Open Skies

[akerosid]

This is a new thread, intended to collate together all information, views, thoughts etc. relating to the EU/US Open Skies issue and related subjects.

Just for information, the current situation appears to be:

- The EU is currently awaiting further info from the US, in relation to the foreign ownership of US carriers; the Open Skies issue has come down to two key points, this and access to LHR;
- US carriers, particularly Continental, are of the view that theoretical access to LHR is not good enough, if they end up having to pay $30m (or so) per slot.
- Despite the delays (it had been hoped that the US proposals might be available in time to seal a deal at the EU ministers' meeting on 14th October), the EU maintains that it is optimistic that a deal can be done by the end of the year,.
- The EU has refused Ireland permission to proceed with its "mini-bilateral" with the US, on the basis that it would like to wait until all countries have Open Skies together; the US also indicated that it would not like the Irish deal to go ahead until full O/S was in place. However, the Irish agreement provides for a transitional phase, whereby O/S would have come about in 2008 (according to the original schedule), but there would be a reduction in the ratio of DUB:SNN flights to 3:1 for Summer 2007.
- Canada has indicated that it would like to increase the number of O/S agreements in place and is likely to enter into negotiations with the EU.
- One of the biggest obstacles for the EU/US deal was seen to be the mid term elections, to take place next week (7th Nov); hopefully, once these are out of the way, normal service can resume, BUT at this stage, it is expected that the Democrats will have control of at least the House, so this may affect the final deal.

[Robertkc]

Well collated akerosid. :D
Having had involvement in this discussions some years ago, it's also very important from the US' point of view that their Legacy carriers are fighting fit, so to speak, to be in a position to tackle any significant change to their competitive landscape. Of course, Delta & NW remain in Ch.11... IMO, there will not be a deal reached until they both emerge from bankruptcy protection.

[akerosid]

That could take ages, particularly with NW. I hope both emerge, of course, but I think the real problem could be if the Democrats regain control of either house of congress (I think Representatives is more likely?); they'll be looking at ways of flexing their muscles and this could be one.

As you can appreciate, I look at the whole Open Skies issue from an Irish perspective and up to a while ago, the US was pushing us to move on this and then, just recently (after the announcement of FR's plan to move on EI - which, as you can imagine, must have gone down like a lead balloon with US carriers!) they were rather stand-offish, saying they'd rather wait until everyone had it. Can't help wondering if words were said; FR on t/a routes would upset a lot of people!

[ryan2000]

It's the Republicans that have been stalling it all along so hopefully common sense will prevail once the election is over whatever about it prevailing here when our election is over.

The Shannon stopover has survived 10 Taoisaigh and 20 Governments!

[LonBA]

Neither Republicans nor Democrats are interested in seriously opening up the US transportation markets, until the American carriers are in a position to be a acquirer. That's a few years away, assuming no major issues coming up along the way.

[Globaliser]

Neither Republicans nor Democrats are interested in seriously opening up the US transportation markets, until the American carriers are in a position to be a acquirer.Let's face it, the US concept of "free and open competition" between, say, JFK and LHR is that there should be a struggle for survival between AA, CO, DL, NW and UA. And nobody else. After all, if it isn't American, it has to be second rate.

[LonBA]

Well I wouldn't go to that extreme. Do the Americans want to ensure their companies have equal, if not greater, footing? Yes. But that's probably not any different than any other country. No one can say (with a straight face) that Europe, the major Continental players in particular, doesn't also play these sorts of games.

I'm willing to bet that if the situation were reversed, Europe would be just as disinterested in Open Skies as the Americans.

[The SSK]

The US talks about Open Skies on transatlantic routes. Europe talks about an Open Aviation Area encompassing the EU, The US, and the routes between the two.

That is the gulf between the two positions.

The US talks about market access, and pricing freedom. In other words, any US or EU airline, flying any EU-US citypair, charging what it likes.

The EU talks about this plus – US access to EU domestic, EU access to US domestic. In practical terms, these freedoms are no particularly big deal. Much more important is a process of a harmonisation of the competition rules – the two sides have very different interpretations of what constitutes anticompetitive behaviour, abuse of dominant position etc, also there are different rules on what constitutes State Aids, bankruptcy protection etc. Then there are big issues on divergence of security rules, for example.

Ownership & control is a big sticking point, not (only) because of US protectionism, but because the starting point in the harmonisation process is different on either side of the Atlantic. A US airline has to be 75% US-owned, whereas an EU airline has only to be 51% EU-owned. This means that, in a process which eventually abolished majority-ownership rules, the US would have to move unilaterally to the EU level before the two could contemplate moving in step to something less restrictive.

In the world of aviation bilaterals, where every demand from one side is subject to a quid pro quo on the other, giving ground unilaterally is something big strong countries don’t do easily.

[akerosid]

Thanks, The SSK, for pointing this out; I had always assumed that the US position was what we were fighting for, i.e. routes between the two, but that the waters had been muddied because of the EU (primarily UK) wish for investment in US carriers. Frankly, I've always had a suspicion that this was brought in by BA/AA to muddy the waters, as the last thing they want is to have any further competition on LHR-US flights. Unfortunately, the EU fell for this. Maybe I'm being unfair; it's just the way I see it.

While most people outside the US (and obviously, quite a few more inside) will be relieved at the US election results, I'm wondering what it will mean for the prospects for Open Skies? The fact that the Democrats are likely to control both houses (as of this writing, with both Montana and Virginia likely to go to the Dems).

Open Skies has been a major initiative of the DOT and since the President is a lame duck, isn't there are risk that this will be one of the policy initiatives which could be stopped? I believe (without being 100% certain) that the Democrats will have control of all committees and that will include the Aviation Committee.

If this happens, what then? There will be lots of lobbying by those against change and a lot of pressure to hold out for what they believe to be a better deal. With regard to the argument above, that the US will wait until its airlines are stronger before going into Open Skies, surely one of the benefits of foreign ownership is that this strength can be added from outside?

Hopefully, we can get some indication in the near future as to what the new Congress will want to do and in particular, its attitude towards O/S.

From a US perspective, how do things look now - more or less optimistic about O/S?

[averytdeaconharry]

Akerosid, I have always enjoyed your postings. I have no idea who you are but I have a long experience in dealing with airline regulatory affairs. I was involved a few years back in preparing the EU position for the openskies negotiations with the US which have taken around 20 years so far. It is a pathetic record when there are potentially so many consumer benefits. I do not believe that the US will ever allow free global ownership of its airlines and I have absolutely no idea why any non US business would have any interest in owning shares in such a hopelessly bankrupt industry. So what I think is that the ownership issues are just a red herring to prevent any deal happening. There are huge vested interests in preventing it. Heathrow access is just the starter. But French chauvinism is also crucial and then there is the German issues about the Star alliance which includes United , an airline that has failed to make a go of LHR-JFK. That has got to be the most pathetic marketing performance ever in the whole history of aviation.
What is needed to crack it all open are politicians with courage. Do you know any?

[The SSK]

While most people outside the US (and obviously, quite a few more inside) will be relieved at the US election results, I'm wondering what it will mean for the prospects for Open Skies? The fact that the Democrats are likely to control both houses (as of this writing, with both Montana and Virginia likely to go to the Dems).

The soft line on ownership & control was held by the Administration, it was blocked by Congress with the Democrats most strongly opposed. Given their new position of power, an O&C provision acceptable to the Europeans is more unlikely than ever.

[akerosid]

I was hoping not to get that answer, The SSK, but I fear it is true. We may have a long wait and I'm less optimistic than ever that we'll have O/S in place by year end, as the EU Commission seemed to suggest.

Now it's over to Plan B for Ireland ...

Averytdeaconharry, thanks for your kind comment. I've always been interested in regulatory issues, having been involved in lobbying against the Shannon stopover, our excuse for a transatlantic aviation policy, since my college days back in the early 1990s; although I'm now living in Jersey, I continued to be very interested in it (and indeed, regulatory issues generally) and have been following the issue very closely over the past 2-3 years particularly, since the prospect of an EU-negotiated deal became known.

We're in a very difficult position in Ireland because although a "status quo"/"all engines stop" position wouldn't affect most countries that much - since most already have O/S anyway (despite the ECJ decision in 2003). However, we're still stuck with this :mad: :mad: SNN stopover rule, which requires one flight from SNN and one from DUB; US carriers and EI and now - belatedly - the Irish govt want it to change, but the Commission won't allow it. I believe there are grounds for a challenge on Competition Grounds, but whatever happens, we're not going to write off another year to this kind of nonsense, especially as one of the consequences of this nonsense is that EI could add three more US cities. It's incredible that we're in this position in 2007.

[akerosid]

As if the prospects for O/S weren't precarious enough, the EU has decided to throw another problem into the mix; it has now proposed to include airlines in carbon emission trading, something which has gone down like a lead balloon in Washington, with talks about threats of legal action over what Washington sees as a tax.

Add this to the stand-off over foreign ownership of US carriers and you have a fine stand-off and certainly one which looks further from resolution than ever. I don't know what deadline has been set by the Commission for the Americans to reply with their proposed rule on ownership (I thought this was expected sometime next month?), but it's probably academic at this stage, because it's likely that Congress will be able to veto any deal done - even if agreement is reached.

Looking at matters from the EU side and although I studied EU Law many years ago, I am a bit rusty on it; I'm trying to look for examples of case law where the EU Commission was ruled to have acted ultra vires as a result of imposing a competitive disadvantage on a particular country/airline; this appears to be the case for Ireland. The EU Commission is refusing to allow Ireland to move ahead to a more balanced, fairer bilateral agreement with the US. The situation for Ireland is even more frustrating because within the next week or so, the European Court is expected to rule on the Commission's case against the Netherlands, which was the first country to enter into an O/S deal with the US; although the Court is expected to rule in favour of the Commission, the actual effect of this is not likely to be great, because although previous O/S agreements entered into by Germany, France, Italy and other countries were ruled illegal, the EU did nothing to compel them to revert to the old bilaterals, but it still refuses to let Ireland move forward with what would be a far tamer agreement - much less competitive than full Open Skies, even with the changes agreed. The result of this is that, now, thanks to the Commission, the competitive gap between Ireland and virtually every other EU member state (except the UK) is greater than ever! Thanks guys.

What I'm also trying to determine is the extent to which the Commission can go in negotiating agreements with third countries, in undermining the interests of member states; in its negotiations with the US, the Commission may well be pursuing a noble and creditable goal, but I'm not convinced that the negotiating power given to it as a result of the Commission -v- Germany case extended to allowing it to place a member state at a competitive disadvantage; in other words, does a long term potential goal justify the imposition of a short-medium (indeed, indefinite) actual competitive disadvantage. I have serious doubts as to whether the Commission has such powers.

[ryan2000]

The EU already bent the rules for SNN by agreeing to a transitional arrangement for that airport. Surely this transitional agreement would be allowed come into effect if the Irish Government put them under pressure.

