EU says it has lever over US on opening air market

[Pieter C. 5]

EU Says Has Lever Over US On Opening Air Market

 

March 13, 2007

The European Union has a lever to force the United States to open its domestic aviation market, the EU's transport chief said on Tuesday in a bid to convince doubters to back a trans-atlantic air travel pact.

 

Britain has voiced doubts over the "open skies" agreement to liberalize trans-atlantic air travel negotiated this month because European airlines will still be excluded from buying control of US carriers or flying on domestic US routes.

 

Two UK airlines that reap big profits on trans-atlantic routes from London's Heathrow Airport, British Airways and Virgin Atlantic, have attacked the deal, putting pressure on the British government to block it in Brussels.

 

But EU Transport Commissioner Jacques Barrot told the European Parliament this first stage accord provided the key to unlock the US market, kept closed by Congress.

 

"Some people who don't like the agreement, some naysayers, say we'll never actually get to this second stage, because the US would have won out on the first stage. But that's not right," he said in a debate in the EU assembly in Strasbourg.

 

"People are right when they call for a mechanism that will inevitably lead to a second stage and I've got that.

 

"We're going to start negotiations for phase 2 in January next year. If there's no second-stage agreement between now and mid-2010, then we can suspend our side of the agreement," Barrot said.

 

The 27 member bloc and the United States agreed two weeks ago on the outlines of an unprecedented pact to liberalize trans-atlantic aviation markets and replace a system based on national carriers dating to World War Two.

 

But Britain is lukewarm, concerned that UK carriers will not get enough access to US markets in return for opening up its lucrative Heathrow Airport, which analysts have said could slash British Airways' profits.

 

Ireland had said it would seek a bilateral air transport agreement with the United States if the EU failed to agree on the deal. EU transport ministers are due to discuss the pact on March 22.

 

Barrot has said if they fail to back it, he would be forced to take nations to the European Court of Justice for refusing to give up bilateral aviation pacts with the United States, which the court has declared illegal.

 

(Reuters)

 

[Andrew Ong 1]

Why is EU getting in the US's business about the open air market?

[Pieter C. 5]

Why is EU getting in the US's business about the open air market?

 

Andrew,

 

Why can so many US airlines operate into the Netherlands, while only 2 can to the US ?

 

NW up to 15 flights a day, as well as CO (2 flights), DL (3 flights), UA (2 flights), US (1 flight), Kalitta (up to 3 flights a day)...

 

It's about time, the US of A opens up their market for other competitors

 

[Pieter C. 5]

Hope, Britain will not pull the plug on this agreement

 

UK said to be angling for Heathrow compromise

 

Thursday March 15, 2007

The UK reportedly is taking another crack at excluding London Heathrow from a liberalized transatlantic aviation environment, a move it attempted during an early round of open skies negotiations between the EU and US several years ago.

 

"Britain is talking bilaterally to the Americans and to the German [EU] presidency. It wants a year's delay in opening Heathrow," an EU source told Reuters. A UK Dept. of Transport spokesperson confirmed that "negotiations are ongoing. We wouldn't say anything that would prejudice them."

 

Since a draft agreement was reached March 2, the UK's ability to block the accord, which needs unanimity from all 27 member states, has been the cause of much speculation. Initially the UK voiced dissatisfaction, with Transport Secretary Douglas Alexander saying that "there remains work to be done" and cautioning that a level playing field was needed.

 

However, Alexander said Tuesday, "There could potentially be very real consumer benefits immediately, reflective of the benefits from low fares and competition we have seen in recent years as a result of the open area within the EU." He also recognized that Bermuda II is not sustainable, having been declared illegal by the European Court of Justice.

 

"I would not sign up to a deal, even a stage one deal, if I thought it was not in the overall UK interest to do so," he told Parliament. "My job today is not to defend the draft in its totality but to say this is what's on the table."

 

Meanwhile, the European Parliament said it would have preferred a more "balanced overall agreement covering all aspects of market opening" as it endorsed a nonbinding resolution supporting the deal.

 

 

[Pieter C. 5]

AA, UA favor open skies despite LHR impact; UK still negotiating as vote nears

 

Thursday March 22, 2007

American Airlines and United Airlines, the only US carriers permitted to operate to London Heathrow, are backing adoption of a tentative US-EU open skies accord, on which EU transport ministers are scheduled to vote today, even though it could hurt them in the London market.

