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New US-EU Open Skies Treaty Possible?  
User currently offlineTargowski From United States of America, joined Aug 2003, 127 posts, RR: 0
Posted (8 years 10 months 2 days 11 hours ago) and read 3670 times:

i read in european newspapers recently that brussels and washington are trying to negiotate a new open skies treaty that i assume will trump bermuda II accords and allow for say, VS to fly JFK-CDG and LH LAX-LHR and so forth without (or with little) restrictions. I am wondering what the ramifications of such an agreement would be, specifically to slot restricted LHR and on the route structure and city pairs of many lucrative transatlantic carriers.

I assume that open skies means more choices, less prices for consumers, but since the airline industry seems perenially in the hole (how can they make money on $400 transatlantic fares?) i am wondering if certain economic floors and ceilings would be in place.

any thoughts?

21 replies: All unread, jump to last
 
User currently offlineGlom From United Kingdom, joined Apr 2005, 2818 posts, RR: 10
Reply 1, posted (8 years 10 months 2 days 11 hours ago) and read 3653 times:

The deal is already signed. I don't know about all these freedom rights though, since I don't know what freedom rights actually are.

User currently offlineANother From , joined Dec 1969, posts, RR:
Reply 2, posted (8 years 10 months 2 days 11 hours ago) and read 3630 times:

Quoting Glom (Reply 1):
The deal is already signed.

Not yet it isn't. It must be approved by the EU Council of Ministers (the 25 Member States). While our Brussels friends are telling everyone what a wonderful deal it is, well it isn't really.

It's actually mostly smoke and mirrors. The US side gets unlimited rights to fly between the 25 Member states ... so what? They already have rights to fly between 15 of the 25 and they don't use them (other than through code-share).

The EU get unlimited rights to fly beyond the US to wherever. So what? IB withdrew their MIA hub operations, it didn't work. Any other beyonds are code shares, EU carriers see no need to operate these.

US side gets unlimited rights to all EU airports (to/from & between, except no domestic rights) Heathrow, that sacred cow is opened to all. So what was a reasonably profitable route for 2x2 airlines, will become an unprofitable route for anyone that wants to operate it be they EU or US. They will go broke paying millions for the slots and selling $199 rt.

As far as EU Airlines being able to opeate from any EU airport, you haven't read the fine print. The agreement allows any EU airline ESTABLISHED in a member state to operate from that member state to the US. Nobody has yet defined ESTABLISHED (sorry for shouting) yet. I'm sure that some member states will interpret this quite strickly, while others will not.

Don't hold your breath!


User currently offlineTOLtommy From United States of America, joined Dec 2003, 3295 posts, RR: 4
Reply 3, posted (8 years 10 months 2 days 9 hours ago) and read 3581 times:

Quoting ANother (Reply 2):
US side gets unlimited rights to all EU airports (to/from & between, except no domestic rights)

I don't believe US carriers will have the right to fly local traffic between to EU airports, just as EU carriers will not have the right to fly local traffic between to US airports. EU carriers will have the right, however to fly local traffic from the US to a third country (non-EU, non-US). IB's MIA hub didn't work because it was focused on connecting TWOV passengers at MIA. They were not that interested in local traffic.

I think the new agreement is a good deal for the EU carriers. Strong EU carriers will be able to originate traffic from outside their home countries. Olympic and Alitalia should be extremely afraid of this. Carriers like BA, LH, and AF/KLM could easily move aircraft in to those markets and feed US partners hubs. I can easily see LH flying ATH-ORD to feed UA's hub, for example. EU carriers could also take advantage and market service from US to underserved destinations outside the US. US carriers can't grow as most are in dire financial shape. But BA will be able to see local tickets from ORD-ACA, for example. LHR will be too expensive for most US carriers to operate into fo rthe time being. The can't afford the slots. LHR is a moot point. Personally, I'm hoping to see a transatlantic LCC form. With partners on each end, they could really take advantage of this new law.


User currently offlineGlom From United Kingdom, joined Apr 2005, 2818 posts, RR: 10
Reply 4, posted (8 years 10 months 2 days 7 hours ago) and read 3554 times:

So what are these six freedoms I keep hearing about?

User currently offlineAtmx2000 From United States of America, joined Oct 2004, 4576 posts, RR: 37
Reply 5, posted (8 years 10 months 2 days 7 hours ago) and read 3541 times:

Quoting Glom (Reply 4):
So what are these six freedoms I keep hearing about?


Air Freedom Rights


enjoy!



