EU-US Open Skies Agreed

[spanishflea]

Well it seems to have taken place:

http://news.bbc.co.uk/1/hi/business/4451440.stm

Everyone seems to be talking as though all issues have been dealt with excluding the ownership one. Even so very exciting news, I dont think many expected an agreement today!

[vc10]

From enplaned.********.com

http://enplaned.********.com/2005/11/tentative-eu-us-deal-would-pry-open.html

Tentative EU-US Deal Would Pry Open Heathrow
Reuters breaking news. Here's our quick-and-dirty.

Key point:

The deal, if approved, would allow every EU and American-based airline to fly between every city in Europe and the United States. The deal would effectively remove fiercely protected competition barriers to London's Heathrow airport, Europe's foremost gateway for international business travel.

But still things on which the deal could founder:

Europe still wants to see if a crucial side issue -- the U.S. proposal to dismantle some limits on foreign investment in domestic carriers -- is finalized and whether it would truly facilitate greater investment opportunities in American commercial aviation companies and greater access to the biggest cities.

So no one should count their chickens. This ain't over.

We've always been cynical about the attitude of Europe (and especially the UK) towards these things. Restricting US airline access into Heathrow (LHR) has always been an article of faith for the UK govt because British Airways (BA) and Virgin Atlantic simply benefit too much from the restrictions. Between them, BA and Virgin control far more than 50% of the key NYC - London market, for instance. In fact, BA's share is above 40%, if we recall correctly.

The stated desire of the Europeans for access to the US market (such as the right to own a greater proportion of US carriers) is also something we find inexplicable. The US airline business is, empirically, a bad investment. So do the Europeans really want these rights, or is it simply a way of preventing full Open Skies by asking for something that they know the US govt can't give?

(It's worth noting that we fully support the elimination of all ownership restrictions on airlines globally, not that we think that will happen any time soon).

But let's be optimistic. Who wins and who loses? Single greatest winner is Michael Bishop and British Midland Airways (BD), which owns the second largest number of slots at LHR but can't use them to the US and so uses them mostly for money-losing European routes. Pre-9/11 Bishop bet big that he'd get LHR-US rights and ordered four A330-200s, aircraft that BD's struggled to use profitably ever since after that bet failed (insert comment about counting chickens before they're hatched). BD will be sitting pretty now.

Biggest loser might be Virgin Atlantic. Virgin has a great onboard product, but at the end of the day we think the biggest reason why it's successful across the Atlantic is that it doesn't face much competition. Virgin might well be forced into a defensive merger with the LHR operations of BD (with, perhaps, the BD's low cost operation, bmibaby, spun out). Richard Branson has certainly discussed a Virgin-BD merger before. The combination of the two in an open LHR would be extremely powerful, and be a key member of Star, assuming BD stayed in that alliance.

For BA and AA it's a mixed bag. Losing the competitive restrictions means they'll face more competition. However, if they can trade that for anti-trust immunity, it finally gives oneworld what Star and SkyTeam have, and that's worth something.

For Continental (CO), Newark (EWR) to LHR is the single biggest hole in its network and one it will want to fill as soon as possible. The rub is paying for slots. Getting the right to fly to LHR is one thing, buying LHR slots so you can actually do so is another. LHR slots are very expensive, we've heard figures like 10 million pounds sterling per slot pair. Painful given the financial circumstances of the US industry, but for CO, likely something it will want to pay (though it will do its best to force slots to be given to it, something we think will probably not work). CO is already the dominant airline in the NYC area, LHR access would cement that. There's no reason why CO shouldn't eventually be one of the top two or three airlines in the NYC to London market. Just think of all those I-bankers going out to Newark to fly to LHR...

To a lesser extent the other non-LHR incumbent US carriers would face the issue of paying up for LHR slots. Hard to see any of them not doing so, ultimately. LHR is such an important source of traffic from which CO, Delta, Northwest and US Airways have been blocked. You'd figure they'd all pay up for at least some slots to access LHR from their main hubs. LHR could look very different in a year or two, if open skies really happens. Slots now used for other purposes will be shifted to the Atlantic. We suspect most of those slots are currently being used for European routes (certainly likely to be true for BD slots). So European traffic will move to other London airports--that benefits Ryanair, easyJet and friends.