Ireland is only a dot on the map as far as Brussells and Washington is concerned.

[akerosid]

The EU has discretion, according to correspondence I've had with the Commission, to grant the power to negotiate with a third party (in this case the US), as long as
- The agreement contains clauses required by the Commission (and since the Nov 05 deal was negotiated under EU supervision, this can be assumed to be the case), and
- The third party negotiations will not undermine EU negotiations under way. The EU has discretion to decide if this is the case and appears, so far, to have decided against us - notwithstanding that the issue obstructing agreement (foreign ownership of US carriers) has nothing to do with Ireland or Aer Lingus.

The govt certainly does need to take a tough line, BUT ... does it want to, with an election coming up? Politically, it may consider it more expedient not to get it. I think - and HOPE - that might be too cynical a view, but I'm damned if I'm going to leave it to chance. The EU needs to be made to feel the pressure on this.

There are some European Law issues which the govt can use if it were to choose to take the EU to court, for example:
- Since the Commission got its mandate to negotiate O/S from the ECJ judgment, can ANY European Court judgment be interpreted in such a way as to permit the imposition or maintenance of a competitive disadvantage?
- Despite winning the case against Germany and other countries in 2003, the EU decided not to take action to force them to regress to their old bilaterals (mainly due to practicality reasons), yet it exercised its discretion to stop Ireland moving forward. Again, practicality was an issue, BUT can practicality on its own be a justification for using discretion unfairly, particularly when the result is the skewing of competitive advantage in favour of certain countries?
- Is it ever acceptable to impose an ACTUAL competitive disadvantage on a member state, in the course/pursuit of a potential agreement with a third party?
- To what extent can a member state act to correct a competitive disadvantage imposed by a member state; in view of the time lag between initiative and receiving judgment in an ECJ case, can the member state act immediately to correct this (and in doing so, is it protected from any sanction or fines from the Commission?)

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

Does anyone know what the Americans' current position is? When are we likely to hear what their proposal is in relation to foreign ownership (and indeed, if we do, will they have discussed it with Congress first, or just present it to the EU first and let Congress shoot it down later?)

Also, is there any indication from the DOT on the feelings towards the current negotiations and how long they're likely to be delayed - particularly given the EU's stance on taxing carbon emissions?

[akerosid]

Well, I didn't have to wait long for an answer!

Here it is officially; the US has dropped plans for any changes in foreign ownership for US airlines, which means that Open Skies is pretty much dead for now and is likely to remain so for the duration of this Congress.

The next move is up to the EU Commission. I'd try and predict the logical move, but logic and the Commission have never been happy bedfellows ...

http://www.rte.ie/business/2006/1205/airlines.html

[akerosid]

European transport ministers will meet in Brussels next week, to find out more about the position relating to Open Skies.

It is expected that the Commission will be asked to take a new approach to resolving the problem, although what shape that will take is unclear. There was an expectation some time ago that the EU might ask some member states to cancel their bilaterals with the US, although I can't see much of an appetite for that.

http://news.airwise.com/story/view/1165524387.html

[ryan2000]

Reports indicate that Singapore and Thai are seriously looking at Dublin.

In relation to Cork, you had your chance last year and didn't support Slattery's twice weekly charters to JFK.

Cork people want direct services as long as the fare is no more expensive than what's available ex SNN. In those circumstances the yield will be poor and the service uneconomic.

[akerosid]

It would be great to see either of them; having the likes of SIA, the bluest of blue chip airlines serving DUB would be a huge boost, having the incentive to market Ireland in a wide variety of crucial markets. :ok:

Perhaps they would be willing to serve DUB via somewhere else, as long as the DAA undertook to extend the runway within a reasonable timeframe?

(Can we move the TG/SQ rumours over to the "Dublin thread", as this thread should really be confined to Open Skies?)

Does anyone know exactly what happened with the Singapore deal? Was it just that Singapore jumped the gun, or the fact that beyond rights would be part of any new deal done between Ireland and the US?

[eu01]

The Open Skies agreement with the USA did not succeed as yet. However the progress has been achieved on the Morocco front.The EU Presidency, Vice-President Jacques Barrot and Karim Ghellab, the Moroccan Minister of Transport, have signed a new type of aviation agreement between the European Union and Morocco. This innovative agreement replaces all the bilateral aviation agreements between the Member States and Morocco.

It is original in that it not only opens up markets but is also designed to approximate the legislation of the two parties. The agreement will stimulate the growth of traffic to Morocco, and new, additional and more varied scheduled services have already been announced.

Jacques Barrot, the European Commission Vice-President with special responsibility for transport, said that "the agreement between Europe and Morocco opens up new development prospects for Moroccan and European companies. We now have an innovative text which is far superior to the conventional open-skies agreements. This agreement will bring the respective countries closer together, and shows us what can be achieved in the context of the Euro-Mediterranean partnership".

The aim of the agreement is to open up the markets gradually and to approximate the legislation of the two parties. It goes beyond the conventional American concept of "open skies", since it comprises a number of fundamental market regulation objectives: flight safety and security will be enhanced, and the competition, state-aid and consumer protection rules will be harmonised. Cross-investment between European and Moroccan companies will be possible, which is not the case under conventional aviation agreements. The agreement also contains several important provisions concerning environmental protection. Lastly, the agreement provides for streamlining administrative procedures.

Passengers will also benefit from new routes, thus avoiding many of the connecting flights now needed. In Morocco, new companies have already been set up, and secondary airports (at present essentially dedicated to regional traffic) will receive international flights. All this will contribute to Morocco`s objective of attracting 10 million tourists by 2010.

The removal of all capacity restrictions between the EU and Morocco is already attracting new market entrants. Carriers have announced new services from Frankfurt, Marseille, the UK and Spain to Marrakesh, Fez and Oujda.

The agreement also breaks new ground in that it is the first time in its history that the European Community, acting as a regional group, has signed a complete aviation agreement with a non-European country. On the European side, the Finnish Presidency and representatives of the 25 Member States have signed the agreement.

The EU-Morocco agreement precedes by a few months another Community agreement that is in the pipeline with the USA. It replaces all the existing aviation agreements between the Member States and Morocco, some of which date back to the 1950s.

The text can serve as reference for any other neighbouring country which might wish to promote economic interdependence with Europe, since the Community wishes to create a common aviation area with all its neighbours by 2010. Contacts have already been established with a view to starting talks with other Mediterranean countries and Ukraine.

[airhumberside]

So will FR still do HHN/MRS-Morroco now that the aircraft that were to be used have been reallocated?

[akerosid]

The EU and US sides will meet tomorrow to discuss the position re Open Skies; despite the dropping of rules on ownership (which, frankly, only affected a very small number of countries), the Americans are of the view that the deal should go ahead as is. If the Europeans reject this, the question will be: to what end? Ownership concessions are clearly off the table (and the Americans aren't going to be having anything to do with these proposals on aircraft emissions), so the Europeans have a choice: there's a deal on the table. Take it or leave it - and, if they do leave it, that might well be it for a good few years to come.

The big sticking point will be LHR and it will be interesting to see how BA and the UK govt respond. Even if the UK objects, there will be qualified majority voting, so the UK won't be able to veto it. Ownership of US carriers is only relevant and of interest to a very small number of EU carriers - certainly not Aer Lingus and many of the smaller ones. Even those that might have an inkling in that direction will see that it's really not worth their while to object.

If they do, what happens then? Well, theoretically, negotiations will have failed and it will be up to each country to negotiate its own deal. I am hopeful that this goes ahead; I think it's a case of "now or never"; waiting two or four or six years really isn't going to make a huge lot of difference. If the UK has a beef over access to LHR, then they can work it out with the US.

Fingers crossed!

http://www.rte.ie/business/2007/0109/openskies.html

[CCR]

If the US is only willing to allow EU ownership of US airlines up to 25%, then the same percentage should apply to US airlines ownership of EU airlines.

[gaelgeoir]

It looks like the Americans will not entertain individual agreements, according to today's Irish Times:

US wants EU-wide flight deal

The US has currently ruled out any bilateral deal with Ireland on opening up the
aviation sector, seen as a key driver of growth for Aer Lingus.
The US department of transport said yesterday that Washington would pursue a
"comprehensive agreement" with the whole of the EU, rather than seek bilateral
agreements that are open to legal challenge in EU courts.

[Count von Altibar]

Open-sky deal highly unlikely based on past negotiations. It's a total joke, especially the LHR access...

[akerosid]

I'm not quite so "confident" that it is a non-runner. After all, what does the EU have to gain from pulling back now. OK, there is the LHR issue, but is the UK on its own, strong enough to stop a deal on this basis? I don't think so. I don't see how any of the member states have anything to gain by obstructing a deal now and ultimately, although the Commission is doing the negotiating, the EU Transport ministers have to agree the deal.

That said, it wouldn't surprise me if the deal failed; it's just that I don't see anything to be gained.

As for Ireland, my understanding is that the US has ruled out any individual member state going for an open skies deal before everyone does, BUT what Ireland is seeking is not open skies, just the right to obtain greater US access and to move beyond the current Shannon stopover silliness; given that US airlines don't like this either, here again I don't see anything to be gained by the Americans holding back - especially with EI soon to choose between 787s and A350s ...

[gaelgeoir]

Holding of breath not recommended, according to latest from ATI website:

"European Commission (EC) and US DOT officials will meet early next month for more talks aimed at finding a way to kick-start stalled open skies negotiations between the two sides."

[akerosid]

This report is a little more upbeat:

http://www.breakingnews.ie/business/?jp=CWSNMHAUAUKF

I would imagine it's a case of going back to the various EU member states to report on the position and to obtain some direction. If the EU member states are happy with the EU proposals, then it should be possible to reach an agreement by next month. One can't be VERY optimistic, given recent developments, but again, I ask: what's to be achieved by holding out when there is realistically not a lot to hold out for.

[akerosid]

According to this week's FI, talks between the US and Canada are expected to provide an impetus to kick-start talks with the US.

http://www.flightglobal.com/Articles/2007/01/16/Navigation/177/211521/Canada+talks+could+help+revive+US+open+skies.html

Canada expects t/a traffic to almost double by 2011 if an Open Skies deal is done; there is certainly considerable potential to grow, when you consider the likes of Zoom, which could benefit immensely, and also some very antiquated bilaterals, like those with Ireland, could be swept away.

The one thing that confuses me about this article is that the EU is unlikely to ask for anything silly from the Canadians, i.e. the right to buy into Canadian airlines or indeed, cabotage on Canadian domestic routes, so it seems that all the EU is doing is learning from its experience with the US and if it can bring the same conditions to bear with the US, then all the better. As far as I can see, the deal EU SHOULD want is already on the table.