 

"More airlines flying to Heathrow by definition can't be good for someone flying into Heathrow now," AA Chairman and CEO Gerard Arpey conceded yesterday at the JP Morgan Aviation and Transportation Conference, available via webcast. "But I do think [open skies] presents opportunities for oneworld and for our partnership with [british Airways]." He added that AA still wants antitrust immunity for profit- and revenue-sharing with BA, particularly if open skies is approved. "We don't believe we should have to give up anything to get antitrust immunity," he said.

 

UA similarly supports open skies despite the obvious conflict with its interests at LHR. "Of course we'd rather not have Heathrow open," Executive VP and CFO Jake Brace told the conference. "But over the long term, the London Heathrow operation will face competition and we accept that. . .Heathrow is not a huge driver of our cash flow. We may suffer in the short term but over the long term open skies is the right way to go."

 

Delta Air Lines, the largest US transatlantic carrier, issued its own statement yesterday urging the EU to ratify the agreement, saying it welcomed "the ability to participate more broadly in European markets, particularly London's Heathrow airport."

 

Opposition continued to filter in as well. Rep. James Oberstar (D.-Minn.), chairman of the House Transportation and Infrastructure Committee, told the St. Paul Pioneer Press that he opposes the deal. "I want to ensure this agreement does not lead to a greater foreign control of US airlines. Decisions would be made far away from us about which US markets would be serviced," he warned, while implying his position might soften if Northwest Airlines was granted expanded antitrust immunity for its alliance with Air France KLM.

 

In the UK, the House of Lords registered its discontent and demanded the US drop restrictions on the Fly America program requiring US citizens traveling abroad on government business to use US airlines on routes handling more than 60 passengers per year. "No such policy exists in the EU. We regard this as a very unbalanced arrangement," Internal Market Sub-Committee Chairman Lord Freeman said.

 

Prime Minister Tony Blair's office rejected reports that President Bush had rebuffed Blair's request to make concessions on the issues concerning the UK. "They were fully aware of our concerns," the PM's spokesperson said, adding, "What we wanted to see was as open a market as possible, with real competition on both sides of the Atlantic."

 

 

[Keith T 2]

The deal's on:

 

http://business.guardian.co.uk/story/0,,2039967,00.html

 

EU agrees open skies deal

 

 

Dan Milmo and David Gow in Brussels

Thursday March 22, 2007

Guardian Unlimited

 

 

The British government has backed a deal that heralds a revolution in transatlantic air travel after winning an 11th hour amendment to the open skies aviation pact.

 

The treaty was agreed unanimously by EU transport ministers at a meeting this morning, after the British transport secretary, Douglas Alexander, won agreement for a five-month delay in implementing the deal.

 

It means that air travel between the US and the EU will be fully liberalised in March next year, throwing open Heathrow airport to all American and European carriers.

 

 

Mr Alexander also won unanimous support for his proposal that the agreement will be suspended if a second phase of the treaty - including changes to rules governing investment in US airlines - is not in place by 2010.

 

"We all accept a mechanism that will suspend the benefits of the agreement for US companies if we don't have a second stage by 2010," said Jacques Barrot, the EU transport commissioner.

 

He went on: "I am confident that the process will deliver greater freedom for investors in aviation and even closer integration and an even healthier industry in general."

 

The German transport minister, Wolfgang Tiefensee, told reporters that "the door is open" on negotiations for a second phase of the treaty.

 

The British government wants a further deal that lifts restrictions on foreign ownership of US airlines and permits European carriers to operate internal flights within the US.

 

British Airways and Virgin Atlantic, the only UK carriers allowed to fly between Heathrow and New York's JFK airport, had urged the British government to oppose the deal.

 

BA has dismissed concerns that the opening up of Heathrow to all US carriers will endanger its most profitable market. However, the growing number of transatlantic shoppers will be hoping that the treaty will lead to increased competition on UK-US routes and therefore a fall in ticket prices.

 

Willie Walsh, BA chief executive, called today's deal "a poor agreement for Britain and Europe".

 

"So far the US has made no meaningful concessions. American carriers can now fly into Heathrow, Europe and beyond while their own backyard remains a no-go area for EU carriers and foreign ownership of their airlines remains unchanged," said Mr Walsh. "We will hold the government to its word to fight for Britain's interests if America doesn't play ball."

 

Virgin Atlantic agreed that the deal did not go far enough, but said that the British government should be congratulated for agreeing a deal that begins to reduce regulation in the aviation industry.