It's also potentially bad news for MaxJet, the new transAtlantic entrant (there's also EOS, but we think EOS is much less likely to survive than MaxJet: selling business class for an economy fare -- Maxjet's business plan -- seems more viable to us than selling first class for a business class fare -- EOS -- especially from London Stansted, which is hardly the preferred London airport). There's going to be a lot more capacity to the US from LHR in the future, if this happens. That will drive down pricing. In particular, if CO enters NYC-London, and British Midland tries to force its way in, then we're going to see a real jump in capacity in this market, with lots of deals. None of that is beneficial for a new entrant whose primary value proposition is price. We're not saying it's a fatal blow, but it's not a good thing.

Oh, this one will be fun to watch

[Diesel8]

Sorry boys and girls, but no US air carrier will be paying for slots at LHR, just like BA and VA do not pay for access to US airports, other than landing fees.

LHR will now have to be opened to every Tom, Dick and Harry US air carrier, otherwise the US will have to put restrictions on BA and VA.

You know what they say, can't have your cake and eat it to!

[akerosid]

Great news, up to a point ... It looks as if they've agreed everything but the key sticking point ... the quid quo pro between ownership and LHR access.

To be frank, I've always believed that BA's announced intention to buy AA was really a call for something it knew was never going to happen and thus, to obstruct the whole Open Skies process.

What happens if things don't go according to plan? What if the deal collapses early next year over this point? We in Ireland have already agreed a peculiarly Irish version of Open Skies and as egregious as it is, it's better than nothing and it certainly seems unfair that every other country should be held back because of access to LHR and ownership of US carriers, something the vast majority of carriers aren't remotely interested in.

And what of regional access to LHR once new slots are created? These are already declining and with the likes of BD and BA stripping them down further to add new US routes (one presumes BA will want to bring some of its LGW-US services to LHR?), won't this mean that places like BHD, INV, ABZ, LBA and NCL may be affected?

[Daysleeper]

Untill the details of what has been agreed are released we wont know if we have been sold down the river by the EU over the Cabotage issue or not.

[potkettleblack]

Interesting bit of politics this. So LHR opens up and the entire EU gets the benefit of open skies to the US. Hhhmm that sounds like a good deal for the UK. I thought when you had the EU presidency and a "friendly" Trade Commissioner that you were meant to do the screwing over and not the other way around. With this stunning piece of diplomacy I can't see the rebate staying either. Still gives more ammunition for the opt out of EU mob, perhaps that will be Blairs swan song and he is more cunning than a cunning thing?

[teifiboy]

IF this all goes through, makes the case for a VS/BD merger quite strong. Should imagine RB is feeling an increased sense of urgency now. Puts BD in quite a strong position.

[Skylion]

As it stands the proposed deal is very good for the USA but much less so for Europe and the UK.
The USA gain rights to fly worldwide out of the UK and Europe and in theory Europe and the UK gain the rights to do the same ex USA. The potential value to the USA would however be far greater than for the Europeans. For example a US carries could operate to anywhere in the world out of London, giving a mix of short and long haul possibilities. Where would a European carrier go out of the USA? S America, Transpacific and Canada are the 3 possibilities and none of them very attractive in terms of either investment required ( transpacific) or markets ( S America and Canada).
Also , whereas the USA could start services ex UK to all those places it already has open skies deals with already ( eg a number of Far Eastern countries) immediately, the UK/Europe would have to negotiate new open skies bilaterals with any countries they wanted to serve ex USA. To gain these it would have to grant open skies to, for example, all the Far Easterns ex UK/Europe, so UK would face prospect of these operating worldwide ex UK. Fancy the idea of high quality/ excellent service/lower cost oriental carriers on across the Atlantic? Great for the customers but a real headache for the Europeans.
Think about it....................................

[Carnage Matey!]

Diesel8

Sorry boys and girls, but no US air carrier will be paying for slots at LHR, just like BA and VA do not pay for access to US airports, other than landing fees.

Funny old thing but if BA or VS want new slots at LHR then they have to buy them just like everyone else. Perhaps if new American carriers don't want to pay for LHR accesss like the rest of the world does then AA and UA can give up some of their slots? Honestly, it makes you wonder what they're spending all those massive government loans on!
BTW, which US airports are slot constrained because I don't ever remember being given a CTOT at any US airport?

[Diesel8]

The three slots controlled airports in the US is JFK, LGA and Washington National.