[akerosid]

Have a look at the following, particularly the last section:

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=tnBusinessNews&storyID=2007-01-29T081120Z_01_L29107028_RTRIDST_0_BUSINESS-LUFTHANSA-CEO-DC.XML

I can't help wondering, what part of "get stuffed" does Barrot not understand? The Americans have said, in no uncertain terms, that there will be no movement on foreign ownership of US carriers; to continue seeking something that is clearly and unequivocably off the table is simply irresponsible and a waste of everyone's time. What the EU should be seeking - the right of any EU airline to fly from any point in the EU to any point in the US is now on the table. Why delay it - and everyone else - by refusing what is really the best deal they can get.

Of course, the consequences for Ireland (as well as many other countries) need to be considered. What they thought the EU would be arguing for when it was given the mandate to negotiate on behalf of all member states is being spurned and for something which IS NOT GOING TO HAPPEN? How thick does the EU have to be to get this? Stop wasting everyone's time and do the deal that's on the table and if they're not going to do that, let individual member states do their own deals.

From Ireland's perspective, all we want is the right to increase US access - which poses a competitive threat to no one. If the EU continues to obstruct this, while seeking a deal which it has already been told in no uncertain terms is not going to happen, then the govt should have the right to act on its own. And if the Commission seeks to take legal action, let it. It would be interesting what legal grounds they could seek to find for such a spurious move.

[akerosid]

The new round of talks between the EU and US on Open Skies began today in Washington. The vibes I've been getting from various sources suggest that the Germans (who, as EU presidency holders, have significant influence as drivers of the EU agenda) are anxious to do a deal. Indeed, significantly, it appears that there is a certain amount of acrimony between the Germans and the UK, which wants a quid quo pro over the issue of LHR access.

However, the UK is now in a minority and if this remains the case, it will not be sufficient to stop the O/S deal going ahead. The EU now has what it wants on the table, so it would seem very foolish to frustrate it; there was talk of a tit-for-tat response from the EU over the removal of the "ownership/ management of US airlines" issue, but hopefully that can be resisted.

The EU might not get all it wanted (particularly as far as LHR is concerned), but in this case a less than perfect deal is far better than none at all. At the end of the day, holding out for a better deal that's unlikely to happen, is just wasting everyone's time.

No doubt tomorrow's newspapers will have more.

[Globaliser]

The EU might not get all it wanted (particularly as far as LHR is concerned), but in this case a less than perfect deal is far better than none at all.But what if any deal that's realistically on offer is less good than the current situation? My sense is that that is how at least some of the parties see it. If they're right, there may be value in maintaining the status quo.

[akerosid]

There seems to be mixed messages coming out; on the one hand, the Germans are said to be anxious to do a deal and on the other, Barrot said in Washington today that it was imperative that the Americans give ground on the ownership issue, which is unlikely to happen, so we're in a stalemate. I don't see that as a healthy position to be in.

In principle, I don't mind them holding back for a better deal, but from an Irish perspective, this means that we're held to an arrangement which is the least competitive of any EU state - but the EU refuses point blank to allow us to change it, so realistically, if the EU insists on holding this line, the only option for Ireland is to opt out of the process altogether and do its own deal with the US. If the Commission objects, then so be it; the Irish govt can counter-sue on competition grounds. However, the EU must be made very aware that it cannot lead negotiations into a stalemate, which may last for years and then tell a member state that this issue - which has nothing to do with it - is going to mean it will be stuck indefinitely with an extremely anti-competitive and restrictive US access policy.

[akerosid]

The latest round of EU/US talks has broken up and will recommence in Brussels in two weeks' time. This suggests that some progress has been made; the Commission will probably go back to the member states and brief on progress to date.

Here's the media report:

http://www.abcmoney.co.uk/news/11200721635.htm

Although it's disappointing that a deal wasn't done, I think that based on what Barrot was saying earlier in the week, I would not have been surprised to see the talks collapse entirely. There is no firm info on what was discussed nor how far the talks went, but I'm assuming that for the talks to have advanced at all, the Europeans would have had to take the demand for changes in US airline ownership off the table. The media report suggests that the talks ended without acrimony and that they are to resume after consultations.

[akerosid]

The Irish minister for Transport, Martin Cullen, has said that he will look at opening direct talks with the US if talks between the EU and US on Open Skies, scheduled to restart in Brussels on Monday, fail to achieve progress.

http://business.guardian.co.uk/story/0,,2016788,00.html

[akerosid]

The EU and US sides are meeting from today in Brussels, to work out a deal on Open Skies, amid fears that if this week's talks fail, that could be "it" until the end of the current US administration.

The sticking point, much as expected, is that the Europeans want changes to the mgmt and control of US carriers; the US is resolute in saying "no" and in any case, even if the US DOT did want to give concessions, it would be blocked by congress.

The EU's latest plan is a "franchise" type operation, "like Burger King" (according to an EU official), whereby the EU carriers could open a US airline with their name, but managed and owned by Americans. The US hasn't said anything, but I can't see it being of much interest to EU airlines either; much more convenient surely to have a codeshare.

It now looks very likely that this week's talks will fail, although it remains to be seen whether any compromise will be offered by either side ...

[ryan2000]

Surely open skies should be about opening up routes and not about ownership which is an entirely separate issue. Minister Cullen should move straight towards implementing the transitional agreement if the talks fail. Any more dithering could be extremely damaging for Aerlingus.

[840]

I assume the feeling is that the Americans will never make concessions on ownership if we give up our only bargaining chip.

[The SSK]

It now looks very likely that this week's talks will fail, although it remains to be seen whether any compromise will be offered by either side ...

My contact inside the talks was not quite as pessimistic as that (at least, not before they started).:hmm:

[akerosid]

Within the past half hour, Commissioner Barrot is reported as saying that significant and decisive progress has been made in EU/US air talks, which will allow him to put a firm proposal before EU Transport Ministers on the 22nd March. No firm details as to what is involved, but the fact that such progress has been made is obviously good news.

More when further details emerge ....

[Cyrano]

Bloomberg:
Europe, U.S. Make `Decisive Progress' in Airline Talks, Says EU
2007-03-02 07:01 (New York)
By Jonathan Stearns
March 2 (Bloomberg) -- European Union regulators plan to
ask EU governments to deregulate the $18 billion trans-Atlantic
airline market, saying talks with U.S. officials this week were
successful in producing a new draft accord.
The European Commission made ``decisive progress'' in
negotiations with the U.S. and will ask EU governments to
endorse an ``open-skies'' agreement on March 22, commission
spokesman Michele Cercone told reporters today in Brussels. The
commission, the 27-nation EU's regulatory arm, will provide
details of the agreement later today, Cercone said.
An open-skies pact would allow EU-based airlines to make
trans-Atlantic flights from any of the bloc's nations instead of
from just their home country. It would also scrap rules letting
only British Airways Plc, Virgin Atlantic Airways Ltd., United
Airlines and American Airlines fly between the U.S. and London's
Heathrow airport, Europe's busiest.
Britain, which accounts for 40 percent of the market,
spearheaded opposition that killed a draft open-skies accord in
June 2004. Efforts to revive the initiative faltered in December
when the U.S. abandoned plans to give foreign investors in its
airlines more control.
Foreign Ownership
The EU had said the new foreign-ownership rule was
necessary to overcome a perceived imbalance resulting from the
existing right of U.S. carriers to fly between nations in
Europe. EU carriers can't offer service between U.S. states.
To make up for the loss of the ownership rule, the U.S.
said it was willing to explore five other areas. These were:
clarifying that foreigners can own as much as 49 percent of non-
voting equity in U.S. carriers; letting EU carriers fly between
the U.S. and third countries such as Mexico; loosening
requirements that federal workers travel on U.S. carriers;
letting EU carriers set up U.S. franchises; and committing to
additional talks after an initial accord is reached.

[The SSK]

There is an agreement. Whether it's a good one or not remains to be seen.

[akerosid]

It seems fine; the US has agreed to look at other areas and one can assume that the US will show bona fides in this regard.

The basic thing is that Open Skies is on the table, plus some extres to be discussed in future. Now, to play devil's advocate, what could be gained by NOT agreeing the deal? The EU is NOT going to get anything better than this, so if they screw this up, it's not going to move those issues "to be discussed at a later date" any closer to achievement; it'll just ruin any chances of either those issues or the main deal being done in the near future.

Fingers crossed that everything will go according to plan!

Good news for Ireland/Aer Lingus anyway. The one question I have is this: assuming the deal is approved by EU ministers on the 22nd, what then? How long a lead in will there be? Could a country decide to put it into being immediately, or (as I expect) will the EU say that the deal will take effect on a certain date; I sincerely hope they don't pick something stupid like November and miss the whole of the Summer season.

[Just a spotter]

Most of the news reports I've read have suggested the same time line

EU Transport Commissioner Jacques Barrot said he would ask EU nations to back the deal when EU transport ministers meet March 22. The U.S. Congress must also back the deal before the new rules would kick in Oct. 28.

With regard to Aer Lingus/Ireland ... RTE's news at nine o clock said it signaled the end of the Shannon stopover.

http://www.businessweek.com/ap/financialnews/D8NK771O0.htm

JAS

[The Sandman]

http://www.iht.com/articles/2007/03/02/business/skies.php

[akerosid]

Looks like BA and VS will be pressing the UK govt to reject the deal.

http://news.independent.co.uk/business/news/article2323467.ece

Probably not unexpected, but still a major obstacle; since the voting will not be by qualified majority, the deal could still be undone. The UK could, even if it were the only opponent of the deal, veto it for everyone else, with the result that the whole O/S process could be finished for years - certainly to the end of the current US administration. Of course, BA/VS would be very happy with this, which suggests that, really, the best course of action would be for the US and UK to do a deal under the supervision of the EU. Otherwise, we could be back and forth to this position for years to come.

:mad: :mad: :mad: :mad:

[jet2_at_blk]

I on the front page of the Times newsaper this morning that the Open skies agreement could see a plummet in air fares across the Atlantic wil LC airlines lurking.

I was thinking about EZY and FR. Being the two biggest LC carriers in Europe, and 2nd and 3rd biggest in the World (I think!:O ) surely they would want a slice of the action.

EZY

Easyjet would probably be the LC airline that would fly to major airports such as JFK and IAH, instead of the smaller airports which would attract FR.
I can see EZY using A332s on their routes, and maybe ordering A350s in the future. These would intergrate well with the fly-by wire a/c they already have in the A319s.
I think that they would seal off LPL and LTN for transatlantic flights, and maybe give NCL that link across the pond they always wanted.

FR

As I said above, FR will be attracted to the smaller airports with lower landing fees.
I can see FR using B763s on their routes, and maybe ordering the 787 in the future. These would also intergrate well into the FR fleet, with an all Boeing set up.
I think that DUB and STN would be FR's mainstays, but they could also venture out into EMA.
They may also be the first to offer 'Free' flights across the Atlantic. Afterall, you are on the plane longer, and the in-flight gambling they want to install may just make these fares possible!

All these ideas are just my opinion IF EZY and FR were to look at crossing the pond anytime soon.