 

The Association of European Airlines cautioned it was difficult to assess exactly how airlines will benefit commercially from the agreement, but said that it was good news for passengers.

 

It added that it was vital that a true 'EU-US open aviation area' is created through further liberalization.

 

Martin Cullen, Ireland's minister for transport, claimed that the agreement will "unlock major benefits on both sides of the Atlantic".

 

"The additional access to the US, as well as the increased numbers of US tourists into Ireland, will greatly benefit Irish tourism, aviation and business links generally in all parts of the country," said Mr Cullen.

 

The Transport and General Workers Union, which has over 70,000 members employed in the aviation sector, said that Mr Alexander had won important concessions from the US.

 

"No other country in Europe has an airport of the size or significance of Heathrow. It was predictable but sad, therefore, that the European Union did not stand up to the Americans. Douglas Alexander has made the best of a bad job," said Jack Dromey, T&G deputy general secretary. "The proposed new arrangements should be scrapped if the Americans do not agree a second stage deal opening up their markets."

[Pieter C. 5]

EU-US Air Deal Endorsed With Five-Month Delay

 

March 22, 2007

The European Union unanimously backed a deal with the United States on Thursday to liberalize transatlantic air travel but delayed its start by five months at Britain's request, German Transport Minister Wolfgang Tiefensee said.

 

Tiefensee, who chaired a meeting of EU transport ministers, said the agreement would enter force on March 31, 2008, instead of in October as initially agreed with Washington.

 

The pact, agreed after four years of talks, will allow any EU airline to fly from any city in the 27-nation bloc to any city in the United States and vice versa.

 

(Reuters)

 

now even Air France/KLM can fly LHR-ORD or TLL-LAX for that matter

 

[Pieter C. 5]

Some more information about this very important agreement:

 

Open skies passes with nod to UK concerns

 

Friday March 23, 2007

Although unable to slow the momentum toward unanimous passage of the recently negotiated open skies agreement between the EU and US, UK Transport Secretary Douglas Alexander nevertheless salvaged a couple of concessions during yesterday's vote by the EU's Transport, Telecommunications and Energy Council that established open skies and opened London Heathrow to competition.

 

Taking care to indicate that the new accord constitutes just the "first stage" of a "comprehensive air services agreement," the Council yesterday announced that the pact will take effect on March 30, 2008, rather than Oct. 28 of this year, thus coinciding with the planned opening of LHR's Terminal 5. "The Commission was asked to secure agreement of the US to confirm their agreement to reflect this," the Council said.

 

In addition, the Council established that if a Stage 2 open skies accord, likely addressing foreign control of US airlines and cabotage, is not reached by 2010, then any EU state "may notify to the Commission which traffic rights in relation to its own territory it wishes to suspend" subject to certain conditions. EC VP-Transport Jacques Barrot warned last week that the EU had the leverage required to force further negotiations.

 

The US Dept. of Transportation did not comment on the new provisions but issued a statement from Secretary Mary Peters, who called the Council's vote "historic" and said, "Tearing down regulatory barriers. . .gives our airline industry more opportunities to compete, innovate and thrive" and the US "look forward to the positive effects this agreement will bring. . .for years to come."

 

Barrot offered subtle thanks to the UK, saying he was "delighted to have piloted this agreement to its destination with all passengers still on board." He said the EU will enter the "next phase of negotiations with the US in a strong position" and that a second stage will "deliver greater freedom for investors in aviation, even closer cooperation between the two sides and a healthier air transport industry in general."

 

The agreement is scheduled to be signed at an EU-US summit in Washington on April 30.

 

and..................

 

Airlines applaud open skies approval; European carriers push for further liberalization

 

Friday March 23, 2007

US and European airlines largely hailed EU transport ministers' approval of the open skies agreement yesterday, though British Airways and Virgin Atlantic Airways led a chorus on the European side cautioning that the deal is just a "first step" toward creation of a truly open transatlantic air market by 2010.

 

IATA DG Giovanni Bisignani called the agreement "a step in the right direction," but added that "it's time to set aggressive targets to create even more opportunities on both sides of the Atlantic." Assn. of European Airlines Secretary General Ulrich Schulte-Strathaus said it "establishes a framework which includes, but goes beyond, market opportunities. . .but it is only a first step towards the ultimate goal." Air Transport Assn. President and CEO James May said the deal has the "potential to provide enormous benefits to our respective customers and economies."

