unfortunately, there's been very little news, apart from reports of a split between various European countries. It seems absurd that LHR is still the sticking point and that it's holding everyone else up. My hope, however forlorn, is that the EU and US are working feverishly together to cobble a deal together in time for the Summit. At the very least, I hope a mini deal can be done, excluding LHR.

It is a cruel (but much deserved - and even more enjoyable) irony that the deal, if it is done, to end the SNN stop could be signed a mere 8 miles from Shannon itself ! I didn\'t miss that irony!

Unfortunately, there\'s been very little news, apart from reports of a split between various European countries. It seems absurd that LHR is still the sticking point and that it\'s holding everyone else up. My hope, however forlorn, is that the EU and US are working feverishly together to cobble a deal together in time for the Summit. At the very least, I hope a mini deal can be done, excluding LHR.

[hobie]

akerosid's view from Jersey .......

quote ....

"It is a cruel (but much deserved - and even more enjoyable ) irony that the deal, if it is done, to end the SNN stop could be signed a mere 8 miles from Shannon itself!"

strong words "akers" ...... for all of us who have valued Shannon over the years, lets hope your cruel dreams do not come true

:ok: :ok: :ok:

[akerosid]

I'm sorry; reading it back, it was a bit cruel, BUT what I was trying to get across was that for years, Dublin wanted a break, but at every step, there was bleating, gnashing of teeth and of course, thinly veiled threats to the invertebrate holders of the transport portfolio of electoral disaster if the government didn't say "how high" when the Shannon lobby shouted "jump". I really have a lot less respect for the successive governments and their complete lack of vision than the SNN lobby which, however ruthless they were, were protecting what they saw as their patch.

Dublin never wanted to destroy SNN and despite what I said, neither do I. I want to see SNN grow and develop, but the way to do that is not - and never was - to hold Dublin back; it was always more about what DUB had than what SNN needed, more dog in the manger than anything else and it's for that reason and aimed more towards the more inflexible (of which there were very many) SIGNAL type lobbyist, that my comment was aimed. I'm sorry if I caused offence, but if there's one thing that really bothered me about the SNN issue, it was the casual attitude with which growth opportunities were squandered.

(Incidentally, I am Irish, from Dublin originally and still, obviously, very much in touch with the old country!)

Incidentally, just picked this up from RTE\'s Aertel:

Negotiations for an \'open skies\'
airline pact with the US will not be
completed in time for the EU-US summit
in Ireland this weekend.

This is according to EU Transport
Commissioner Loyola de Palacio.

In the words of Capt. Blackadder, "I think the phrase rhymes with Clucking Bell".
:mad: :mad: :mad:

[dusk2dawn]

Summer is over.... but then there is the US election so maybe not...

Anyway, why did this tread end up in A, A & R ? Sure it has to do with routes - but it is also politics and for many of us, jobs ! Back to R & N, please.

I picked this off Association European Airlines (http://www.aea.be/aeawebsite/datafiles/wsj0804.htm) site. AEA in turn seems to have it from Wall Street Journal Europe.


...And the Stalled `Open Skies' One.

After seven inconclusive rounds of talks about a new international "Open Skies" aviation agreement, frustrated EU and U.S. negotiators have been blaming each other in the last few weeks for the perceived failure to achieve a breakthrough. America claims that the Europeans can't move because of unresolved quarrels over jurisdiction between the Commission and EU members. The Europeans accuse the U.S. of not having made sufficient concessions to be able to go beyond a traditional aviation agreement.

Both sides need to realize they have a common interest here. In the past, all governments regulated all aspects of commercial airline activity, from routes to prices. But the Europeans now realize the time has come to rethink its approach. The U.S., in the meantime, has pushed an "Open Skies" doctrine that seeks to deregulate access to airline markets. Open Skies agreements enhance competition among airlines; that's good for consumers. For its part, the EU wants not only to deregulate market access but agree on other matters -- such as state aid or competition policy -- that affect airlines.

Certain aspects of international aviation today are absurd. The EU has its Competition Rules and the U.S. its Sherman Act. Both are intended to stimulate market competition, but each arrives at a different conclusion. So the U.S. gave the green light to innovative strategic airline alliances with only minor undertakings for the applicants, whereas the Commission felt obliged to impose inhibiting conditions on the very same alliances between the very same airlines on the very same routes. The Europeans felt that only an entirely new regulatory framework such as Open Skies could entice both the EU and the U.S. to gradually make their policies meet.