ConcordeBoy is a twin supremacist!! He supports quadicide!!
User currently offlineCentrair From Japan, joined Jan 2005, 3598 posts, RR: 20
Reply 6, posted (8 years 10 months 2 days 7 hours ago) and read 3525 times:

Quoting Atmx2000 (Reply 5):
Air Freedom Rights

That really cleared things up for me.

I remember in another thread about this topic that it would also allow for increased foreign ownership of U.S. Carriers. Is this true? Would love to see AF/KL take up more of NW.



Yes...I am not a KIX fan. Let's Japanese Aviation!
User currently offlineGlom From United Kingdom, joined Apr 2005, 2818 posts, RR: 10
Reply 7, posted (8 years 10 months 2 days 7 hours ago) and read 3524 times:

Interesting. But this sixth freedom: if you have third and fourth freedom rights (which you would need to operate a viable route), isn't that sixth freedom just a combination of the fourth freedom from one country and the third freedom from another.

Also, why is third freedom third? It seems more natural that it would be the first freedom, since it's simpler than the actual first freedom.


User currently offlineDLPMMM From United States of America, joined Apr 2005, 3592 posts, RR: 10
Reply 8, posted (8 years 10 months 2 days 7 hours ago) and read 3521 times:

Quoting Centrair (Reply 6):
remember in another thread about this topic that it would also allow for increased foreign ownership of U.S. Carriers. Is this true? Would love to see AF/KL take up more of NW.

Word has it that permissable foreign ownership of USA airlines will be increased to 49%.


User currently offlineZvezda From Lithuania, joined Aug 2004, 10511 posts, RR: 64
Reply 9, posted (8 years 10 months 2 days 7 hours ago) and read 3514 times:

Quoting DLPMMM (Reply 8):
Word has it that permissable foreign ownership of USA airlines will be increased to 49%.

Yes, but that will be separate from the treaty.


User currently offlineAtmx2000 From United States of America, joined Oct 2004, 4576 posts, RR: 37
Reply 10, posted (8 years 10 months 2 days 6 hours ago) and read 3498 times:

Quoting Glom (Reply 7):
Interesting. But this sixth freedom: if you have third and fourth freedom rights (which you would need to operate a viable route), isn't that sixth freedom just a combination of the fourth freedom from one country and the third freedom from another.

No, third and fourth freedoms have to do with origin and destination traffic. A nation could prohibit a foreign carrier from taking passengers to beyond points or prevent passengers from other countries coming into the country on that airline, and prevent sales of such tickets in the country of origin. I don't see how they would enforce it once the passenger is out of the country, though.

Quoting Glom (Reply 7):
Also, why is third freedom third? It seems more natural that it would be the first freedom, since it's simpler than the actual first freedom.

Given that flights between countries require people to fly over other countries because it is the best route or the only route, the first freedom is essential for long distance air travel. Also with regards to post WWII air travel, technical stops in other countries for refueling purposes were need because of the state of technology then, making the 2nd freedom also essential for world service. The first two freedoms are then more about freedom of movement of the airplane itself. They were agreed to in a multilateral agreement. Passenger rights between countries are individually negotiated in bilateral agreements built on top of the foundation provided for by the multilateral agreement.



ConcordeBoy is a twin supremacist!! He supports quadicide!!
User currently offlineDLPMMM From United States of America, joined Apr 2005, 3592 posts, RR: 10
Reply 11, posted (8 years 10 months 2 days 6 hours ago) and read 3497 times:

The big question is whether the 25 EU nations will all sign off on the proposed treaty, or if they will scuttle this one, as they did the last one.

Here is an interesting link from the USA sState Department that describes the previous negotiations that took place.

http://www.state.gov/e/eb/rls/rm/34327.htm


User currently offlineOH-LGA From Denmark, joined Oct 1999, 1436 posts, RR: 19
Reply 12, posted (8 years 10 months 2 days 5 hours ago) and read 3459 times:

Quoting Zvezda (Reply 9):
Yes, but that will be separate from the treaty.

But the EU has also made noises that the EU actually approving the Open Skies deal will be dead in the water unless the US relaxes foreign ownership rules.

Kai



Head in the clouds... yet feet planted firmly on the ground.
User currently offlineMasseyBrown From United States of America, joined Dec 2002, 5462 posts, RR: 7
Reply 13, posted (8 years 10 months 2 days ago) and read 3417 times:

US airlines are authorized a few intra-EU routes today, although I'm not sure any of them are in use.

I haven't seen it mentioned, but I'm assuming these dormant rights would be given up. It seems reasonable. Yes/no???



