US - UK Bilateral Open Skies

[Just a spotter]

According to The Irish Times, quoting the FT, 5th March 2018, the early discussions on an open skies agreement between the UK and US post 2019 are not to the liking of the UK.

One person attending the London meetings to “put Humpty Dumpty back together” said: “You can’t just scratch out ‘EU’ and put in ‘UK’.” https://www.irishtimes.com/business/transport-and-tourism/uk-us-open-skies-talks-hit-brexit-turbulence-1.3415499

JAS

[SWBKCB]

There's a surprise :(:rolleyes:

[EIFFS]

The London route is such a money spinner for US carrier I reckon you can and they will do just that.

[PDXCWL45]

If UK carriers are 'locked out' wouldn't that also effect Delta and American Airlines because of their joint ventures with Virgin and British Airways?

[GLAEDI]

There’ll be pressure from the US to limit a certain Nordic named airline and it’s expansion from the U.K. to the USA.

[Dannyboy39]

AMERICA FIRST! AMERICA FIRST!

Hello... British Airways (United States) LLC.

[PDXCWL45]

AMERICA FIRST! AMERICA FIRST!

Hello... British Airways (United States) LLC.

Well Delta Airlines does own 49% of Virgin Atlantic so American Airlines could do the same with IAG!

[bycrewlgw]

As with any trade deals the smaller ‘partner’ will always come off worse.

[PAXboy]

The Chancellor was speaking up about the problems for the industry once !st April goes by and it's less than 365 days. Sadly, the folks who have seen the problem from day one, have not been able to get their voice heard.

[Skipness One Echo]

The Chancellor was speaking up about the problems for the industry once !st April goes by and it's less than 365 days. Sadly, the folks who have seen the problem from day one, have not been able to get their voice heard.
No one gagged anyone.
The reality is US/UK is already open to and operated by US and UK airlines. Norwegian fly UK registered B787s on a UK AOC, they also fly Irish registered 737-MAXs on an Irish AOC. Like EZY, they could move the aircraft to the sister AOC and G- them.
What real changes are being threatened in reality?
Will American no longer be transferring a huge % of it's LHR inbound traffic onto BA short haul? Not in US interests.
Will Delta have to sell up their stake in VS? Not in US interests.
Will BA be forced to stop flying Paris-US? Already happening as Open Skies is closing and the routes are being Level-ed.

It would be interesting to know what the realistic threat is here. Unless the administration go the full Trump and stop BA, DY and VS flying to the US in which case AA,UA and DL would also be blocked and we have an enormous self inflicted wound to transatlantic commerce.

[Curious Pax]

If you read the Financial Times report, the talks were held in secret in January, and quickly broke down as the US would only offer a standard bilateral agreement. The killer clause to that is that it requires airlines to be majority owned and controlled by parties from their country of origin. Under EU-US open skies that means EU owned (I assume Norway are included in this) airlines can operate anywhere in the US. However with Virgin being substantially owned by Delta and Air France; BA being an IAG subsidiary, and Norwegian being, well Norwegian there lies the problem.

A graphic illustration that the bigger the imbalance between partners, the more likely the smaller partner loses out. Unlikely to be the only example over the next year or so.

[nighthawk117]

No one gagged anyone.
The reality is US/UK is already open to and operated by US and UK airlines. Norwegian fly UK registered B787s on a UK AOC, they also fly Irish registered 737-MAXs on an Irish AOC. Like EZY, they could move the aircraft to the sister AOC and G- them.
What real changes are being threatened in reality?
Will American no longer be transferring a huge % of it's LHR inbound traffic onto BA short haul? Not in US interests.
Will Delta have to sell up their stake in VS? Not in US interests.
Will BA be forced to stop flying Paris-US? Already happening as Open Skies is closing and the routes are being Level-ed.

It would be interesting to know what the realistic threat is here. Unless the administration go the full Trump and stop BA, DY and VS flying to the US in which case AA,UA and DL would also be blocked and we have an enormous self inflicted wound to transatlantic commerce.

The problem isn't the AOC, it's the ownership. Norwegian UK is still Norwegian owned, despite the UK AOC.

"Will American no longer be transferring a huge % of it's LHR inbound traffic onto BA short haul? Not in US interests."
"Will Delta have to sell up their stake in VS? Not in US interests."

Neither of these will make any difference to the US. Delta and AA will both cope just fine without these agreements. Probably wont have a huge affect on the UK airlines either - Virgin might struggle a bit, BA wont even notice.

"Will BA be forced to stop flying Paris-US? Already happening as Open Skies is closing and the routes are being Level-ed." Both owned by the same company, it's just changing the name on the door. Immaterial anyway, its EU-US, not affected by these negotiations.

The big problem is going to come with untangling ownerships. BA is now tightly integrated in to IAG, which if the US gets their way, at least half of it would need to be sold off. BA would need to be sold off. Likewise AF/KLM will need to sell their stake in Virgin, and Norwegian will need to sell a stake in their UK division.

It's all going to be a nightmare. Also bear in mind this isnt going to be unique to the US-UK market. The same issues will crop up for EU-UK negotiations, possibly even some other countries that have accepted EU ownership of a UK airline, may now decide this is no longer the case.