This maybe the break many UK airports have been waiting for. MAN are still desperately trying to expand on the long haul (and are doing a good job), and NCL may get that link to NYC they have been longing for!

If this agreement does go through, sure this would make LHR by far the biggest airport in the world, not only on International passengers, but across the board. Chicago and Atlanta will have to watch out!:D


Anybody got any opinions?

[DONTTELLTHEPAX]

I could see FR sticking with the 737-800's and stick to the East coast with poss first route as follows STN-PIK-EWR, Airberlin would also be an airline to watch at STN as they have a interline system set up and running. I could see them using, B767 or even B777 to the west coast of the USA.

[Ian Brooks]

Heathrow is very slot constrained so probably not a lot of extra flights especially in morning as it is already so busy but I can see American and BA moving flights over from Gatwick.
I thought Manchester was not really affected by the Old Bermuda so not sure if it will have a vast effect
Places that could do quite well are Stansted and Luton in my opinion

Ian

[jet2_at_blk]

Heathrow is very slot constrained so probably not a lot of extra flights especially in morning as it is already so busy but I can see American and BA moving flights over from Gatwick.
I thought Manchester was not really affected by the Old Bermuda so not sure if it will have a vast effect
Places that could do quite well are Stansted and Luton in my opinion


Heathrow is slot constraint now, but with T5 just around the corner, and a most likely 3rd runway and another new terminal, there should be a big change! (Obviously not immediately!)

Why would BA move flights to LGW? LHR is 'theirs.' No airline comes close to what they operate from that airport. If they sacrafice some of these slots, they are basically giving BMI the chance to move in. I suppose if they were to move the US flights to LGW and start new East Bound services, that could work.

Manchester is throwing itself into a massive expansion plan for 2015. They want new services on long haul routes. This could help them, as the LC airlines may get involved.

I definatley think that LTN would grown rapidly, but STN just doesn't have the space at the moment. They are nearing their maximum capacity of 25 million pax per annum. I think that the airports to watch are LPL, NCL and EMA. Big with the LC carriers, and could be the bases for the next revolution in air travel.

[Richard Taylor]

Aberdeen has long coveted a link to Houston, KLM were speaking about linking the two, subject to an agreement on "open skies". Oh, & a longer runway at ABZ! :hmm:

Also BAA were in talks with "a-still-unnamed" US airline about the same link.

[The SSK]

Assuming the agreement gets past the EU Council (v. likely) and the US Congress (...), the most likely opportunities would seem to be:

Continental, Delta etc could access Heathrow - but they would have a hell of a job amassing enough slots to make it viable.

BMI could fly to the US from LHR.

Virgin might find it easier going running a franchise operation in the US.

BA and American could gain anti-trust immunity to allow them to cooperate more closely

Lufthansa could operate transatlantics from 'their' Zurich hub.

Several opportunities would open up for Aer Lingus

Hopefully European airlines will all make a bit of money, but probably not much, carrying US government business which up to now has been closed to them.

Talk of locos between the UK and the US is nonsense, there would never have been any obstacle in the first place. The current UK/US bilateral is flexible enough, and the two sides liberal enough, to allow just about anything as long as it doesn't involve Heathrow, and to a lesser extent Gatwick.

[FullWings]

Will be interesting to see how BA and Virgin will cope with the loss of their lucrative LHR to US oligopoly.
In reality, what difference will it make? LHR is completely slot restricted, "open skies" or not. If other carriers want to operate out of LHR to the USA, they'll have to buy space off someone else (if they can).

On the whole, I think it could be advantageous to Virgin, BA, Midland... as they should be able to fly from anywhere in the UK to the USA rather than being restricted to certain airport pairings. At the moment BA can't fly direct to IAH from LHR or ORD from LGW, etc. They could also take advantage of other European airports that are not at capacity.

[ri5]

I think Mr O Leary will now be seriously be looking at the option of a few 777 A/c to fly from STN and Hahn to the USA.Watch this space.

[akerosid]

Unfortunately, I wouldn't be so sure about approval by the European Transport Council; the UK Govt will be under severe pressure to veto it (see article in today's Independent); BA and VS want it like they want a hole in the head and they will be lobbying furiously to veto it. Unfortunately, they can do just that, because qualified majority voting does not apply.

The information I've been given is that since no change in US law is brought about by this, Congressional approval is not required. However, this could be a moot point.

It seems ridiculous that with 26 countries wanting a deal and one not wanting it, that one country could wreck it for everyone. The Americans may well have to threaten Britain with a revocation of Bermuda II, to put some pressure on.

If the UK does wreck it, then what next? Clearly if every other country wants the deal, why can't they go ahead. Why should BA have a veto over EI's ability to expand its t/a links? Surely, the best option would be for the US and UK to thrash out their differences, under EU supervision and everyone else should just go ahead with the deal as agreed.

[ICING AOA]

I on the front page of the Times newsaper this morning that the Open skies agreement could see a plummet in air fares across the Atlantic wil LC airlines lurking.

I was thinking about EZY and FR. Being the two biggest LC carriers in Europe, and 2nd and 3rd biggest in the World (I think!:O ) surely they would want a slice of the action.

Dear Jet2-at-blk,
To follow your idea, I have found a suitable Zero star hotel at New York for Ryanair B787 Crews (for their low cost nightstop) :ok:



http://img206.imageshack.us/img206/9685/511971crappyhotelwashrorm7.jpg

[Eirefly]

The infamous Shannon stopover will now be finished. At least EI will start to fly to Florida with their new 330's.

[LB1985]

At the same time, restrictions on U.S. airlines flying to Europe would be loosened, effectively removing barriers that now grant only two U.S. airlines — American and Delta — the right to fly into London Heathrow Airport.
Delta, at Heathrow? :confused: I thought it was United, at least it was when I last checked...

[Just a spotter]

Anywhere in the UK to JFK would be a bit too long for an FR 738. STN's 3,400 mi, PIK's 3,200. The 738 reaches to just under 3,600 with 186 passangers.

Even moving outside the UK & closer to the US, SNN is still a gnats over 3,000 mi. Shortest single jump would be from NOC again just over 3,000.

JAS

[Scottie]

For the Loco's it's just not going to happen.

Loco's don't like sector lengths of greater than 4 hours, the more sectors per day the more money they generate. The margin on economy trade across the atlantic are already wafer thin.

Really would you want to go on a 737/A319 7 hours without entertainment or food?

Go to a bucket operator and you can fly with BA/VS/CO etc for £250 with food and entertainment. If this deal goes through then prices across the pond will plummet and you'll still be flying with the aforementioned carriers and more.

If EZY goes across the pond I'd leave the company.

IT AIN'T GOING TO HAPPEN!

[flyer55]

Yeah will be interesting to see what they do and especially BA with its Texas routes !

[flyer55]

Well if it does happen I wonder if BA would swap routes over with routes at LHR and send them down to replace the ones moving over !

[barit1]

Help me out with something, please:

When jets didn't have the long legs of today, LHR & CDG & FRA etc were the European gateways for onward travel to the ME, Africa etc. I personally preferred LGW if my destination were the British Isles; instant BR connection, somehow an easier operation.

Today many flights from N. America operate non-stop to Eastern Europe, ME, Africa etc. So I don't see the continued need for European hubs - yet the hub operations seem to continue and grow. Is my perception right that LHR has a lot of through traffic, as opposed to LHR as a destination? :confused:

[Hotel Mode]

Same reason Dubai is a hub, you may be able to fly JFK-Prague but you sure cant fly Denver-Prague etc etc.

[DONTTELLTHEPAX]

There is no reason why a Loco such as FR could not get some B777,B767 or B757 and run then as full fare flights from the US and use them as feeder flights to europe via STN, By doing this they could offer such deals as buy a transatlantic flight get a european one free we all know that FR make there money with onboard sales, what a good idea to flood the UK Loco market with US pax.

[jet2_at_blk]

That would be a brilliant idea, but FR are strictly no baggae transfer, and point to point airline. Unless they change this, you would have to book seperately. (Would be a 763, T7 well too big!)

[EI-BUD]

Tradition would have it that LCCs dont do the long haul or flights above 4 hours. And MOL has often said he is not at all interested in anything outside Europe or certainly close to it. However, nothing would surprise me these days.

I believe MOL realises the opportunity in the Longer routes. Aer Lingus is the vehicle that he would use for this. If the EU rules against Ryanair and MOL is told he cannot persue the take over idea, MOL woll certainly try to make life hard for them.

Jetstar are showing that Long range routes can work, where many have not succeeded.

We must wait and see. I could see EZY being much more interested in Longer Routes than Ryanair.

Would Ryanair do NOC USA? Good prices ex the USA to Ireland could do wonders for Tourism , especially in the West ?? NOC SNN or even KIR.

Whether Ryanair or EZY venture into USA operations some lower cost outfit will as there are big opportunities....
EI-BUD

[jet2_at_blk]

Why would FR have to do a stop over? If they were to use 763s then, the it is not needed. Current FR rules:

1.Point to point flights
2.Pile 'em high, sell 'em low

A 738 would cost FR LOADS more to run per seat on Pond flights. Suitable a/c are needed. The problem is that fuel consumption is a major problem with FR, and the 763 would not be upto standard. Maybe FR will wait for the 787 to arrive before venturing. Unless they could get some 752s?

[whoop.whoop]

Mr O Leary will now be seriously be looking at the option of a few 777 A/c to fly from STN and Hahn to the USA
Thats why he is so interested in EI. LHR slots. LHR-JFK.
:ugh: :mad:

[PAXboy]

Reading in The Independent (serious UK newspaper): if it is still the case that this provides access from the US into Euro hubs and then elsewhere within Europe but does NOT provide onward access from US hubs, then it is no progress.

If as is reported this allows the US into Europe but not Europe into the USA, then it is not a good deal. We know from other areas such as food production, that the USA does not have the same understanding of the term 'open markets'.

If it is to be agreed that European carriers can land at JFK and then continue with the same a/c into the mid-west, for example, then we might be getting somewhere.

Also, does this draft allow the US carrier landing at LHR to pick up pax before going on to Prague? If so, then we must be able to pick up pax at JFK before going on to Kansas City (for a pair of towns plucked at random).

[akerosid]

I think long haul, low cost is the wave of the future; Zoom is already on t/a routes, Jetstar has started in Oz and soon, Fly Air Asia Express (FAX) - and offshoot of Air Asia - will be operating from KUL to Europe.

I think this, along with the loss of its position at LHR, is freaking BA (and VS) out; however, it is absurd that one company - let alone a country - should be in a position whereby it can hold this whole process up for everyone else; we are likely to have 26 countries agreeing and 1 country (read airline) vetoing. Things move on; BA needs to understand that. All of this stuff about picking up in the US and flying on somewhere else is really just dressing; even if it were allowed, I simply cannot see any EU airline wanting to do this, especially when they have alliances; why buy a dog and bark yourself?

