Open Skies Agreement Phase 2
Talks began on Thursday 15th May between the United States and European Union over the next phase of the "Open Skies" Agreement.
The first stage of the historic treaty liberalising transatlantic air traffic movements was introduced at the end of March, and allows any airline to fly point-to-point between any US and any EU airport and vice-versa.
The talks regarding the second phase of Open Skies are being held in Brdo, Slovenia. Discussions include whether European airlines will be permitted to operate domestic services between airports in the US and, most critically, the question of foreign ownership of US airlines.
Currently, the terms of the Open Skies agreement allow US airlines to purchase their European rivals - but, due to US federal laws, foreign control of US airlines is prohibited beyond a certain level. This has led many European airlines to question whether the Open Skies treaty represents good value for them, including Virgin Atlantic boss Sir Richard Branson who called the agreement a "damp squib" for this reason. This issue is set to become a key topic in the Open Skies discussions.
US Airline Ownership Rules
US officials attending the talks surprised the EU somewhat by proposing a deal before the talks began which would remove the plethora of US airline ownership rules, so making it easier for European airlines to purchase their American rivals.
John Byerley, the chief US negotiatior in the talks, said that Washington would be open to making a deal that would lift the present restrictions on overseas carriers owning US airlines - currently, US federal laws mean foreign airlines cannot hold more than 25% of the voting rights in a US airline.
Byerley said: "The sticky spider's web of restrictions...form a huge impediment to expanded cross-border investment in, and management of, airlines around the world".
The announcement by the US officials took Brussels representatives by surprise - and initial reactions from EU representatives at the talks suggested that the EU would prefer "to concentrate on the deepening of the existing agreement" rather than wholesale changes.
The US officials warned that any changes would only take place slowly because of the likely opposition of the US Congress.
Boyden Gray, the US Envoy to the European Commission, said: "It's going to take a lot of work to persuade our congress that this is something that should be allowed, I don't think it's impossible to do at all but it will take generating public support in the United States and that is do-able but is not easy".
Airlines Support for Open Skies
For their part, airlines on both sides of the Atlantic support Open Skies. They believe expanding the treaty will allow necessary consolidation and rationalisation to occur in the industry, which will drive efficiencies that can be passed onto customers.
Paul Charles from Virgin Atlantic commented: "The only open skies that make sense are truly open skies -the current system is full of regulation and red tape and we need to unshackle our industry. A car company like Ford can invest into the UK car market, yet airline carriers are restricted from investing in each other".
He added: "This is a golden opportunity for lawmakers, but we expect it to take some time yet".
Industry analysts also believe that no significant progress will be made in these talks.
Source - Airport International's Aviation Correspondent
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