I love long German words like 'Freundschaftsbezeigungen'.
User currently offlineANother From , joined Dec 1969, posts, RR:
Reply 14, posted (8 years 10 months 1 day 23 hours ago) and read 3405 times:

Quoting TOLtommy (Reply 3):
I don't believe US carriers will have the right to fly local traffic between to EU airports

Check Bierleys press conference, he was clear, the US will get rights between the 25 Member states but not domestic within any country.

Quoting TOLtommy (Reply 3):
Strong EU carriers will be able to originate traffic from outside their home countries.

Read again my comment on right of establishment. It's just not a simple as you imagine. Say LH decides it wants to operate CDG-JFK, Is it established in France? Does it need to set up a subsiderary to operate France - USA. Who has safety oversight of the aircraft? The French? The Germans? (Yes EASA is just down the road, only another century or so before they get that off the ground) Let's face it the EU transatlantic airlines have huge moneys invested in their hubs, which they feed very effectively from other European cities. Why would they want to operate out of another EU carriers fortress, where they will have limited feed?

Quoting Centrair (Reply 6):
I remember in another thread about this topic that it would also allow for increased foreign ownership of U.S. Carriers.

No, this isn't part of the deal. Congress would have to act to accomplish this. What the DOT is doing is considering on redefinine what the "Control" part of ownership & control actually means. For example, today, a non-US citizen cannot have control over an US airline's fleet planning department. Tomorrow, if DOT makes the 'interpretations' this would be permitted, provided overall control of the company remained with US cititzens. This makes it look like the US is relaxing their ownership and control rules, when they are not.

Quoting Atmx2000 (Reply 10):
A nation could prohibit a foreign carrier from taking passengers to beyond points or prevent passengers from other countries coming into the country on that airline, and prevent sales of such tickets in the country of origin.

To my knowledge, only the US has done so - by prohibitting sales in the US of tickets to Lybia and a few other countries it doesn't like. This was done for 'national security' reasons, and not economic ones. I believe that the Prez has to order this.

Quoting DLPMMM (Reply 11):
The big question is whether the 25 EU nations will all sign off on the proposed treaty, or if they will scuttle this one, as they did the last one.

Well, there doesn't seem to be a lot in it for them. What you are seeing is the Eurocrats in Brussels who want to be seen as 'doing something' and they will do just about anything to get this through. But will it change anything other than access to Heathrow and the Shannon rule? No.

Quoting MasseyBrown (Reply 13):
US airlines are authorized a few intra-EU routes today, although I'm not sure any of them are in use. I haven't seen it mentioned, but I'm assuming these dormant rights would be given up. It seems reasonable.

The US position is that the EU member states are 25 soverign nations, each with a seat at the UN (including ICAO). Their open skies policy calls for unlimited 5th freedoms and this includes between the 25 MSs. Today US airlines have unlimited 5ths between any two countries that have signed open skies. Netherlands and Poland is just one example (The US side has some 5ths ex the UK, but these haven't been used (except for code share) for years.) As the US has open skies with 15 of the 25 MSs US airlines already have rights between these 15 countries. With a new agreement this will increase to all 25. Are they likely to use them .... (I'd put money on this one!). The US position is clear - they are not looking for domestic rights in the EU, but insist on unlimited 5ths between MSs.


User currently offlineZvezda From Lithuania, joined Aug 2004, 10511 posts, RR: 64
Reply 15, posted (8 years 10 months 1 day 22 hours ago) and read 3393 times:

Quoting OH-LGA (Reply 12):

But the EU has also made noises that the EU actually approving the Open Skies deal will be dead in the water unless the US relaxes foreign ownership rules.

Yes, it is clear that the treaty will not be approved unless the US relaxes its foreign ownership rules.


User currently offlineBobnwa From United States of America, joined Dec 2000, 6483 posts, RR: 9
Reply 16, posted (8 years 10 months 1 day 17 hours ago) and read 3340 times:

Quoting Centrair (Reply 6):
Would love to see AF/KL take up more of NW.

It would only take $1.00 for AF/KL to own more of Northwest since they presently own zero shares.


User currently offlineDLPMMM From United States of America, joined Apr 2005, 3592 posts, RR: 10
Reply 17, posted (8 years 10 months 1 day 14 hours ago) and read 3294 times:

Quoting ANother (Reply 2):
As far as EU Airlines being able to opeate from any EU airport, you haven't read the fine print. The agreement allows any EU airline ESTABLISHED in a member state to operate from that member state to the US. Nobody has yet defined ESTABLISHED (sorry for shouting) yet. I'm sure that some member states will interpret this quite strickly, while others will not.

I thiunk you should read the link I provided. You seem to be under some false impressions as far as the USA's and EU's position on several matters.