If my readings are correct, slots at LHR are not sold, however, dealings do transpire between air carriers for slots and/or times.

As I said, it is doubtful that US air carriers will be buying slots at LHR, one since that is not how it is done and secondly, because there supposedly are none. The US air carriers will undoubtedly be demanding accesss to LHR, so I guess the slots will simply have to be found.

I don't think DAL, NWA, CO will buy the argument that they simply cannot have access, I knowI wouldn't if I was them.
I guess BA, VA, BMI will have to give up slots.

The EU have been pushing for open skies, Rod has been most outspoken about it, well, it is a give and take. Restricting access to LHR will simply not work!

[Carnage Matey!]

So what your suggesting is BA, VS and BD have to give up slots at LHR, lets say 10% of their slots each, grounding aircraft and laying off staff in the process, so that DL, NW and CO (two of which are bankrupt) can come in in their place. Do you really think the EU are going to sign up to that?

On the matter of slots simply 'being found', there is an interesting chart here (http://www.pprune.org/forums/showthread.php?s=&threadid=198725&perpage=20&pagenumber=2) detailing slot demand and slot utilisation at LHR. Put simply, the slots are highly unlikely to just 'be found' Any latent capacity would have been exploited a long time ago. There are plenty of minnow airlines operating into LHR who could sell their slots, thats where the newcomers will have to find their slots. So far all the USA are offering is unrestricted point to point access between the EU and the USA (no benefit for UK operators) and some loose commitment to easing foreign ownership rules which Congress will probably block. There's not much 'give' there really, is there.

[Skipness One Echo]

Can I then ask is it the caes that BA must fly their southern US routes from Gatwick? Dallas, Houston and Atlanta I am sure would be better off at Heathrow with an improve business yield.

[Carnage Matey!]

Almost certainly, but to do so would require new slots or the transfer or services (probably short haul) to LGW. Handing over a large number of slots to US operators would probably preclude this happening.

[Voeni]

The desired slot policy from the EU is slot trading and there is a lot of work going on, on how it's to be done. Slot trading is the most economical and most effective way of allocating slots, it will sure come in the future (finally we'll get rid of all these stupid grandfather rights).

US Airlines have to buy slots at LHR, like all other airlines. The FAA already announced it is open to the discussion, as long as the treatment is the same for all airlines.

With the Open Sky Agreement, I'm sure we'll see other US airlines looking for slots and, with no other chance, buying them.

vc10: excellent statements!

BTW: There is a veery interesting study on slot allocation, done by NERA (london based research institute) for the EU. Don't have the link, but it's worth reading it (about 400 pages)

[EI-CFC]

Can I then ask is it the caes that BA must fly their southern US routes from Gatwick? Dallas, Houston and Atlanta I am sure would be better off at Heathrow with an improve business yield.

I think the LGW - ATL was a route they inherited from British Caledonian when they took them over, so I think that more a historic remnant than anything else. I'm not sure about the other two, and whether it was the same situation with them.

[Oshkosh George]

I am not certain,but I believe that LHR slots are allocated,but not sold.
The selling occurs between airlines,as ALL the slots are currently allocated,and there aren't any spare.

If there is to be open skies,then I'm sure there would have to be a total reallocation of slots,where EVERY slot would have to be applied for(meaning ones currently held ),and some system of fair allocation worked out. Quite how this would be done is hard to see,but to give all applicants a bite of the cherry,clearly BA would suffer enormously.

[flyer55]

What happens to Bermuda and Barbados , do they get bumped to LHR ?

[Flame]

Voeni...

"US Airlines have to buy slots at LHR, like all other airlines. The FAA already announced it is open to the discussion, as long as the treatment is the same for all airlines"

....How does that tie in with the fact that so many major US companies are now competing with other carriers from the cosy confines of chapter 11 protection....is this what the FAA mean by the same treatment for all airlines..????

[Diesel8]

OshkoshGeorge is right, at least according to the documentation, british, that I read concerning the issue. Slots are not sold, but allocated, however, airline with LHR slots do trade them.

If a slot is forfeited it goes to the pool, to then be handed out to eligible airlines, actually those that have put in for them.

I doubt you will find many US pilots who support this, since I am still at loss to what the US carriers gains, just like someone fails to see what british air carriers gains. So, why push for it, why does BA want it? What airports are they restricted from serving in the states.