And meet they must. After 9/11, a new comprehensive regulatory framework is urgently needed that goes further than just market access. September 11 sparked the international war on terrorism. The vulnerability of civil aviation called for far-reaching and sophisticated security measures that provide the greatest possible degree of protection, whilst at the same time attempting to minimize any adverse effects on ordinary citizens, and hassle for the traveling public. We are still far from having achieved these objectives. Common, internationally-agreed standards of security are still absent. And given the declared intention of insurers to terminate coverage against bio-chemical terror attacks, agreement is needed in order not to leave civil aviation without risk protection.

But it doesn't stop there. To what extent, for example, should anti-terror measures be financed by governments or by passengers? As long as there is no consensus, competition will remain distorted and governments will have an endless number of excuses to go on bailing weak airlines out. We badly need an international agreement on state aid. Granted at whatever level -- regionally, nationally or internationally -- state aid either protracts the illness or prevents the market from finding a cure.

It's ironic that the two champions of airline liberalization -- the United States and Europe -- should fail to grasp the opportunity to mend such obvious deficiencies. Since 1978, the U.S. has been in the forefront of national and international aviation liberalization. The Europeans followed suit and liberalized their internal airline market in the 1980s. Both sides have the valuable experience needed to close the ranks and come up with a joint framework that fits the post-9/11 world.

Such an agreement would not only be security-related -- as important as that in itself is. It would be a response to fresh global challenges. At a time of de-industrialization in Europe, and emerging economic powers in Asia, traffic patterns will dramatically change. Airlines will need greater opportunities to operate worldwide. They need to gain access to international finance markets, which they are currently denied by bilateral air-service agreements that restrict foreign ownership of national carriers, to enable them to become truly global players. Future success will depend on an international regulatory framework that provides sufficient stability for growth, irrespective of extraordinary events.

The EU should not fall into the trap and publicly drag its internal EU institutional quarrel out much longer. The Commission is convinced that bilateral aviation agreements involving member states violate the principle of non-discrimination, because they don't offer all carriers equal market access. The European Court of Justice recently sided with the Commission, giving it broad power over aviation. But member states are questioning how far its mandate extends. The U.S. has its own domestic difficulties in reaching a new international agreement ahead of national elections.

And yet, despite these domestic woes on both sides of the Atlantic, the fact remains that the world has changed. Bilateral market access agreements are showing their age. Europe and the U.S. are economic and political superpowers. By assuming leadership they can create a template other nations can follow, so that, eventually, a new market-oriented framework will emerge which allows passengers to benefit from undistorted global competition within the aviation industry.

---

Mr. Schulte-Strathaus is secretary general of the Association of European Airlines.

874 words
19 August 2004
The Wall Street Journal Europe

[akerosid]

There is blame to go around and personally, I put most of it on the EU side. They had the chance to go for open skies and threw it away, because they wanted something that (a) wasn't - and won't ever be - on the table and (b) even if it could be gained, would it ever be used? Would any EU carrier actually want to set up in the US - and be cut to pieces. The sad reality is that the main proponents of the drive for cabotage is the UK, driven on in turn by the UK carriers, which know that "no news is good news" as far as their position in LHR is concerned.

Having been in correspondence with the EU Commissioner's office, I was told that Regulation 847/04 relates to the right of EU states to enter into direct negotiations with the US (or indeed any other state) and (to paraphrase), it says that where community negotiations are ongoing, they must await the approval of the EU to enter into and conclude negotiations.

So, basically, having messed up their own negotiations, the EU is also messing things up for others too.

Does anyone know if any new EU/US negotiations are scheduled this side of the November election? (Somehow I doubt it).

