The European Union and the United States expressed hope on Monday that they could reach a deal on ”open skies” by next month, bringing greater competition to the civil aviation industry on both sides of the Atlantic.
European and American officials began a week of tough negotiations for the first time since EU governments, including Britain, threw out a brokered agreement in June last year. They hope to agree a fresh deal by mid-November in Washington.
Proponents of ”open skies” — a topic under discussion for decades — believe that an agreement would usher in a new wave of consolidation in the troubled aviation industry, not just within the EU and US but also across the Atlantic. Ultimately, European airlines could buy or merge with their US counterparts and vice versa.
A deal is seen as of huge benefit to consumers by prising apart protectionist arrangements among a few airlines and promoting cheaper prices through stiffer competition. It could create tens of thousands of jobs on both sides of the Atlantic.
François Lamoureux, European Commission director general of transport, said: ”We have to succeed. I think the political will is there … I am hopeful we can reach an agreement by the end of the year.”
John Byerly, deputy assistant secretary for transport at the US State Department, said: ”Our airlines are depending on us.”
As the talks began, BMI, the former British Midland, urged the two sides to ”seize the historic opportunity” of ending the illegal agreement that limits the number of airlines that can serve the US from London’s Heathrow to four: British Airways, Virgin Atlantic, American Airlines and United Airlines. About 40% of transatlantic flights originate in Britain.
Analysts warned that the prospects of a deal remained low, partly because US airlines, apart from low-cost carriers, have sought Chapter 11 protection from bankruptcy due to the impact of terrorist attacks and surging fuel prices, and because of the protectionist mood in Congress.
But Byerly said airlines need the stability of an ”open skies” deal and the negotiations are ”the last clear chance to achieve an historic breakthrough in transatlantic aviation before storm clouds gather on the European legal horizon in 2006”.
The commission, backed by a European Court of Justice ruling in 2002, has said it will force the termination of all bilateral air services agreements with the US unless an overall deal is reached this year.
Byerly said the US will now accept that a European airline can serve the American market from anywhere in the EU, irrespective of national ownership, but he would not back demands that EU carriers operate freely within the US.
What is open skies?
An agreement to allow airlines, of whatever nationality, to fly without restriction between the EU and US, or anywhere around the globe.
Who benefits?
Consumers. There are 40-million transatlantic air passengers a year and 17-million more could be added. The EU estimates fare-savings of £3-billion.
Who else?
Airlines. British Airways could turn its partnership with American Airlines into a full merger, as could Lufthansa and United Airlines. European carriers — British Airways and Iberia, Air France-KLM and Alitalia — could more easily merge.
What is an EU carrier?
The European Court of Justice banned restrictions on, say, British Airways or Lufthansa flying from France to the US. Flag-carriers are European airlines, the court said.
What are the economic benefits?
Airlines and plane-makers would be more innovative. The George Mason University in Virginia calculated that 30 000 hi-tech jobs would be created in each of 29 EU regions it examined.
Why did the last deal collapse?
The EU — notably Britain, which has 40% of the market — wanted greater European access to the US domestic markets, or ”cabotage”. US carriers already do, apart from at Heathrow. — Guardian Unlimited Â