However, I will still maintain, that slots will have to be provided at LHR for the US carriers that wish for them. LGW or STN might be nice, but the businessman prefers LHR for access to London and for onward connections.

[Hunter58]

Diesel8

you may or may not know that LHR is a saturated airport. Well, it is. To give ANY carrier preferential treatment would be unfair. You may also recollect that BA (and others) are in LHR since a very long time, therefore having grandfather rights to slots (but not to new ones). You want to come, show you have traffic rights and queue up, like everybody else.

Why in Gods name should any US carrier get any form of preferential treatment?

[Diesel8]

Yes Hunter, I think most people understand that LHR is about the most constrained airport and that there are not any slots available. However, then why don't you explain to me, why the US air carriers should be happy about open skies, or why they would even want it, if access to LHR is not part of the deal?

Seems this might be good for BA, VA amd BMI, since they all have slots and would be allowed to use them to the states without restrictions, however companies like CO, DAL, NWA gets nothing.
Doesn't seem like a good deal to me!

[Hunter58]

Acess is part of the deal, but at same conditions as every one else, no fast track.

Maybe US carriers want to keep all 5th (and in certain cases now 7th) freedoms they still enjoy...

[Diesel8]

Well, since there are no slots available and probably will not be for a long time, since the new entrant US carriers would go to the bottom of the queue, then it is tantamount to offering nothing in return for open skies in the US.

So I ask again, what is in this for the US, since I am unable to see an upside? So yes, status quo seems a better deal for the US airlines, as unfair as you may find this to be.

[dallas dude]

Diesel8,

Considering AA and UAL have tie-ins with UK based carriers and would expect to connect onward traffic through LHR, [AA-BA and UAL-BMI].

IMO, it would make sense for AA to shift its DFW-LGW flights to LHR to consolidate ground ops and save a bunch of money on the current split operation. Obviously, the cost of three pairs of slots, and slot availabilty, may be prohibitive.

In the case of NWA, CAL and DAL their partners' hubs [KLM, AF] offer connecting traffic through Amsterdam or Paris, therefore any desire to move to LHR would be an expensive distraction.

For O & D traffic solely between the US and UK, LGW IS a viable option.

Frankly, I prefer it as it's just as easy to ride into London on the Gatwick Express.

From a marketing perspective LHR may appear to be the gateway jewel in the same way JFK is regarded versus Newark.

Instead of getting involved in a costly fight for an LHR presence I'd spend a few more bucks pumping up the advantages of LGW and identify further US-LGW opportunities.

I think this is part of the "win" for the US. Standy for rumours of a real second runway at LGW.

DD

[Epsilon minus]

Well I'm left wondering how on earth they are going to squeeze a quart into a pint pot? Like an NCP car park on an international match day, Heathrow is full up. I want to be around the slot bartering table to see who's prepared to give up what and at what price and at what time.
And as someone succinctly pointed out that they had never had a CTOT at a US airport, true, but then at LHR you don't have to add FPF plus 5 tonnes for the taxi !!
Will US airlines with more debt than Africa rush to get a slot at LHR, possibly but then why. You can get to LON just a quickly from STN and LGW as you can from LHR and with less hasstle.

[Hunter58]

Strange enough somehow it was the US that started discussions about open Skies and wanted to bluff intelf into an agreement for LHR, taking up all these bilateral open skies to 'press' the brits into doing it, and very strange enough the brits said always, yes, but no favourism for anybody, and they still say that.

LHR must be really worth something...

Or, judging by how much US airlines have lost in the past few years they just overestimate it?

The brits have been pretty clear on this, and the EU as well, so since the US were the ones starting talk open skies (and we mean open skies here, not US favourable skies, but same rules for all), suddenly slots at LHR should be favoured?

Very strange also is that other carriers have been able to get slots at LHR, incidentally partly by buying them or by queuing up.

So, in a quintessence, the US airlines are begging for favourite treatment because they cannot stand up to competition, or did I totally missunderstand something?

[unmanned transport]

Air Transport World.
Monday November 21, 2005

Negotiators for the EU and US, after five days of talks in Washington, achieved a tentative air services agreement that will provide airlines from the US and EU member states open access to each other's markets "with freedom of pricing and unlimited rights to fly beyond the EU and US to points in third countries," according to a joint statement (see text below).If approved by both sides, the agreement could take effect with the 2006 IATA winter season, which traditionally begins in late October.