[dusk2dawn]

From the DG 7 homepage. (http://europa.eu.int/rapid/pressReleasesAction.do?reference=IP/04/1478&format=HTML&aged=0&language=EN&guiLanguage=en)

Brussels, 14 December 2004

The Commission defends the “Open Skies” rulings

The European Commission today decided to send reasoned opinions to four Member States following the measures it took in July to enforce the Court of Justice’s “Open Skies” rulings (IP/04/967). Despite the Court’s judgments of 5 November 2002,[1] Finland, Germany, Italy and Portugal still have discriminatory bilateral international air transport agreements. By reserving transport rights for national carriers (“nationality clauses”), these agreements hinder freedom of competition for the provision of international air transport services between the European Union and third countries to the detriment of the airline industry and users.

The Commission today decided to send reasoned opinions to four Member States for failure to comply with European law and to observe the EU's exclusive external competence with regard to certain aspects of air services agreements concluded by Member States with third countries.

Following the “Open Skies” judgments handed down by the Court on 5 November 2002, about 2000 agreements need to be brought into line with European law, in particular to abolish nationality clauses.

The Court’s judgments also mean that, given the EU's exclusive competence with regard to certain aspects of international air services, the Member States may no longer enter into international agreements themselves.

However, the Commission has found that the above four Member States have entered into new commitments with some of their partners outside the EU. By doing this, they are in breach of European law and in contravention of the internal market in aviation, in particular the principle of non-discrimination between European air carriers.

[dusk2dawn]

ATWOnline, Thursday February 24, 2005 :
AF CEO Spinetta urges phased approach on US-EU OAA (http://www.atwonline.com/indexfull.cfm?newsid=5022)

[akerosid]

I have to agree strongly with what M. Spinetta says; the whole cabotage thing has been a waste of time; had this not been brought into the equation, we might well have achieved a deal long before now. I've long suspected that this was brought into the mix by those who were opposed to a deal, solely on the basis that they knew it was something the Americans would never agree to.

There is apparently a new round of talks coming up in June (why wait so long; wouldn't now be an ideal time, so that airlines can take advantage of a good Summer season), so hopefully some sense can be achieved. Even if those countries (how many actually - just the UK?) insisting on cabotage could be left to one side, so that everyone can make some progress, it would be a move in the right direction.

[Tom the Tenor]

Akerosid, do you have a copy of the USA/Ireland biltateral?

Also, once the airports become independant from 1st May do you see the way open at all for a judicial type review of the fairness of the stopover in that Shannon will then have a competitive edge over all the other airports in trying to attract traffic on the North Atlantic market? Or am I just being fanciful and that treaties between one state and another are not open to court challenge?

Thanks.

[dusk2dawn]

I have available as follows:
Exchange of notes at Washington February 3, 1945, with text of agreement (http://mbjensen.bei.t-online.de/t-irl__1.htm) and
Agreement amending the agreement of February 3, 1945, as amended. (http://mbjensen.bei.t-online.de/t-irl__3.htm)

Sorry to say that I'm not up-to-date on the teaties anymore but I don't think that any newer agreement exists.

[Tom the Tenor]

Dusk2dawn, thank you so much for the link to the Ireland USA bilateral agreements 1945 & 1990. Reading the detail is very illuminating and provides much food for thought. Clearly, charters from Cork and Knock to America are exempt from the obstacle of having to stop at Shannon. As things stands this is the only way for Cork to ever hope for direct flights to America and my hope would be that we should aim for a series of "Scheduled charters" like Aer Lingus are doing between Dublin and Orlando, the only difference would be that a Cork bound flight will would not have to stopover at Shannon unlike the eastbound EI flight from Orlando.

[dusk2dawn]

The Shannon arrangement is regulated in Agreement on preinspection of aircraft passengers and crew at Shannon airport. Signed at Dublin June 25, 1986; entered into force June 25, 1986. It should be available at a US Embassy near you. TIAS number is 11379.
You never know - there might be some provisions you can use in Cork.

[akerosid]

The big obstacle to progress is, at present, Regulation 847/04, which acts to prevent EU member states negotiating or concluding individual bilateral agreements without the EU Commission's green light. As I understand it, negotiations between Ireland and the US have been under way, but these cannot be concluded because the EU will not allow Ireland to conclude a bilateral, even to correct the anti-competitive effects of the current position.