It all comes down to moving forward with a process which will involve HUGE economic benefits. My sincere hope is that the US govt makes it very clear to the UK that if it messes this up, Bermuda 2 will fall. The tricky part of the situation is that the prospect of Open Skies being on ice for 2+ years is hardly a disincentive to BA/VS/DFTR; the only thing that is going to concentrate minds is a "negative incentive".

http://business.timesonline.co.uk/tol/business/industry_sectors/transport/article1466123.ece

[pax britanica]

Just an ignorant pax but a few things occur to me as regards 'fortress Heathrow'

LHR cannot accept any meaningful number of extra fligts and one small problem-3 hours of fog say -disrupts half the worlds airlines because of delayed aircraxt in Heathrow. I just do not see O Leary and FR wanting to be tangled up in that. And as your man says he hates aircraft and pilots and techies and wants the simplest cheapest model he can get-basic planes -outsourced maintenance no nightstops and he has done well with it.


Would Easy-a pretty marginal but decent operation take these risks ? no chance.

Euro carriers swapping shorthaul slots for complex scedules like AMS-LHR -JFK-LHR AMS. Possible I am sure but do they have the aircraft ? can the Terminal2 (I know KL doesnt go there) gates accomodate bigger aircraft.?Again very complicated and why take the chance

Looking at the other side of the pond Jet Blue is in disarray and Southwest are even less likely than Ryanair for TranAt adventures.All the legacy carriers except CO are a joke in terms of financial strength and quality of service.Who would choose NW over BA or VS?

So this could be largely cosmetic especially in the short term and by that I mean prior a third runway at LHR which is years away. Is 'theoretical access' to LHR going to make any difference at all to BA VS and AA. Whats much more likely to hurt their transat yields is if MaxJet and Co really get going and cream off the J class pax . But theres no votes in that because if BA lose too many business pax Y fares will creep up and up. If they dont and BA lose business across the baord they end up like Untied -is thata good thing??

And there is another lesson which is that unfettered competiton tends to lead pretty much back to the start point. Look at the US Telecoms Industry.Twenty years ago there was one mega carrier, AT&T in its Ma Bell guise. THe monopolywas broken and twenty frantic years later its consolidated back to where it was with 2 mega carriers one in the east one in the west. Is that the way the airline biz is going -maybe 3 big international players all with regional strengths-area monopolies - plus SW?

So the regualtors and polis play with the status quo at their peril-it seldom leads where they intend
PB

[akerosid]

I had understood from an article in the Independent that unanimity was required for voting on issues such as this, but reading the following opinion (in favour of O/S, as it happens), I'm not quite sure:

http://www.telegraph.co.uk/money/main.jhtml?menuId=242&menuItemId=2818&view=DISPLAYCONTENT&grid=M3&targetRule=1

The writer suggests that the UK cannot block this on its own (suggesting Qualified Majority Voting). If true, this would be great, BUT what is the actual position? From what I have read, I'm unfortunately of the view that unanimity will be required, in that one of the several areas which requires unanimity is treaty agreements.

With regard to the points at issue, such as cabotage within the US, this has never been on the table, but more to the point, it is somewhat academic, because I simply cannot see EU airlines availing of it, even if it were available.

[HZ123]

Let us not forget that last year alone one of the broadsheets stated that 25% of the seats transitiing Europe to the USA and reverse are already empty on each flight. In addition to any start up LOCOs it may well lead to the loss of a few old favourites, which may be the greater effect. Finally, it only takes a serious security incident and the market drys up and that scenario is not unlikely in the present climate.

[GAZIN]

akerosid.
I find it incredible that the issue of cabotage is not part of these negotiations. I would have thought it should be a key part of any agreement between Europe & the USA.

[barit1]

The reason the US is skeptical of cabotage is simple geography. BA would love to operate a LAS-JFK segment, for example, and in return AA gets - what - MAN-LGW? It this even remotely equitable?

[merlinxx]

If this works it means that cabotage (8th Freedom of the Air) will/should be applicable throughout the EU? YES and this INCLUDES FRANCE!!!!

[The SSK]

Akerosid - the issue *probably* falls under the Maastricht 'second pillar' and therefore requires unanimity. You can bet that the German Presidency, which wants to have this deal signed on their watch, will be working hard to bring the Brits in line.

As for cabotage/5th freedom opportunities - there was a time when Europe was crisscrossed with US 5th, Pan Am then Delta had a huge Frankfurt hub operation, TWA, Pan Am and subsequently United had a number of key routes out of LHR. TWA had a sizable part of the Rome-Athens market. All gone.

The only US 5th in Europe nowadays is express parcels.

Barit1 - 'BA would love to operate a LAS-JFK segment' - you must be joking.

[akerosid]

Just had a look at this Reuters report this afternoon, which also seems to believe it is Qualified Majority voting; I agree with you, SSK, that it is unfortunately more likely to require unanimity.

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=hotStocksNews&storyID=2007-03-05T150557Z_01_L0559954_RTRIDST_0_OPENSKIES-BA-UPDATE-3.XML&pageNumber=2&imageid=&cap=&sz=13&WTModLoc=InvArt-C1-ArticlePage2

The Commission wants unanimous support, but if Britain opposes it, for example, it could still go through as such decisions require support only from a "qualified majority" of member states under the EU's complex weighted voting system.

(Under this, http://en.wikipedia.org/wiki/Qualified_Majority_Voting, all countries have a set amount of votes based roughly on their populations; the four biggest countries, including the UK, have 29 votes. Three key issues have to be satisfied. Firstly, out of a total number of 345 votes, 255 (or 74%) must approve; 91 votes are needed to block it, so the UK would need several other countries to do so). Additionally, however, the countries in favour must include a majority of the member states AND over 62% of the total population of the EU, so if QMV does apply, we're laughing.)

If the latter is the case, then we are much closer to a deal; Reuters also suggests that US Congressional approval is required, which runs counter to comments posted elsehwere, which suggested that since there was no change to US law, no Congress vote would be required. However, even if a vote is needed, I would be less concerned about this than about the EU vote.

If there is unanimity, then the Brits could mess it up; if there is not such a requirement, it doesn't matter if they vote it down. I would be surprised if any other countries came out against it. The economic benefits to virtually every EU economy (including, let it be said, the UK's) are huge.

Even if unanimity is required, I would still not want to put money on Britain rejecting it, although I still think it is by far the most likely outcome. The UK needs to understand that if it rejects Open Skies, it could suffer in other areas of co-operation and since it would be the only country to do so, is it necessarily in its best interests to stand alone in obstructing a deal which every other country wants? Also, if it does stand alone, any remote chance it has of getting what concessions it seeks from the US will be out the window and indeed, it is not beyond the realm of possibility that the US could revoke Bermuda II.

[akerosid]

PaxFlyer's comments get a mention!

http://www.ft.com/cms/s/d0169358-cb02-11db-b436-000b5df10621.html

[akerosid]

The pace of lobbying and basically doing down the proposed O/S deal intensified today, with the UK Transport Secretary, Douglas Alexander, saying that more work needed to be done on it. BA, of course, is lobbying hard against it, but it's still not clear what other countries are against it. I am not aware of any.

Interestingly also, Jacques Barrot said today that it may be possible to change the voting process to qualified majority, which would make life a lot easier for getting the deal through, although how that can actually happen is not clear. It is a treaty with a foreign state, in which case it should, unfortunately, be unanimous. http://www.borsaitaliana.it/bitApp/news.bit?target=NewsViewer&id=267478&lang=en

The UK govt says that there are a lot of issues which have not been addressed, but notwithstanding, what is included is very positive and will benefit every EU economy, including the UK.

Perhaps the key question is, what does the UK believe will happen if it vetoes the deal? As far as BA is concerned, the longer is can be put on the long finger the better. I really, really don't think it cares too much about the concessions that the US has - or might - make; the combined value of these won't come near to the value of BA's LHR position. The UK may argue for cabotage, increased ownership, yada, yada, yada, but does anyone really see BA actually flying US domestic flights, much less wanting to trade the position it has today for that right? No way.

Has the UK govt considered the possibility that the Americans will give strong consideration to revoking Bermuda 2 and also, the potential for Britain's relationship with its other EU partners if it vetoes a deal which is worth billions to them? There's a lot riding on this and a lot to lose with the wrong decision; is it really worth a huge cost to UK PLC, to save BA's cosy little position at LHR ...

[Count von Altibar]

There have been huge obstacles to this deal on both sides of the Atlantic in recent years but this time, in my opinion, it seems they are determined to push this agreement through. BA, Virgin or any other airline are not going to stop it just to protect their cosey positions. You can't stand in the way of progress...

[ryan2000]

BA are like the Shannon lobby in Ireland i.e block progress in their own selfish interests. My gut feeling is that it'll go through this time and that any outstanding issues will be addressed later.

[gaelgeoir]

Haven't you noticed that the "Shannon lobby" has accepted the inevitability of Open Skies for some time past? There hasn't been a whisper of protest about the forthcoming change. Their current campaign seems to centre on lobbying for road access improvements and tourism marketing support for the West of Ireland.

[The SSK]

Air France/KLM have come out firmly in favour of the agreement in this press release (http://www.airfranceklm-finance.com/sysmodules/RBS_fichier/admin/forcedownload.php?id=727).

Goldman Sachs have advised that they think the risks to BA are overstated - because of the difficulty for competitors in acquiring a significant number of LHR slots.

[barit1]

Just out of curiousity - and I do not know the answer in advance:

What percentage of slots at LHR are held by UK domestic carriers, and what percentage by foreign carriers?

And - similarly at JFK? :cool:

[The SSK]

Do you mean domestic carriers, or domestic routes? (Slots are of course not normally route-specific).

Should be possible to find out what share of scheduled departures are domestic and international, or what share are domestic-flag and foreign-flag.

[Cyrano]

Just out of curiousity - and I do not know the answer in advance:
What percentage of slots at LHR are held by UK domestic carriers, and what percentage by foreign carriers?

From this ACL UK report (PDF) (http://80.168.119.219/UserFiles/File/LHR%20W06%20Start%20of%20Season%20Report.pdf), page 5:

At the start of the W06 season, of 9229 weekly movements at LHR:

BA: 3784
bmi: 1057
(Lufthansa: 412)
Virgin: 298
(Aer Lingus: 274)
(SAS: 274)

So BA+bmi+Virgin = 5139/9229 = 56%

[akerosid]

Let's fast forward a few weeks and assume that the UK does wreck the whole thing. Now, strictly speaking, the EU should say, right, all systems stop. Everyone has to revoke their bilaterals and we get into this silly, time consuming and utterly wasteful exercise, just because BA grabbed the British minister by the b****s and attached an electrode.

Q: Is the EU Commission really going to grant SO much power to one airline that it will effectively let them get away with murder. Remember, all this stuff about cabotage and foreign ownership of US carriers is really just a smokescreen, asking for something BA knows will sink the whole thing. No one will be happier if this thing sinks without trace for years to come. For Britain to veto this would be a HUGE victory for BA.