The accord, which must pass muster with all 25 members of the EU Council of Transport Ministers--who rejected an earlier agreement in 2003--would open London Heathrow to all US international airlines as well as to all European carriers wishing to fly between the US and London, subject to acquiring slots at the airport. Increased access to Heathrow has been viewed as a key stumbling block to reaching an all-inclusive Transatlantic Open Aviation Area. Under the Bermuda 2 agreement, only two US and two UK airlines are permitted to fly between Heathrow and the US.

"As soon as the agreement applies, every US airline would be legally authorized to fly from any point in the United States to Heathrow [and] to any airport in Europe. By the same measure, every European carrier could fly from Heathrow or any other European airport to any airport in the US. They would have to obtain slots and facilities to do so but the legal prohibitions that exist today would no longer exist," US Deputy Assistant Secretary of State for Transportation Affairs John Byerly told reporters during a conference call.

"There is no carve-out for Heathrow," European Commission Director-Air Transport Daniel Calleja stated. He also emphasized that "when the Council makes its decision, it will take into account the outcome of the rulemaking process recently initiated in the US Dept. of Transportation concerning increasing the opportunities for foreign citizens to invest in and participate in management of US air carriers" (ATWOnline, Nov. 3).

The Council of Transport Ministers is expected to discuss the agreement at its Dec. 6 meeting but is not expected to take a vote until the outcome of DOT's rulemaking is known. Comments on the NPRM are due to DOT Jan. 6 and the department could make its decision final in February.

While Calleja acknowledged that UK opposition could torpedo the agreement, he told reporters: "If the evaluation [by the Council] of the outcome of the procedure in the US is positive, I think there will be a positive decision from the Council of Ministers."

Under Friday's agreement, the US and EU committed to a timetable for another round of talks. Within 60 days of the accord taking effect, "we would commence negotiations for a second-stage agreement," Byerly said.

"This is a first step and we look forward to continuing the process, Calleja stated. "We think we share on both sides the goal of continuing open access to markets to maximize the benefits for the consumers, for the airlines, so what we have agreed is there will be a pre-agenda for the second stage and on the EU side an expectation that we would seek further liberalization and also further cooperation in issues like competition, security."

by Perry Flint

(Sounds like a free for all, dog eat dog guys. Let's have some competition!!).

[DH1]

LHR access remains the nub of the problem. Slots are not available at transatlatic timings from the normal slot pool (ie, the slots that are given away for free). This means that the only source of slots is from other airlines. The price is fairly high though - GBP 10m to GBP 12m per daily slot pair for prime morning slots, maybe set to go higher in a sellers market.

But who would sell? BA and BD will need theirs for their own Open Skies aspirations. CO/DL/NW could always look to their Skyteam partners AF/KL/AZ but they don't have too many slots that they could give up without making whole routes like CD-LHR or AMS-LHR unviable. Maybe 4 slot pairs in total - max.

Other than alliance partners, potential sellers of slots get hard to find.

Even if the runway slots can be found, coverting shorthaul/small aircaft services into longhaul/big airrcaft services is not automatic. Before T5 open in 2008 terminal and stand capacity is very limited. BA and BD face this problem as well.

So, Open Skies doesn't necessarily mean that much for LHR in practice.

[Gonzo]

I wonder how much cash it would take for airlines such as Air Seychelles, Air Mauritius, Uzbek, Air Astana, Air Algerie, Air Baltic, Belle View etc to be persuaded to swap their Heathrow slots with Delta's, Continental's Gatwick slots?

It's happened before with BA swapping with Balkan and Lithuanian.

[no, no, no]

LHR will see a benefit though - bmi can open the market from their view point and increase competition and more than likely reduce fares like it did in Europe, and like it has done on the London, India route. Slots can't be given by a government as they are controlled by the airport/slot people - so airlines will have to wait or buy from an airline, just like Virgin/Qantas did when they bought slots from flybe.

Delta have already acknowledged this and said that they will queue up for slots but will probably be a couple of years before they can start LHR - but until LHR even gets opened up they can't wait around.

The only way more slots will be given up is if a joint venture type agreement goes ahead between say AA and BA - at which point they would have to surrender some slots for competition rules. Or wait until LHR finds more slots maybe through mixed mode operations, or a future new runway???

