EU-U.S. air deal opens new Atlantic routes, with five-month delay
Jeffrey Stinson, USA TODAY, 3/22/2007
LONDON — Europe's transportation ministers agreed today to scrap most restrictions on transatlantic flights, holding out the prospect of cheaper fares and a bigger choice of airlines for passengers flying between the USA and Europe.
The European Union ministers, meeting in Brussels, unanimously approved a long-sought agreement dubbed "Open Skies" that is designed to make for greater competition between airlines by allowing them to fly to more cities on both continents. They did delay the initiative's effective date for an additional five months at Great Britain's request, putting it effect March 30, 2008 instead of Oct. 28 this year as originally planned.
"The deal is of great political and economic importance," EU Transport Commissioner Jacques Barrot said in a statement. "The fact that everyone in the Council (of transportation ministers) has been able to welcome the outcome is to be commended."
The deal will replace a patchwork of bilateral agreements between European nations and Washington and some protective arrangements that date to the end of World War II that severely limit competition by restricting the overseas destinations of airlines on both sides of the Atlantic.
The net result for passengers will be $15.9 billion in savings in five years, the European Commission estimates, as 25 million more people will fly between U.S. and European cities.
The commission also estimates that the growth in air travel will create 80,000 new jobs.
Most U.S. and European airlines supported the agreement, which has been under negotiation for four years. The deal would:
— Permit any U.S. airline to fly across the ocean to any European city, provided it can gain landing rights. Now, access to European countries is limited to what agreements can be negotiated.
— Allow any European airline to fly to any city in the USA from any city in Europe. That would let Air France, for example, to fly directly to New York from Berlin instead of only from a French city, such as Paris.
— Let U.S. airlines fly passengers to different cities in different nations inside Europe, as European airlines can now.
— Open London's lucrative Heathrow Airport to any U.S. or European airline to make cross-Atlantic flights. At present, only the U.S. airlines United and American and British carriers Virgin Atlantic Airways and British Airways can do that.
However, the agreement doesn't permit European airlines to fly between cities in the USA's domestic market. And it prevents European airlines from owning controlling interests in U.S. airlines.
Allowing more airlines to offering transatlantic flights in and out of Heathrow was a big prize in the agreement.
Heathrow, long the gateway for many Americans traveling across the Atlantic, is the world's busiest airport. And because of the large number of business travelers who use it as a destination or take-off point, Heathrow is considered to be the most lucrative intercontinental market.
British Airways, which would lose its partial monopoly at Heathrow under the new agreement, complained that the lucrative Heathrow rights were negotiated away without European airlines being allowed to buy controlling interests in U.S. airlines or fly domestic routes in the USA.
Britain approved the Open Skies agreement today after getting EU ministers to agree to the delay in its implementation. British Prime Minister Tony Blair had appealed earlier in the week to President Bush to ease ownership restrictions.
The Bush administration had been willing to loosen foreign ownership restrictions on U.S. carriers. But Congress in December rejected the idea after U.S. labor unions and airlines had complained.
On Tuesday, however, the U.S. government gave tentative approval for an airline started by Britain's Sir Richard Branson to begin offering service inside the USA. The Transportation Department gave the airline, Virgin America, the go-ahead on the condition that the airline was insulated from Branson's control.
That decision was blasted by the AFL-CIO as a "blatant quid pro quo" aimed at winning British and the rest of Europe's support for the Open Skies agreement.
The AFL-CIO's Edward Wytkind said in a statement Wednesday that maintaining U.S. financial control over U.S. airlines have "served workers and our nation well, and should not be discarded simply to buy-off the EU."
Despite the agreement, passengers may not immediately see more flights available to them or savings. Airlines still must negotiate landing rights with airports and gain access to their gates. Many airports are full and gate charges can be very high.
At Heathrow, for instance, the daily 1,250 time slots are mostly filled. Gate rights also will be costly. Although the current going price is not known because the trades are seldom made public, it can run into millions of dollars.
Branson's Virgin Atlantic Airways said last week in a statement that it would begin direct flights between New York and several European destinations as soon as it could following implementation of the agreement. But that, the airlines said, could take two years.
Contributing: Reuters