So, instead of following the BA script, which would allow BA not just to hold its position at LHR, but also to mess things up for all of its EU competitors, why not (for once) take a sensible approach and allow the other 26 countries who want a deal ON THE BASIS THAT THE COMMISSION RECOMMENDED to go forward in that way. Now, I know that unanimity is required for the vote at Council level (this was confirmed today), but if these 26 countries were to do a deal with the US on the basis of the deal agreed, with a community aviation clause (excluding the UK), the Commission could turn a blind eye to it and everyone could win.

Legal? In this situation, it's a case of "legal schmegal"; an obstacle has been wilfully placed by one airline and its glove puppet and this is supposed to hold the rest of Europe back indefinitely. "Dream on"; this is something that needs to happen. Let's not let BA or the UK govt stand in the way.

[The SSK]

JFK schedules for March (source OAG):

Departures by US carriers to US destinations: 12623

Departures by US carriers to non-US destinations: 3359

Departures by non-US carriers to US destinations: 307

Departures by non-US carriers to non-US destinations: 4000

[Ancient Observer]

I do not agree that giving up open access to lhr is a good thing at this stage in Aviation's development. Access to lhr is the ONLY tradeable asset in this debate that Europe has, and that USA wants.
For the bureaucrats in Europe to give this up for NO gain whatsoever is just like a lot of other weak-minded stuff that the Community drags the UK into.
It is weak thinking, and pathetic bargainning. The USA used to out-bargain Russia and China - and they are good at negotiating. To the USA the Brussels lot are a simple pushover.

[SADDLER]

We risk opening the floodgates with only a short term advantage to UK airlines.Its no wonder other countries and their airlines find open skies so appealing.[I am not BA or Virgin]

[Wannabe1974]

Now I am a simple young(ish) Wannabee who doesn't know a lot about the intricacies of such negotiations. However, I really would be grateful if someone could explain the following:
(From Today's Telegraph)
"It would allow a US airline to fly to the UK and on to another European city or the Middle East, Africa or Asia. But a European carrier would not get the same access to the massive US market. Critics of the deal also question the different levels of foreign control permitted of US and European airlines, which would allow a US airline to own 49pc of a European rival while EU carriers could only acquire a 25pc voting stake and an economic stake of up to 49pc".

How is that in our interests?

Please don't shout! Its a genuine question!

[teifiboy]

Don't worry. It's a fair question

[The SSK]

The main concession that the Americans have made is to allow any EU airline to fly from any EU point to the US, opening the door to 'seventh freedom' operations. In fact it also extends to Switzerland, so for example Lufthansa (which owns Swiss) could operate Zurich - USA as an LH service. Air France/KLM could become a single brand.

Aer Lingus will get access to the extra US destinations they desperately want. Iberia will have their way cleared to get a closer cooperation with American Airlines within the OneWorld Alliance.

US airlines don't want or need extra rights to fly within Europe, apart from the parcels carriers like FedEx they don't use the rights they already have. Similarly apart from Virgin America, no European airline is interested (for the foreseeable future) in setting up shop over there.

One disappointment is that the US have hardly moved on their protectionist attitude to traffic on government business, that is nearly all reserved for US carriers.

[Wannabe1974]

Don't they have a protectionist approach to just about everything?

Whilst I can see your points and understand them, I still don't really see why the line of reasoning that no-one really wants these rights should result in what can only be described as an alarmingly sloped playing field? :confused:

[akerosid]

In the overall scheme of things, I don't see it as being alarmingly one-sided. It is what it is; "it does exactly what it says on the tin" ... it is an Open Skies deal. Any airline from the EU will be able to fly from any airport in the EU to any point in the US. That's what it should have been all along.

BA and VS are fighting a rearguard action now, to try and persuade the govt to veto the deal; both - along with the Transport Secretary and BMI - are to appear before a Commons Select Cttee hearing today on the matter.

http://www.ananova.com/news/story/sm_2238987.html?menu=

I think it really is relevant to say that the concessions being granted by the US are irrelevant, because both airlines are complaining about what they are getting in return and if they're not going to use any concessions they are getting/ would get in response, then that has to be relevant.

The reality is that the Americans could multiply these concessions one hundred fold (or more) and BA/VS would still be opposed; they have the one thing they covet more than anything else and that's LHR-US access. And they're going to do everything in their power to keep it that way.

If it were Qualified Majority Voting at EU level, then I would say "no problem", but the fact is that Britain's veto could torpedo the deal for the 27 countries that actually want it (the other 26 EU countries and the US) and if they were to use that veto, it would be in defence of a very anti-competitive arrangement. The EU would then be after all EU countries to abandon their bilaterals (and you can be sure they would start with the UK and Bermuda 2, if the Americans don't renounce it first!), so one way or another, the UK needs to understand that Bermuda 2's time is up.

It needs to be made very clear to the UK that there is no upside to the use of its veto; Britain - as a whole, rather than the sectional interest of BA/VS - stands to gain from Open Skies. To reject the deal would see Britain's relationship with its EU partners damaged and would leave the UK isolated and all for a pyrrhic victory, because its protection of B2 and BA/VS at LHR would only be temporary. It would be naive for the UK to believe that there would be no negative consequences arising from a veto which would cause mayhem for the EU Commission, its 26 EU partner states and the US.

[Wannabe1974]

Nope! Still don't get it!

[The SSK]

The EU is very concerned that there should be a level playing field within Europe, first and foremost that is what the single market is all about.

It is anathema to them that some EU airlines should hold a competitive advantage over others. That’s why they don’t like restrictive bilaterals like Bermuda 2, but also why they don’t like US-style Open Skies bilaterals which give airlines like KLM and Lufthansa the opportunity to cosy up to their US partners.

However the level playing field in Europe can only be achieved by dismantling the whole Europe-US bilateral structure, and that requires the cooperation of the US.

It’s pointless saying ‘The EU has given up Heathrow to the Americans’, as far as the EU is concerned Heathrow-US routes are just as closed to Lufthansa and Iberia as they are to Delta and Continental.

Sorry if I’m sounding more like a European than a Brit, but that’s what I am.

[Wannabe1974]

So how exactly is this going to benefit the UK? I can see the benefit to the European types over the sea, but I can't really see BA/Virgin/BMI wanting to fly London-Paris-New York.
I don't see the point in the UK Govt supporting yet another initiative to allow the rest of the EU to become more prosperous at our expense!

[yachtno1]

I think we've got the Irish slant on this "Open Skies" loud and clear!:}

[D O Guerrero]

Now it all makes sense!
Wannabe makes some excellent points, although no-one seems to be giving him a very straight answer.

[en2r]

I don't mean to be rude but the whole world doesn't revolve around Heathrow. Most EU countries want Open Skies for their own reasons, and very few just want to get access to Heathrow. Here in Ireland we want Open Skies to get rid of the ludicrous Shannon stopover which means that for every two flights that leave an Irish airport, one flight must make a stopover in Shannon. We just want to get rid of this, we don't care about Heathrow.

[MarkD]

SNN is a mess entirely of Ireland's making - it's not so long ago when Open Skies was opposed by Them In Charge since it would kill SNN restrictions but now that an EU wide deal is needed to vary SNN restrictions they are all for it.

It's hilarious to hear Clare pols talk up the fact that every time SNN stop has been liberalised pax numbers increased - the same pols that refused to accept this right up until the 3:1 deal was done and the writing on the wall.

[D O Guerrero]

So as I see it, we in the UK should just roll over and let everybody else have it their way?
Just so I understand..

DO

[yachtno1]

From an Irish perspective, that does seem to be the case DOG...:)

[akerosid]

I wouldn't put it quite like that; the UK is the only country which seems to want these concessions, while every other country wants a deal, so it's not Ireland alone they'd be helping (although that would be enough! ;) ).

Anyway, the EU Commissioner said yesterday that this O/S deal is only Phase I of Open Skies, with another part of it to start in 2010. How the mechanics of this will work, I'm not sure. The EU has threatened to back out of the whole O/S deal if the Americans don't give concessions; like that's going to happen ... a textbook example of cutting off one's nose to spite one's face.

The Transport Sec'y, Douglas Alexander, said yesterday before a Commons cttee that the UK is likely to support the deal, given that rejecting it would leave the UK isolated. He said that the benefits of the deal had to be looked at in a wider context, not just on the basis of LHR alone.

http://politics.guardian.co.uk/economics/story/0,,2033169,00.html

[Ancient Observer]

One intelligent person has been consistently asking what the advantage is of this "deal" for UK plc.
Quite simply, there is no positive advantage, and lots of downside for UK plc.
The useless bureaucrats in Brussels have been out-thought and out-negotiated by the USA. USA have moved on very little, whilst Europe have given up the only bargainning chip that the USA ever wanted.
USA will never return to the table - they've got all they want.
That is plain daft. (I have no connection with BA/Virgin - but I know a lot about negotiations, and the thought of the Officials conceding for no reason annoys me.)

[MarkD]

Ancient - UK airlines would be able to base US ops out of continental airports - assuming they could get slots at somewhere like CDG, of course :rolleyes: I'm sure some people were wondering what EU open skies would bring the UK and the answer is one of the cheapest air travel environments in the world - if you forget the taxes!

As for the UK traveller, airlines like BD and EI could use LHR slots to do US ops and bring down the prices for UK travellers, or at least for BA/VS to continue to justify any premium. I don't see it happening myself but who can say what some airlines will at least try.

[D O Guerrero]

Thanks Mark - A sensible answer at last.
I still don't like it though! Basically we're getting into something on completely unequal terms. Both parties need each other, but we're prepared to let the US to have more just because we're worried they might pull out. Well it strikes me that we need them just as much as they need us. I don't think it is usually justified in any negotiations to obtain something at any price.
I think that the principle objection should be that EU companies will not be able to control US companies. Whilst this might not matter to countries like Ireland or Portugal or wherever, it matters to the UK as we have a strong history of overseas investment. The whole thing stinks of grotesquely one-sided protectionism and I hope that our veto is deployed in the absence of a fair deal.
I do think most people would welcome the genuinely "open-skies' aspect of the deal.

[840]

I wouldn't say OpenSkies has no benefit to the UK. It is likely to have a similar effect to the EU-wide Open Skies deal, with plenty of new routes for regional airports and perhaps Stansted and Luton, but with airlines who have a strategy based around Heathrow operations suffering.

[BCALBOY]

Already have Open Skies outside of LON , so this deal won-t add anything for Regions....if anything may reduce Regional services as carriers will
redploy resources to LON if they can get the slots.
BMI ,FOR E.G , have only developed LHL from MAN because they ordered LHL a/c in anticipation of a deal and when it didn-t happen they had to find something to do with the aircraft .
Also all carriers are going to want to m ove their LGW-NATL services to LHR which will be negative for LGW and in order to get slots at LHR carriers aill be buying slots from SHL operaters @ LHR , so a number of secondary SHL destinations @ LHR will lose their services ....places like MME , HAJ , EIN , RTM ,STR ,some of ex-BMED destinations:)

[akerosid]

The UK is looking for a one year delay to the Open Skies deal, before new operators enter the LHR market. Can't think why any more time is necessary, but if it's just a year, I guess they'll agree to it, if the alternative is the UK vetoing the deal.