My question is this: to the extent that it is repugnant to EU Competition Law, can a regulation of the EU be regarded as not having effect; in the current case, the effect of Regulation 847/04 acts to protect a position where Ireland and Irish carriers are put at a competitive disadvantage vis-a-vis other countries, which have sane bilaterals in place. I wonder does EU Law provide for a position where the effect of enforcing a regulation actually puts the commission at risk of flouting EU (Competition, for example) law and if this is the case, could the Irish government take the view that to the extent that the regulation was repugnant to EU law, it didn't have any effect and consequently, the government could proceed to conclude its negotiations with the US.

This is particularly the case when, due to its insistence on cabotage, something which would not be of interest to most EU carriers (and certainly not the Irish ones), the EU is not acting in good faith and continuing to maintain the competitive disadvantage faced by Ireland longer than is necessary.

I think I'll put that one to the EU ...

[dusk2dawn]

Well, at last we have Regulation 847/04, which acts to prevent EU member states negotiating or concluding individual bilateral agreements. ;)

[neidin]

Great links. Well done. Tom I think the decision to scrap the Airbirdges due to cost overruns is a real downer on the USA airlines using ORK for USA flights. People in ORK need to make more noise on this. SNN will screw you everytime at present unless you fight real hard. John Smyth is burning up the miles to get you new flights and there should be more good news next week. But he is starting to fight with one hand tied behind his back.

[Tom the Tenor]

Yes, Neidin, you are of course correct. There is not enough pressure at all by Cork people on the airbridges issue. People fail to realise how strategic this matter is.

Regretably it appears Cork people are at best clueless on how the lack of airbridges will effect the outcome of the airport in the years ahead when it comes to any kind of US longhaul operation.

The sooner Mr Gantley, the Cork Airport Authority and the Dublin Airport Authority go before the Oireachtas Committe on transport the better. I hope Mr Gantley is put under pressure here and asked the right questions and that he is not out of his depth and that he can perform outstandingly for Cork Airport and not just well. The Dublin Airport authority need to dealt with very hard on this matter and Mr Gantley and Cork's new board need now to prove themselves and I am hoping they are up to it.

I am also concerned by the performance of the Cork politicians. Sure, they are organising the Transport Committee hearings and that is good but I feel they too should be leading here and making more noise putting the case about the airbridges in the public eye more often.

You know how it has been for the past six or seven years with little or no action on the proposed new Cork School of Music. It has been weak wills all around I regret to say and the irony of that is the rental costs of so many places to keep the different departments of the School of Music going in Cork would more than fund the building of the new School.

I fear we may be looking at similar situation at Cork Airport unless we get the airbridges. The story about two years, five years down the line etc - it would then never happen.

Popular talk has the over-run on the new terminal being approximately 40 million euro(!!??). However, a large engineering project is always kind of likely to overun somewhat. It is what you end up with when you have dealings with builders etc? But the marginal costs of the 3 airbridges is said to be 1.5 million euro. If this is the case all I can is - Come off the stage, Mr Gantley and Cork Airport Authority or put another 5h!t or get off the pot!

[akerosid]

Irish Times, 4th March

EU Commissioner travelling to Washington on 21-22 March;

The main obstacle now seems to be increase on ownership; Americans have already offered up to 49%. Can they reasonably be expected to offer more? Furthermore, how much does EU permit non-EU countries/bodies to own? This should, hopefully, be dealt with fairly quickly.

The EU's concession on cabotage is most important, but as welcome as it is, does mean that it has effectively wasted a year (actually two years, because it's too late now for any action in time for Summer 2005) on this. Not sure what is expected to be gained in March, but hopefully, we can achieve something in time for 2005.

It's obviously too early to get very excited, but I'd hope something can be done this year, even if not in time for this Summer. HOWEVER, what annoys me is that the EU has (as I understand it) exercised its power to stop the govt from concluding negotiations with the US, while at the same time it has been seeking something it now accepts is not a runner. Surely, as a matter of good faith, at least, it should now permit Ireland to readjust its bilateral to allow a change in the ratio of flights between DUB/SNN, as well as unlimited access to all other airports, ORK, KIR, NOC, etc.

