Wednesday, 31 March 2010

EU and US Open Skies now a reality

Negotiators from both ends of the Atlantic have now struck a deal make permanent the 2007 open skies deal that expands the liberalization of the skies across the EU and U.S. - a pact once thought to be threatened over ownership rules.
Talks over the next phase of the three-year-old open skies agreement between the United States and the European Union were expected to be contentious primarily because of the reluctance by the U.S. to relax foreign ownership rules. Prior to the latest round of talks, Europeans had warned that the entire agreement could unravel if progress were not made on this particular issue. It appears that progress has been made, but one can hardly call it a promise by the U.S. to liberalize its airline ownership policy. Because changing such laws requires an act of Congress, U.S. negotiators could only commit to working toward some reform without giving a specific timeframe. Some airlines are disappointed that this latest agreement does not go far enough in this regard. The EU allows 49.9% foreign ownership of its airlines; the U.S. only permits 25%. What is new is that, under the new agreement, European carriers will be able to attract U.S. government business and U.S. airlines will be able to expand on their access to EU markets.

The current EU-U.S. opens skies agreement permits any carrier from the U.S. to fly to any EU city and beyond. EU carriers are allowed similar access to any U.S. city but do not have rights to operate between U.S. cities. The new accord promises future action by both parties to balance the access to each other's' markets and to cooperate on environmental and regulatory issues. One such issue is night curfews at EU airports that often restrict the operations of cargo carriers such as FedEx. If the EU lifts some of these restrictions, the U.S. is willing to allow EU carriers the rights to fly from the U.S. to third countries in the future.

In essence the two sides have agreed to make permanent the 2007 open skies deal as they work toward greater cooperation on various issues such as security, safety and ease of travel. EU and U.S. regulators have to approve these measures independently before anything becomes official. Though both sides touted the progress made, the International Air Transport Association (IATA) thought the agreement could have done more. "The agreement was not a step backwards, but it did not move us forward," claimed IATA director general, Giovanni Bisignani. – a pact once thought to be threatened over ownership rules. To paraphrase a famous quote attributed to Mark Twain, reports of the death of open skies have been greatly exaggerated.

Source: IAPA

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