I would imagine a number of unpleasant expletives coming from bmi HQ, but again, they mightn't be affected that much, if they won't be able to get any new aircraft by October anyway.

With LHR moving to mixed mode operations around 2008-9, the US might accept this if a quid quo pro is US carriers being allocated a certain proportion of the new slots arising from this?

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=allBreakingNews&storyID=2007-03-14T164222Z_01_L14477839_RTRIDST_0_EU-OPENSKIES-BRITAIN-UPDATE-3.XML

[Skipness One Echo]

Heathrow mixed more is surrely only a proposal at the minute or have I done a Rip Van Winkle again?

[Ancient Observer]

Mixed mode remains a very live project, with the DfT pushing BAA to make it happen, and if it can be done safely - CAA must be on the case by now - then the extra slots will be sold. Who gets the money - why, Gordon Brown, of course! The Treasury are after the income from the sale of the slots. That is why it is being pursued with vigour. Dear Sir Michael won't get the money. Anyway, he's sold his BMed slots to BA.

[bmi expat]

Ancient observer, new slots at LHR are not sold, that is illegal. When slots become available, they can be applied for by any carrier but new entrants are given preference.

As for bmi selling the BMED slots back to BA, where on earth did you hear that from, do you have a source to back that up?

[akerosid]

Just a few days left and the British govt is under pressure from both sides.

The Sunday Times reports that TB will be talking to GB to try and wrangle some concessions, including a 5 month delay in increased access to LHR. There is expected to be a sympathetic reaction to that, although Britain is also expected to push for another concession, whereby talks with the US on increased domestic access must start within 60 days and conclude within a certain, set timeframe, or else the whole deal falls through. Since the UK is the only country looking for this access, this is unlikely to get much of a hearing.

There will be a lot of talking next week, but it is now expected that a deal will be done.

BA is planning to move ATL, IAH and DFW routes to LHR (although it probably won't be able to do this before LHR is open to more US carriers) and Virgin is looking at route from other European countries.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/03/18/cnopen18.xml

[BCALBOY]

Would like to stimulate some discussion on what will happen if/when EU agrees to deal with US.

Carrier reaction ( my thoughts).......

AA - move DFW,RDU to LHR ...poss new routes to SFO,SEA,IAD or will they keep presence @ LGw...1 DFW ...RDU ?

DL - priority JFK ( need 3 or 4 to compete ) plus hometown ATL....maybe leave CVG and 1ATL; @ LGW .

CO - PRIORITY EWR ( again 3 or 4 /day ) plus IAH......will they keep 1 x EWR @ LGW plus seasonal Cle.

US - wud want to move whole OP to LHR ...would they add PHX to PHL/CLT.

NW - wud want whole op to LHR ....would they add SEA to MSP/DTT.

UA- LHR/DEN ? ( Think they-ve already tried BOS/MIA AND PULLED).

VS- LHR/LAS ?

BA- ATL/DFW/IAH ( already reported in press) wud they incr SEA frequency to protect or move BWI/DTT to LGW or pull to provide slots for others ?

BD Which routes make sense...JFK wud need 3-4/day ...which needs 3-4 a/c plus big revamp of their business product....LAS ?.....ORD..what will UA think abt that ? Will they pull MAN LHL to release the a/c...think they only started MAN as they had ordered a/c in anticipation of LHR opening up and it didn-t !!


Where will the slots come from in short-term ?

Skyteam....wud KL pull or move EIN/RTM to LCT to help DL/CO/NW ? Cant see AF/KL reducing AMS/CDG.

OneWorld....Cant see BA helping anyone other than themselves.....will they transfer to LGW...e.g. MRU ,BWI,DTW or reduce Domestic Freq further or move some very shorthaul to LCY or pull routes like STR or get GB slots to AGP/RAK/CMN or have they already bought BMED slots from BD ??

STAR...WILL BD help anyone other than themselves.....PMI/VCE/NAP/HAJ/INV/JER/MME/ABZ ??
Would LH help UA by say pulling CGN ??

Any other carriers willing to deal and move to LGW or LCY....AirJamaica, AIR Seychelles , Bangladesh Biman, PIA , LUXAIR , CZECH ??


A bit long but hope it stimulates some discussion:ok:

[akerosid]

It's certainly going to be a significant shake-up, so it's going to be interesting to speculate on what might happen.

For a start, TB is going to be talking to GB tomorrow, to discuss Open Skies issues. The UK is looking for a five month delay (which is expected to be granted, because few airlines will probably want to start new routes through the Winter). The UK is also expected to seek other concessions, which are unlikely to be granted ...

http://news.airwise.com/story/view/1174245450.html

What can the UK get out of this? Well, apart from the delay not a lot and even for that, the Americans will want something in exchange; I still think that some movement on mixed mode operations will be sought. If the US carriers are being charged £20-30m per slot, while bmi can just axe some LHR-MAN/EDI/GLA flights, then that's not going to go down too well. If bmi can add, say, six flights all at once, whereas US carriers can barely add one or two, then I can see some tension in transatlantic relationships.

I would expect that BA would find things easier, because it has more slots to axe; LHR-MAN flights would be cut back, plus frequencies on others cut down; however, this wouldn't be allowed to happen until US carriers have more access, so not before next May at the earliest. I wouldn't expect them to be able to add IAH and ATL until CO and DL, respectively, get LHR access.

Of the US carriers, I see American having the biggest benefit, since they can transfer DFW and RDU wholesale; indeed, I could see AA being the first US carrier to pull out of LGW altogether. DL and CO will too, once they have sufficient LHR slots. CO would probably want four at minimum - two each to IAH and EWR; CLE would probably be dumped.

DL would want about six, two each to ATL, CVG and JFK - again, not cheap for an airline in Ch 11.

Of course, all of this could change if there are mergers in the US.

I still can't see EU carriers wanting to fly LHR-US; indeed, I suspect VS's comments about flying Europe-US are intended as something of a threat; i.e. saying to AF/LH that "if you fly from our airport, we'll fly from yours".

A lot of airlines will be under pressure to sell LHR slots, but I still think that there will be a considerable amount of pressure on the UK govt (from the US govt) to bring Mixed Mode operations forward and for US carriers to get a significant proportion of these. I would expect that there will be an agreement for a "phasing in" of new LHR-US flights, starting next May; this would be to ensure (as suggested above) that US carriers aren't disadvantaged in the manner in which new routes are added.

As for next Thursday, it would surprise me if the UK govt were not told in no uncertain terms by the US administration what will happen if a veto is used. I would expect an immediate revocation of Bermuda 2, subject to whatever notice period is applicable.

[Flightrider]

I would be very surprised if AA moved RDU up to Heathrow. The main corporate customer on this who keeps the route afloat is SmithKline, travelling between their UK HQ in Crawley and their American set-up. Moving it to LHR probably won't make a fraction of a difference to the route's performance so why use a scarce set of LHR slots if it isn't going to bring any change in profitability?

There are a few other factors like this behind individual routes which might not make it absolutely clear-cut as to who will do what.

It is probably of more merit to speculate where people will get their LHR slots from. If you have an idea of the quantity of Heathrow slots on which the likes of Northwest, Delta, American, US Airways and Continental can lay their hands, then you can start to take some educated guesses as to what they will do. USAirways is the interesting one, since it doesn't have an obvious alliance partner likely to sell slots to it.

London City could get busier still with all of the extra flag-carriers' flights to Rotterdam, Eindhoven, Luxembourg and Paris.

[Yak97]

Can't see KL moving their RTM & EIN flights to LCY, the operate for large corporate customers (Shell, Unilever, Philips, Daf etc).

[FullWings]

...I suspect VS's comments about flying Europe-US are intended as something of a threat; i.e. saying to AF/LH that "if you fly from our airport, we'll fly from yours"
Yes indeed. I notice that AF & LH were firmly in favour of open skies - so they will obviously have no complaints if Virgin, BA & BMI move into CDG and FRA in force to compete on their longhaul prime routes... :E

[757manipulator]

The real winners from an EU/UK perspective could well be the newish lowcost longhaul carriers beginning to emerge.
Zoom UK, Globespan and others like them could very well open new routes from secondary destinations into places like MAN and LGW from the US.
The big revolution I think will be more point to point flying from the US, rather than the current hub and spoke setup.

[eu01]

The big revolution I think will be more point to point flying from the US, rather than the current hub and spoke setup.To my mind, you've made a very good point here.

[Hotel Mode]

The big revolution I think will be more point to point flying from the US, rather than the current hub and spoke setup.

Theres already near enough open skies form UK regionals to US, hence the upsurge in US airlines starting routes like Bristol/Edi etc. Only LHR is closed to new routes, you may find it actually concentrates capacity on the major airports as the yields are still much higher there and the alliances move slots to more profitable transatlantic flights. Do you think BMI will still be using a slot for an ERJ to Leeds when it could be a 330 to JFK.

[757manipulator]

It might be so for US carriers, but is certainly not the case for EU/UK carriers.

As for the LHR issue, I have to agree, although that is what is happening today, it may not always be the case.
Higher yields come with a higher cost of doing business at LHR, and you can make the argument that putting all your eggs in one basket increases your exposure to unforseen circumstances.

[akerosid]

Several media outlets report today that the UK "will not block" Open Skies. The deal is likely to go through on Thursday, although the DFTR says that negotiations are ongoing. TB is supposed to be speaking to GB today, although there is no confirmation that O/S is on the agenda.

The UK is seeking a five month delay in increasing access to LHR (until T5 is open). It's expected that this will be granted.

Presumably new US carriers to LHR will then use T4?

Does anyone know whether there is a date for Mixed Mode operations to be introduced at LHR?

[gaelgeoir]

I've got to ask......what is Mixed Mode?

[840]

Using both Heathrow runways for take-offs and landings simultaneously.

[flyer55]

Whos TB and why they speaking to GB ?

[akerosid]

Tony Blair ... speaking to George Bush. He is seeking US approval for concessions sought by the UK, specifically a five month delay in bringing Open Skies to Heathrow, i.e. until Terminal 5 opens.

[Jamesair]

Apparently Bush rejected the Blair approach re excluding Heathrow.

However, a rumour that there would be "good news" in tomorrows EU talks has pushed BA shares up in the market today.

[akerosid]

No. 10 has rejected the Independent's report on Blair being rebuffed (and in fairness to No.10, the Independent derives considerable glee from suggesting differences between the UK and US, and the "cracks" in the special relationship). Its report was little more than speculation.