[dusk2dawn]

Air transport: an ambitious external relations agenda

Two years after the “open skies” rulings confirming the EU's external competence with regard to certain aspects of international air services agreements,[1] the Commission is today presenting a strategic approach to develop the external aspect of the internal aviation market. The European Commission wishes to create a common airspace with neighbouring countries by 2010 and is therefore recommending that the Council authorise it to start negotiations aimed at ambitious air agreements with China and Russia without further ado. “International air traffic regulations are in need of modernising. By creating a single aviation market, the European Union has opened up new opportunities for airlines and passengers. Common markets have yet to be created between the European Union and third countries,” said Vice-President Jacques Barrot, adding, “Europe’s capacity to build new markets, in relationships of trust with its partners, will give air traffic worldwide a major boost.”

Read the full text: EU press release of Mar. 14, 2005 (http://europa.eu.int/rapid/pressReleasesAction.do?reference=IP/05/288&format=HTML&aged=0&language=EN&guiLanguage=en)

[akerosid]

I'm glad to see this development and I hope other countries will follow; the agreement with China will be particularly significant. Hopefully India and Canada will be next.

However, I don't think that the EU nations should give this authorisation to the EU without some concessions. The EU's stance on the EU/US negotiations has caused unnecessary delays and as I've mentioned, it's use of 847/04 while it was holding up negotiations with its demands has not been helpful. I'd like to see some negotiation on this; true, the US is the first nation with which the EU has held negotiatons as a single unit, but lessons need to be learned.

[akerosid]

The EU has written letters (yeah, that'll scare 'em) to seven individual countries, as well as warnings to others, all of them having signed individual bilaterals with the US. See report from Airwise, below:

The European Commission on Wednesday launched legal action against seven member countries to force them to scrap bilateral aviation pacts with the United States.

The EC has now taken action against the 20 EU countries which had signed such deals with Washington.

The Commission argues it has the sole right to conclude a pan-European aviation deal with the US following a 2002 court judgment which condemned eight EU states for signing bilateral pacts with Washington.

It says the bilateral deals limit competition as they only guarantee national airlines traffic rights and therefore prevent carriers from offering the best deal on a transatlantic flight.

The Commission is using this legal precedent to force the other members of the 25 nation bloc with bilateral agreements with the US to rip them up.

The Commission sent warning letters to Spain, IRELAND, Hungary, Poland, the Czech Republic, Slovakia and Malta on Wednesday, urging them to scrap the deals.

---------------------------------------------------------------------------

Now, I can't imagine the Irish govt being in any hurry to act on this (for a start because three other govts have only been sent second warning letters). However, it does raise a question: if the govt(s) were to go ahead and scrap deals with the US, what would happen? Since the EU has the right to grant permission under Reg 847/04, would it simply be a case of revoking the present agreement and bringing a new, albeit transitional (pending the OAA) agreement into being?

I haven't seen the EU comment on what will happen if/when any of these countries does what the EU says and this is what may be causing the delay; if the effect is that there is no agreement and therefore no flights, then clearly the EU can get stuffed, so it needs to set out what will happen if these countries do comply with its request to end the bilateral agreements.

[dusk2dawn]

I take it, akerosid, that your are not pro EU ;)

As the court have passed its verdict and the membercountries subsequently have given the commission the mandate to negotiate new agreements, it seems only to be a logic step to drop the existing agreements. It might help to clarify the situation for the counterpart(s).

Official press release: The Commission continues to take action against illegal "Open Sky" agreements (http://europa.eu.int/rapid/pressReleasesAction.do?reference=IP/05/305&format=HTML&aged=0&language=EN&guiLanguage=en)

[The SSK]

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.

[akerosid]

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.

[dusk2dawn]

ATW Daily News: European, US airports urge EU-US progress on open skies (http://www.atwonline.com/news/story.html?storyID=340)

[dusk2dawn]

PDF file (http://www.eurocockpit.be/media/OAA_ECA-Position_PP_2704final.pdf)

[dusk2dawn]

ATW Online (http://www.atwonline.com/news/story.html?storyID=5055)

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."

[akerosid]

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.

[akerosid]

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?

:D

http://news.airwise.com/story/view/1149809760.html

[dusk2dawn]

Interesting. Anyone got a draft agreement?

[dusk2dawn]

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.
More: ATW-online (http://www.atwonline.com/news/story.html?storyID=5410)

[akerosid]

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.

[The SSK]

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.
I don't think that's the issue.
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.

[tornadoken]

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.