But you also have to think that European airlines can now also start LHR to the US if this goes through - yes DL may not be able to get any slots, but why couldn't KL or AF operate LHR-ATL with DL codesharing?? LH may also want to start new services from LHR - they won't get the feed they need (although they will have STAR feed still just like bmi would) and could still start a service to a STAR hub like ORD, IAD etc - unless they fancy increasing their presence in New York for example with flights from Germany and the UK - a good offering!!! Just like Virgin could open up AMS-NYC, CDG-LAX etc focusing on their point to point traffic like LGW etc!!

So the UK consumer will get a lot of good out of this, there will be increased competition on the LON-US markets, markets like Las Vegas, Dallas and Orlando would be opened up from LHR (at the moment they are restricted as only certain amount of markets can be served from LHR, even for the 4 airlines allowed access).

And it isn't just LHR that gets included as the US cargo carriers like Fed Ex will be able to fly fifths beyond LHR to European points (eg LON-AMS)

So a lot in this for everyone, but the consumer more than anything - so why shouldn't this be a good direction??? And it may start changing the face of the US aviation map which to be honest needs a kick up the rear end!!

[HEATHROW DIRECTOR]

Problem - where are they going to find room for them?? Heathrow is working almost at max capacity and the only way to seriously up the movement rate is to ditch the noise abatement procedures.... and can anyone see that happening??

[Gonzo]

I'm almost tempted to say.......Surely that would lead to more holding in the stacks at Heathrow?.......oooops, I said it! :E

[Flip Flop Flyer]

... would open London Heathrow to all US international airlines as well as to all European carriers wishing to fly between the US and London, subject to acquiring slots at the airport and ...They would have to obtain slots and facilities to do so but the legal prohibitions that exist today would no longer exist

In other words, eveyone is more than welcome to fly to and from Heathrow if they can find the space and get the slots. Catch 22 springs to mind.

[Re-Heat]

There will always be buyers and sellers of the slots at Heathrow - indeed it is not impossible with more than a little planning to obtain them from BAA directly a zero cost where carriers fail to utilise their slot, or more are created through efficiency gains. Though there may not be a large mass available, there are many than can be obtained through some means or another.

[teifiboy]

well there seems to be one obvious winner with loads of slots and itching to get into the transatlatic market

[LGS6753]

Surely when a carrier enters Chapter 11 or Administration (UK version), its ownership effectively changes. Perhaps any airline operating under bankruptcy protection (i.e. not on a level playing field) should be deprived of their LHR slots?
Wouldn't be liked by the US but may stop the current unfair trading conditions.......

[Re-Heat]

So effectively Lufthansa then, once Bishop excercises the put option and SAS have sold out.

[Epsilon minus]

Bloody good point sir. How can any business that is bankrupt be allowed to apply for new business. Definately unfair. Any lawyers out there care to comment.

[WHBM]

Almost all of the desired slots will be for an early morning arrival and a later departure. The additional slots that become available at present tend not to fall into this pattern.

And as Heathrow is also currently "full" for ground movements, stands, check-in desks and gates as well, there is that to consider. Can't quite see Continental going for transfer buses to/from the cargo area.

The whole thing about Heathrow access usually hides the facts. Heathrow is already full for movements. It's like a nice apartment building where all the units are taken by long-established residents. Here comes Mr Upstart, who now would also like an apartment. Sorry, it's full. All taken. But that's not good enough for him. Complain to the press. Say it's not fair. Whine Moan Pout Sulk. Throw the existing tenants out, make them double up, all so Mr U can get in where he wants.

[Diesel8]

"Wouldn't be liked by the US but may stop the current unfair trading conditions......."

What is unfair about it? Even in Ch.11 companies do pay their bills, sure they alter the debt state. They discuss the debt with their lenders, but they still have to pay the daily bills. Of note should be, that say in the case of UAL, very, very few of the leaseholders have decided to take back their airplanes.

If BA was able to negotiate better lease deals would that be unfair to others who might not?

Before you all start flaming away, I should say, that I do not work for UAL or any other ch.11 airline, actually compete with them. Further, if you want to have a meaningful discussion, you should look up US Ch.11 laws.

Now, I am donning my asbestos suit:)

[teifiboy]

..and in the event of Lufthansa excercising this put option on BD, what stops them making an absolute mint from selling the whole batch of slots, shutting the airline down and laughing all the way to the bundesbank?

