Transatlantic Open Skies Agreement
History was made on Sunday 30th March 2008, when the much-anticipated "Open Skies" agreement air travel between the European Union and the United States came into effect.
The deal, which was signed 12 months ago, ends restrictions on flights between the two countries.
Open Skies allows any airline to fly non-stop between any city in Europe and any city in the US.
Under previous rules, flights into the US were only permitted if the between their country of origin and the US.
The agreement replaces the old patchwork of 21 bilateral aviation agreements between EU nations and the US government. It opens up the transatlantic air travel market to all airlines of any country.
The Open Skies deal is expected to lead to a large increase in the number of carriers on transatlantic routes, as airlines take advantage of the new ruling. According to data from the International Air Transport Association (IATA), the number of scheduled flights for April between the EU and the US has risen by 11% on last year's figure.
Some airlines have already started Open Skies services. Air France, which could previously only fly to the US from France, has today begun services from London's Heathrow Airport to Los Angeles. Similarly, Continental has started services from Heathrow to Newark Airport and Houston, Texas. Delta has connected Heathrow to New York and Atlanta.
The giant Irish-based low-cost carrier Ryanair has expressed interest in flying to North America in the future, taking advantage of the Open Skies deal. Meanwhile, in June British Airways is launching a subsidiary airline - called OpenSkies - which will operate services to New York from Paris and Brussels.
The EU has estimated that the agreement could generate as many as 26 million extra air passengers over the next five years. Some independent consultants say that this figure could end up being much higher.
Cheap Flights to USA
EU officials hope that the Open Skies deal will lead to lower prices for trasatlantic flights across to the USA.
Jacques Barrot, the EU's Transport Commissioner, said: "This marks the start of a new era in transatlantic aviation. This agreement will bring more competition and cheaper flights".
However, industry analysts say that the expansion of routes is not likely to reduce ticket prices for air passengers. Fuel prices are high and analysts say that despite the theory of more competition driving prices lower, in reality airlines will end up charging high prices to their passengers to cover costs.
The same analysts add, however, that British Airways could end up losing out in the long term. A study by BNP Paribas, an investment bank, says that rising competition on flights from Heathrow to the US could slash the airline's profit margins by 3% - a total of over £273 million - given that most of BA's profits come from transatlantic routes.
Open Skies Phase Two
As Open Skies comes into force, politicians are due to begin talks on the second phase of the agreement. This phase will discuss whether European airlines will be able to operate domestic services between airports in the US - for example, between Washington D.C. and New York.
Controversially, the current agreement allows US airlines to purchase their European rivals while the latter are not allowed to buy US airlines. This has led to BA and Virgin Atlantic criticising the nature of the Open Skies agreement in its current form, saying that although it promotes competition it has advantaged North American airlines over European carriers.
Indeed, Virgin's chief Sir Richard Branson has recently called Open Skies a "damp squib" for this reason.
Source - Airport International's Aviation Correspondent