 

Much attention is being focused on London Heathrow, where transatlantic operations currently are limited to BA, Virgin, American Airlines and United Airlines. "Access to Heathrow for US airlines is at the heart" of the deal, BA CEO Willie Walsh said. He encouraged the UK government to "stand by its right of automatic termination of traffic rights" and employ that power "if America doesn't play ball" by negotiating further liberalization.

 

LHR was the EU's "most valuable negotiating asset," Walsh insisted. With that chip "given away," it is "naive" to think the US will pursue greater freedoms, including more US market access for EU carriers by 2010, he added. According to OAG, BA operated 44% of transatlantic flights in and out of LHR March 1-19, with AA at 16%, Virgin at 14% and United at 11%.

 

AA and UA have said they support open skies even though it may hurt them in the short term in London. Continental Airlines already has applied to the US Dept. of Transportation for permission to launch service from Houston Intercontinental to LHR before summer 2008.

 

Bmi CEO Nigel Turner called the agreement's approval "a brave move in the face of stiff opposition from the two UK airlines that have for years enjoyed a protected transatlantic market from Heathrow."

 

International Air Carriers Assn. DG Sylviane Lust said the agreement is imbalanced in US carriers' favor: "The [EU's] shopping list for the second phase negotiations remains substantial while the US side has obtained everything it wanted in the first phase."

 

 

 

 

[Andrew Ong 1]

Andrew,

 

Why can so many US airlines operate into the Netherlands, while only 2 can to the US ?

 

NW up to 15 flights a day, as well as CO (2 flights), DL (3 flights), UA (2 flights), US (1 flight), Kalitta (up to 3 flights a day)...

 

It's about time, the US of A opens up their market for other competitors

 

I get it now, thanks for clarifying it for me, Pieter

[Keith T 2]

The deal has interesting implications for Ireland. Currently US carriers and Aer Lingus have to put a stop in Shannon for every 3 flights to Dublin. I expect that to be abolished when the new agreement comes into effect. Shannon pollies won't be happy. I think they might try to force EI to do the Shannon stop anyway.

 

And Aer Lingus has just announced new TATL routes to MCO, IAD and SFO. This uses up all 7 cities EI is permitted to serve but the cap will be abolished in Mar 08.

 

Sorry for going OT.

Edited March 25, 2007 by Keith T

[Pieter C. 5]

EU, US sign open skies agreement, look ahead to second round

 

Tuesday May 1, 2007

After years of contentious negotiations, representatives from the US and EU enjoyed a bit of ceremony yesterday--and looked ahead--as the open skies agreement reached in March was signed at a Washington event attended by Europe's VP-Transport Jacques Barrot, EU Council President Wolfgang Tiefensee, US Transportation Secretary Mary Peters and Secretary of State Condoleezza Rice.

 

While Peters touted the "lower-priced and more accessible air travel" and "healthy competition" expected to result from the deal, her European counterparts continued to remind everyone that there is more to come.

 

Tiefensee called the agreement a "milestone on the road toward a deeper transatlantic partnership," saying that "Europe is pressing for further steps" and will open a new round of negotiations immediately after the pact becomes effective in 11 months, or no later than May 30, 2008. "The objective of the negotiations will therefore be additional traffic rights and fewer restrictions on European ownership and control of US carriers," he said.

 

Barrot said the European commercial air transport industry already "is feeling [the agreement's] effects in a positive way" and that he welcomed "the firm commitment given today by leaders on both sides of the Atlantic to conclude a second-stage agreement as a matter of priority."

 

 

[Pieter C. 5]

UK's Bmi To Expand Transatlantic Flights

 

May 2, 2007

British airline bmi said on Wednesday it would expand its long-haul flights to take advantage of liberalized transatlantic flying, after boosting operating profit by 85 percent in 2006.

 

Bmi also criticized the owner of London's Heathrow Airport, Spain's Ferrovial, saying it had poorly implemented tough new security measures there, cutting into revenues.

 

Chief Executive Nigel Turner declined to say which routes the airline was looking at launching from Heathrow when the "open skies" pact between the European Union and the United States takes effect in March 2008.

 

But he said the Airbus A330 was bmi's preferred aircraft for fleet expansion.

 

"We've had a good run with the A330s, and we're familiar with the aircraft and engines," he told reporters. "We've got three already, and it's the default aircraft at this stage."

 

Bmi increased underlying operating profit by 85.5 percent to GBP10.2 million pounds (USD$20.4 million) in 2006, while one-off items helped it triple pre-tax profit to GBP29.7 million pounds.