[Epsilon minus]

D8
Even in Ch.11 companies do pay their bills

That is 100% incorrect. No they don't. One airline has been granted the right through the courts not to have to pay its aircraft leasing bill.
Chapter 11 is in effect a grossly unfair subsidy and life line to an uncompetative business.
Airlines in Europe must deplore it.

[akerosid]

I've been following this excellent thread with much interest and I'd like to share a few thoughts - in no particular order I'm afraid; it's more of a brain dump!

1) Mixed mode. Won't this create new slots; how will they be divided? Assigned or for sale.

2) If there is to be entry of new airlines to LHR, presumably it will be done on a phased basis ... i.e. a certain number from 11/06 and more once Mixed Mode is introduced, then another date.

The big losers here will be regional links to LHR; apart from the big three - MAN, GLA and EDI, how many will be left. I can't see BMI being too slow to dump INV, BHD and/or LBA, if it got rights to the US, same with BA to ABZ, NCL and one or two others?

It seems brutally unfair that these regional destinations, to which LHR access is SO important (and living in JER, I can vouch for that) can have their access severed and their flights replaced by those of US carriers in Ch11. There's no way (even if it were permitted) that UK regional destinations could afford £30m (or even half of that) for a slot.

The DFTR (the "R" incidentially, standing for "Regions"!) is not interested in lifting a finger, which basically means that airlines have the right to dictate which regions/centres have access to LHR - and that basically means the biggest of them; perhaps legal moves are necessary to prevent regional routes being sidelined; injunctive relief to require DFTR to provide slots. Role of CAA in obstructing access to regions; it has been an obstacle.

Perhaps it's time for regional centres to come together as a group, to fight for their rights. Even if R3 is authorised, it's hardly reasonable to tell them that their access is being cut for 7-8 years until that runway is open (if this ever happens?)

Consultation process last July on issue of regional access to London; what was the result of this? Is HMG going to set its face against any access. This is the most frustrating aspect; it's a straight market approach. LGW becomes less attractive as a hub by the month; smaller regional destinations can't justify a large number of links, so access to a major hub becomes all the more important.

Ultimately, best solution may be for UK regions to come together and invest in small UK carrier with significant LHR slots? Is this the method the govt would prefer? If bmi were owned by a group of regional governments and interest groups, they would suitably "incentivised" to reintroduce and protect regional routes.

Is govt satisfied with prospect of no domestic access to LHR (apart from major routes which have plenty of alternative access - MAN, GLA, EDI? That's what's going to happen and for those regional airports lucky enough to have access to it, AMS will be their primary link to intercontinental markets.

[unmanned transport]

I'm almost tempted to say.......Surely that would lead to more holding in the stacks at Heathrow?.......oooops, I said it!
************************************************

Teehee:)
Great minds think alike Gonzo.

Sorry for that insulting stuff guys in that other post.
It's just some of the arrogance that I have a tough time dealing with. We have it out here as well !!

[Daysleeper]

And it isn't just LHR that gets included as the US cargo carriers like Fed Ex will be able to fly fifths beyond LHR to European points (eg LON-AMS)


Has 5th freedom been confirmed? It does not read like that just now more like Any ONE USA point to any ONE EU point.

Has anyone got the actual text of what has been agreed?

[Gonzo]

Glad you can take the banter, UT! :ok:

[Gonzo]

I think I'm beginning to sound like a broken record. Mixed mode won't bring in that many extra slots, and it won't work unless all environmental considerations (ie. noise preferential routes) are done away with.

[Oshkosh George]

Fifth freedom is mentioned in this other thread running on 'Rumours and News'.

http://www.pprune.org/forums/showthread.php?s=&threadid=199262

Of course,all this has to be agreed by all EU countries,and the UK/US governments.

[Yellow Sun]

..and in the event of Lufthansa excercising this put option on BD,

Lufthansa cannot exercise it because it is a "put" option, not a "take" option. The decision to activiate the option is SMB's alone.

YS

[Epsilon minus]

UT
It's just some of the arrogance that I have a tough time dealing with. We have it out here as well !!

Where's out here then?
EM

[Geffen]

Gonzo, you sound like a stuck record? never!

[Gonzo]

Pah! Watch it Geffen or you might find your number of days leave decreasing rather rapidly..... :E

[Geffen]

Gonzo, I always thought they went down quicker than I used them!!