The UK has already indicated that it is unlikely to veto the deal; interestingly though, the Italians have suggested that they have not yet decided, although I can't see any good reason for them to reject it. It's not as if AZ wants to buy into any US carriers.

If "Good news" in a BA context means the use of the veto, that now looks unlikely. The good news probably means a six month delay in LHR coming into the O/S regime, i.e. until the opening of T5.

[akerosid]

Well folks, less than 12 hours to go. The UK is said to be still negotiating feverishly; depending on which report you read, a vote should be taken either at lunchtime or this afternoon. The sticking issue is still the automatic cancellation of Open Skies if the US does not agree to domestic access by a certain date. The EU Commission says that there is a provision to compel the US to come back to the negotiating table over this, so it's not quite clear what the difference is between what the current deal proposes and what the UK wants.

Expect a lot of hard talking in the meeting today; it's 26 -v- 1 and if that one country revokes the deal, has it really considered the consequences of that?

Hopefully, they will see the positives and realise that access to the US domestic market would be a pyrrhic victory; given the brutality of the US domestic market and the likelihood that any new, foreign entrant would be cut apart by the likes of Air Tran, Southwest, Spirit and the now-lean legacy carriers, I can't see any of them entering the market, which again brings us back to the suspicion that a deal-breaker is being deliberately pushed by parties who want only to see the deal killed.

Hopefully it won't come to that; here's to success by lunchtime ... :ok:

[757manipulator]

Deal agreed...as per BBC reporting

[Hudson Bay]

Old news!!!!

bmi making a big announcement very soon.

[akerosid]

Great news. Here's the BBC report:

http://news.bbc.co.uk/1/hi/business/6477969.stm

This is terrific; there is need for some clarification, particularly in relation to when the deal will take effect. Some have been saying March 2008 (but I think - and hope - that only applies to LHR) and it remains to be seen if anything sought by the UK is likely to undermine the chances of approval by the US. We'll see, I guess.

For now, just savour the moment.

Expect a significant announcement from EI as well ...

[LHRKLBD]

The open skies comes into effect on the 30th March 2008.

[Shanwickman]

Apparently the March 2008 date refers only to LHR. Aer Lingus have just announced flights from Dublin to San Francisco, Orlando and Washington starting in October 2007.

[The SSK]

I am reliably informed that Aer Lingus have a derogation to start their new US ops in October, either by language in the agreement, or by getting the nod from the EU that they will tolerate a short-term change in the outgoing Ireland/US bilateral.

[akerosid]

Now that Phase I of O/S has been put in place, I thought it would be an opportune time to start another thread, to focus on the way forward. I think the next phase will be as difficult - indeed, potentially moreso - than the current one and I thought it would be useful for those interested to share some views here as to how things will - and/or should - work, going forward.
I note that there is a piece in today's FT, whereby the EU and US are on a collision course over the second stage of the Open Skies process and that we could reach a point where t/a flights could suddenly come to a stop. It just seems absurd, given the level of cabotage within Europe by US carriers and the likelihood of European carriers being dumb enough to want to start domestic operations, that we could sacrifice what will then be a huge t/a business, of huge economic impact, for very unlikely eventualities.

Now, I don't really believe it will come to that; it simply won't happen. There is no way that, for example, Ireland is going to stop its US access because UK carriers think they might be interesting in US domestic access. However, I think we need to look outside the box here and think of ways that we can work around this.

At the outset, let's assume (quite accurately, I think) that even if the US were to say, tomorrow, "look guys, you can have cabotage", very few airlines would really want to do so. They'd have to invest heavily to market, acquire a fleet, train staff, find a relatively unused hub and by the time they had done that, the likes of Airtran, Southwest, Spirit and the now-much-leaner legacy carriers would be waiting to cut them to pieces. It would be a disaster, so why fight for something that they would not necessarily want to do?

If they want to equalise things, why not take away the rights any US pax operators have in Europe, so there is a level playing field, rather than to cut off the nose to spite the face, by threatening to axe all routes? It just isn't sensible.

Surely, the best way forward is to align the extent to which US airlines can invest in EU airlines, with the extent to which EU airlines can invest in US airlines and, starting from that base, to encourage partnerships between EU and US carriers, on a case by case basis - looking at it more from a competition and mergers/monopolies basis than just an EU/US split.

What if the Americans decide not to move at all? The European economies, Britain included, will benefit significantly from the current position, whereby there are no restrictions on flights between the EU and US. Likewise, the EU will, I think, suffer much more than the US if the EU goes ahead with its threats; it is simply not a good bargaining position to threaten something which will hurt us (in the EU) much more than the US and consequently, it is difficult for the US to take this seriously; rather than withdrawing into inflexible and damaging positions, surely it makes sense to use the next two years to take a pragmatic, realistic view of trends and the realities of the two markets, so that a more mutually beneficial arrangement can be reached, which does not cast a cloud over links which are vitally important to many European economies?

Over to you ...

[akerosid]

http://www.canada.com/nationalpost/financialpost/story.html?id=25da13b5-3def-4995-89d6-e790a8b81654&k=65363

It is currently talking with Canadian airlines and airports and wants to talk to the EU later in the year.

Hopefully, the deal with Canada will be more straightforward than that with the US. With any luck, a deal might be possible in time for next year's Summer season, although it's pretty tight timing.

[turnipgreen]

If the Americans get their act together and wish to start services, where do the slots come from? purchase? most our broke. So, does this mean turning to their European alliance partners for slots? If so, does this mean giving up short haul slots at LHR for long haul? Will these short haul services then move to LGW or even better LCY? Have Air France and BA jumped the gun with their new LCY services? We hear that the money is in the long haul traffic. OS may just see LHR focusing more on long haul by all airlines in the future.

[dusk2dawn]

A link to the full agreement, please?

[The SSK]

Not the Agreement per se, but the nearest thing to it - an 'Information note (http://ec.europa.eu/transport/air_portal/international/pillars/global_partners/doc/us/2007_03_05_information_note_us.pdf)' published by the Commission.

[flyer55]

Well with Openskies happening wonder how long it will take BA to move some of the WW routes at LGW to LHR !

[yachtno1]

IAH and ATL a the very least ..they will sacrifice short haul slots to accommodate these US routes

[DONTTELLTHEPAX]

Is it just me ?
I cant see what all the fuss is about over LHR slots, would'nt it be
a safer bet for some Transatlantic traffic to start flights from other
London Airports, STN and LTN would be better for people north of London
I for one hate the M25.
I might be wrong but if more airlines start flying LHR to USA they are going
to be half full/empty, where as, if say one or two open routes from STN or LTN they will get the majority of pax north of London and there is alot of
us trust me.:ugh: :rolleyes: :confused:

[airhumberside]

According to yesterdays Sunday Times, IAH moves to LHR at the start of open skies. ATL/DFW follow six month later

[Confirmed Must Ride]

Don't tell the pax -

LHR is being made such a fuss becuase of all the potential interline traffic that can be had. It is just not about point to point anymore. No other airport in the UK has this size of through traffic.

[DONTTELLTHEPAX]

You say its just not about point to point anymore, I would say
many more are willing to try it as the cost from getting from A to C
via B is normaly less with low cost airlines such as FR and EZY to
name but two.
I have noticed/spoken to alot of Americans using STN who have flown
into LHR and took the to coach to STN get a better deal.
More and more people have the Internet and are finding it
cheaper to make there own way with low cost airlines
and not using through check-in (interline).

but saying that keep an eye on AirBerlin who do have Interline
baggage at STN.

((( sorry for my typo )))
Its ment to read not using through check-in or interlined baggage.

[The SSK]

Some confusion of terms here, interline refers to through pricing, ticketing and baggage transfer between airlines. Online transfers are between flights of the same airline.

Hope you don't mind the clarification :)

[Val d'Isere]

I cant see what all the fuss is about over LHR slots,
:ugh: :rolleyes:


That comment unintentionally raises one good point though.....ask bmi if they think Heathrow slots are worth a fuss!

bmi wouldn't admit to it, but their entire survival and profitability for 20 years relied upon the fact that their only real "competition" on short haul was BA. Of course, the loco's like Ryanair have ruined that cushy little number in recent times.


I wonder if bmi would welcome Ryanair at Heathrow with a nice big fat wad of slots?

Still be proclaiming "we welcome competition" would they?

No, thought not.

Open skies to bmi doesn't mean open skies in and out of Heathrow. :rolleyes:

[Ancient Observer]

I wrote on here some time ago that the BMed slots which BMi bought/inherited had been sold to BA. If you look at to-day's Times, that has now been confirmed.
BMi had no experience of flying to "dodgy" places, and had no intention of starting to do so.

[Ancient Observer]

bmi expat asks whether or not the sale of the mixed-mode slots can go ahead at lhr. Hr thinks it would be unlawful. Well, it isn't and it won't be.....any more unlawful than the Treasury's UKP100 billion raid on UK pension plans. If the UK Treasury want the money, they will get it. They certainly won't let BAA have the money.

[Ancient Observer]

Akerosid - I have a different opinion to you. Whilst I appreciate your thoughtful inputs on this topic, I do not agree. I believe that UK plc, aided by the Germans, who just wanted a quiet life in the Presidency, (and whose DfT is pre-occupied by flogging off their version of NATS), just rolled over when the USA came calling.
Within the bureaucracies of DfT and the Commission, they just wanted a deal. The legal obstacles put up by the Euro courts could have been overcome, but no-one had the guts to do that.
In the end, BA will manage within these new constraints, as they have to, but it was not a good deal. Phase 2 will be just a joke.

[BCALBOY]

I don-t think we can assume because BMI has sold slots to BA that it doesn-t intend to OP most of the ex BMED schedule.
The number of slots may equal previous BMED operation but that doesn-t mean the slots sold to BA aren-t a mix of ex Bmed and current BMI slots .
From BMI's point of view what wud be the point of buying BMED for 30m
,selling their slots for 30m ,taking on BMED staff and aircraft .What wud they do with them ??:rolleyes:

[sky chef 1923]

Think you are being a little unfair,any company in the world can only compete along with the rules and regs of that industry.
bmi have suffered as much as anyone with the flood of low cost carriers as a consequence of having a majority short haul business,any successful business has to adapt and roll with the punches. Perhaps this is why bmi is the longest running privately owned airline in the world!
Open skies is great news for bmi because it can now compete with the big boys on a level playing field for the first time,no wonder that Branson would love to snap it up,unfortunately it doesnt appear to be for sale.Watch this space...:ok:

[Ancient Observer]

Open skies seems to have gone quiet? Any more rumours of developments?

[The SSK]

The Agreement should be formally signed on Monday.

Ah - that's not what you meant by 'developments'?

[Cyrano]

ATI reports this morning that Canada and Ireland have signed an open skies agreement, replacing the existing bilateral, and effective immediately.

Under the new agreement, carriers from each country will be allowed to serve any city pair between the two countries.

Details here. (http://www.aviation.ca/content/view/4488/1/)

Good news.