 

Bmi described "open skies" as a "long held and hard fought aspiration" and said it would develop a wider medium and long haul route network.

 

Turner ruled out fears bmi would cut short haul flights to make slots available for transatlantic flying.

 

"We have no plans to curtail any domestic flying or short haul flying," he said, adding that he expected domestic flights to be hit hard anyway by increases in Air Passenger Duty in the UK.

 

In December, Chancellor Gordon Brown doubled the tax to GBP10 on short haul flights and GBP40 on long haul flights.

 

Turner said he "did not envisage, but could not rule out" the possibility bmi Chairman Michael Bishop would sell his 50 percent stake in the airline in the near future.

 

Speculation about a possible takeover has surrounded the airline since the "open skies" deal was struck, as bmi holds so many of the scarce slots at Heathrow that would be needed by any new operator there.

 

Bmi criticized Ferrovial for poorly implementing tough new security measures at Heathrow.

 

"The poor implementation by the airport owner of draconian new security measures materially increased an already negative perception by passengers using the airport," it said.

 

"It is estimated to have cost the airline GBP10 million in lost revenues."

 

Overall revenues were GBP905.4 million in 2006.

 

(Reuters)

 

[Pieter C. 5]

Oneworld partners American Airlines, Iberia, Finnair, Malev Hungarian Airlines and Royal Jordanian filed a request for antitrust immunity with the US Dept. of Transportation effective March 30, 2008, the day the US-EU open skies agreement becomes active. The five carriers said they wish to cooperate on codesharing, loyalty programs, route and schedule planning, advertising and marketing, pricing and yield management, revenue allocation, ground handling, cargo, IT and distribution and other areas. "We believe that an alliance with antitrust immunity is of vital strategic importance and will help us remain competitive with other transatlantic alliances that already have such immunity," AA Senior VP-Planning Henry Joyner said. Six SkyTeam carriers filed a similar request last month.

 

Where's BA in all of this ???

[Pieter C. 5]

EU Sees 'Open Skies' Talks With US Finished By 2010

 

May 16, 2008

The European Union expects to complete by 2010 talks with the United States on liberalizing transatlantic aviation, the EU's chief negotiator said on Friday, paving the way for increased competition.

 

"I hope that... 2010 could be the year when we finalize the negotiations but it will depend a lot on technical work," Daniel Calleja Crespo, head of the European Commission's Aviation Directorate, told reporters after talks in Slovenia ended.

 

The second round of "Open Skies" discussions, which started on Thursday, builds on an agreement which entered into force in March, allowing airlines to access any US city from any point in the EU and vice versa.

 

The move promises to increase competition between carriers, could cut ticket prices and may eventually pave the way for transatlantic mergers to create the first global airlines.

 

The United States surprised EU negotiators on Tuesday by saying it would seek a wider deal by pledging to drop access restriction for airlines from more than 60 nations.

 

"We think that's in our mutual interest because we have a leadership role. There are no two areas of the world that have done more to liberalize aviation," said John Byerly, US Deputy Assistant Secretary of State for Transportation Affairs.

 

"We think we can lead the world and when you lead you have to bring the rest of the world along," said Byerly, who is the US chief negotiator.

 

But the EU said it wants to complete the talks with Washington before inviting others on board.

 

"Once the United States and Europe agree on liberalizing aviation, we would like other countries to share... but we think we should first agree with the United States and then expand this to the rest of the world," said Calleja.

 

He said, however, the US proposal should not delay ongoing talks and called it "a positive contribution" which has to be integrated in the overall negotiations.

 

Byerly said investment liberalization was likely to be the most challenging issue in talks.

 

"Both sides have made proposals on investment liberalization because it can help our airline industry on both sides... to have access to capital. We have different views, different proposals," he said.

 

Britain has led critics of the earlier agreement and is calling for the abolition of US laws that cap foreign control of US airlines at 25 percent of their voting stock.

 

British Airways had said relaxation of US ownership rules was the most crucial issue, allowing airlines on either side of the Atlantic to increase efficiency through mergers.

 

European airlines also want greater access to the US domestic market -- with the right to sell tickets for flights between US cities.

 

Britain has warned it will exercise its right to terminate the Open Skies agreement if US barriers are not lowered during the current talks but Calleja said it was too early to say if such a termination was likely to happen.

 

The next round of negotiation will take place in Washington in September.

 

(Reuters)