[SWBKCB]

The same issues will crop up for EU-UK negotiations

And the for every other non-EU country where we are currently part of an EU, as opposed to a UK, bilateral.

[Thad Jarvis]

Article leaked by NAS in a Ryanair style scaremongering exercise. They are the only ones realistically likely to lose out in any new deal and they clearly know it. With their employment model and current terms and conditions I won’t be losing sleep over them.

[Skipness One Echo]

Neither of these will make any difference to the US. Delta and AA will both cope just fine without these agreements. Probably wont have a huge affect on the UK airlines either - Virgin might struggle a bit, BA wont even notice.
Someone quoted to me that 40% of all AA's inbound LHR traffic is connecting onto UK/EU with BA. Now that sounds insanely high but anyone know how far off that is?

[ELondonPax]

Scaremongering? Look at the behaviour of the current US administration. They are tearing up trade agreements at a rate of knots. Why assume this will go in the UK favour.
Please show an actual example of anything material that the Trump administration has done to actually benefit the UK.

[TURIN]

Please show an actual example of anything material that the Trump administration has done to actually benefit the UK..

He makes Boris Johnson look like a statesman. :hmm:

[Navpi]

What will happen to the Heathrow model and BA re connectivity OR are the EU negotiators hell bent on destroying this in order to attract passengers to Paris and Frankfurt.

[bycrewlgw]

What will happen to the Heathrow model and BA re connectivity OR are the EU negotiators hell bent on destroying this in order to attract passengers to Paris and Frankfurt.

Why would EU negotiators be hellbent on destroying anything? We’ve chosen to leave.

[AirportPlanner1]

So in 2019 the primary (only) non-US operator between the UK and US will be Thomas Cook?

Think I’ll buy me some shares.

[GLAEDI]

Or shares in Dublin airport as IAG move their US and UK regional flights to there. I do believe this is the US protection against airlines like Norwegian, it’ll be interesting to see how it shakes down ownership also. The other major UK airline to be hit will be TUI being a German owned. Virgin I suspect will escape as what ever agreement by the US, Delta will protect their investment. I also believe this prevents any idea by EK to run flights through MAN, BHX and GLA to the US which had been mooted in the past.

[pholling]

As most of you have deduced the issue here is that as of 1 April 2019 the UK will no longer be included in the existing US-EU 'Open Skies' Agreement. Norway is included in this as a specifically named country, same with Iceland. The UK is only included as a member of the EU. One potential option would have been to make a change to have the UK included in a manner similar to Norway. However, this would require all three of the following to be true
1. The UK asks to be included in this manner
2. The EU agrees
3. The US agrees
Clearly at least one of the above has not happened.

Without this a new agreement must be reached or the freedoms that allow US and UK carriers to fly between each others countries will expire at Midnight on 1 April 2019. Now the US and UK have had early talks on entering into their own agreement. However, the US is insisting on the ownership and control clause plus several other things. The ownership and control clause is part of the US-EU agreement, so there is no difference here. Some of the other terms are clearly less advantageous than the ones in the existing agreement.

The problem for the UK is that the ownership and control clause becomes critical. Under the EU agreement the airlines must be owned and controlled by either US or EU (and named country) entities. This is how IAG, AF/KL, Lufthansa, Norwegian, etc groups can operate from anywhere in the EU to the US. It is also what allows Branson to sell his 31% to AF/KL but could not sell 1% more to DL.

As Nighthawk points out the entanglement of all UK airlines with the EU is the real problem. It is also not as simple as moving ownership about. Control also matters. The US definition is generally around 25% of voting shares if you are the largest shareholder. For example, Branson could not have more than 25% of Virgin America voting shares if there were no larger US shareholders than him, and his total shareholding could not have been more than 49%. The US tends to be quite ruthless about this. What does this mean
1. For BA to qualify it would probably have to be completely divested from IAG, that is even 25% shareholding by IAG might still be too much as Madrid would not be allowed to control the operations of BA
2. TUI UK will leave the Orlando market
3. Norwegian will not be able to continue operating out of the UK at all
4. Virgin has the lease amount of change. All that has to happen is they create a new, US registered airline that is 51% owned by DL and 49% by Branson and AF/KL, or better yet ~24.5% by each to keep under the US 25% threshold. This would then be allowed to operate between the UK and US. The rest of VS could operate to other locations. This is similar to what VS already does for a few Caribbean routes.
5. Thomas Cook is an interesting question. They are currently UK controlled, but have significant EU operations. Condor for example. They will either have to transfer to EU control, which bind TCX UK, or sell off Condor and their other European Airlines. The status quo will not allow both TCX and Condor to continue operating to the US.

And this is not the worst case scenario. There is still the no agreement in principle by Oct-Dec timeframe. That could be catastrophic.

[pholling]

What will happen to the Heathrow model and BA re connectivity OR are the EU negotiators hell bent on destroying this in order to attract passengers to Paris and Frankfurt.

What makes you think the EU had anything to do with this? While they could have blocked the UK's continued membership of the EU-US open skies agreement, we have no evidence they did. It could be the UK didn't want that, the US blocked it, or a combination. The issue is that an agreement of some sort must be in place by 1 April 2019 or there are not legal rights for UK and US carriers to operate between the two countries.