With respect to your above statement, This was the USA's position:

We responded with a new ownership and control clause that would have authorized every European carrier to operate to the United States from any and all points in the EU¯for example, BA from Frankfurt, Lufthansa from Warsaw, Virgin Atlantic from Brussels, or EasyJet from Paris. Moreover, our proposal would have eliminated immediately, fully, and permanently all legal barriers in a comprehensive agreement to the merger of EU carriers, such as the planned combination of Air France and KLM.

And for your statement:

Quoting ANother (Reply 14):
No, this isn't part of the deal. Congress would have to act to accomplish this. What the DOT is doing is considering on redefinine what the "Control" part of ownership & control actually means.

Here was the USA's position:

Listening also to EU calls for changes in traditional inward investment rules, we proposed to secure Congress's approval to increase foreign ownership limits for voting stock from 25% to 49%, the current EU standard. We were also prepared to make further liberalization in the investment area a priority subject for consideration in follow-on negotiations, upon implementation of the first stage.

Also, parts of the US position included:

We agreed to eliminate the longstanding requirement for formal designation of airlines;
We agreed on an Annex for cooperation in airline competition matters between the Commission and the Department of Transportation;
We worked out changes sought by the EU in the safety article of our model bilateral;
We added, at European request, new provisions on state aids, the environment, and consumer protection;

With respect to your cabotage argument, here is the USA's stance:

The reasons offered publicly are far from convincing, tending to shed more heat than light. For example, some argued that the absence of cabotage rights for EU carriers in the U.S. domestic market created an "imbalance" when contrasted with the rights of U.S. carriers to operate between, but not within, the EU Member States. This rationale is both a legal and a commercial red herring. From a legal perspective, as long as the EU Member States are just that¯sovereign states under international law, each with a separate vote in the International Civil Aviation Organization¯it is simply incorrect to equate cabotage with fifth freedoms. But just as important is the limited commercial relevance of cabotage: no EU carrier has approached us in recent years with a serious request to operate cabotage flights, just as no American carrier today operates passenger aircraft between any points in Europe and only a few carriers have historically operated a modest number of all-cargo flights.

There is a whole lot more in the link I provided.


User currently offlineANother From , joined Dec 1969, posts, RR:
Reply 18, posted (8 years 10 months 1 day 11 hours ago) and read 3240 times:

Quoting DLPMMM (Reply 17):
There is a whole lot more in the link I provided

Yes, you are right. I did read it however it is from a June 2004 statement from the US Department of State. A lot of things have happened since then.

Have a look Here particularly this Q&A:

Quote:
Question: Can I follow up on the cabotage question?

Do I understand correctly that the U.S. is seeking what some might call cabotage within the EU, to be able to fly to London and then on to Berlin, which you may be able to do right now already, but to have that right to fly within the EU among all twenty-five nation states?

Byerly: Very clear on the situation. We have with 15 EU Member States today the unlimited right to fly beyond each of those Member States to another Member State. Unlimited right to fly via another Member State to those Member States. We have in some cases, in the other ten cases, we have agreements that provide more limited fifth-freedom rights within Europe already. What we seek is the right for every U.S. carrier to fly from one European state to another European state and beyond any European state to third countries. What we offer is the right to fly to the United States, which is a country, and beyond to any country.

This may also be of interest:

Quote:
Question: What does the American law say now about the maximum ownership share that a foreigner can have?

Byerly: The maximum ownership share in voting shares of a U.S. carrier is twenty-five percent. Our law also specifically provides that the head of the airline and a certain number, two-thirds or so, or seventy-five percent, of the Board of Directors or officers have to be American citizens. And furthermore, our law provides that actual control of a U.S. carrier must rest with American citizens.

and this

Quote:
Question: In other words, you would submit a proposal to Congress?

Byerly: No, we're evaluating options. I'm afraid I'll just have to leave it with that.

Have a look at article, in particular the comment

Quote:
U.S. citizen control still would cover "those areas of airline operations where there currently remains significant government involvement or regulation," notably safety and security. The 25 percent cap on foreign voting interests in a U.S. carrier also would be unchanged.

Look, I'm not trying to be unnecessarily argumentative - but we are being lambasted by smoke and mirrors. Both the EU and US sides are not telling the whole truth (this press conference notwithstanding). The EU has no idea how they are going to manage 'establishment' and from what I observe few, if any EU airlines are prepared to exercise their 'right' to operate from their non-hubs. Experience has also shown that US airlines are unlikely to exercises their 'new' rights within the EU.

What's left? Heathrow blood bath, and loss of service to Shannon. We shall see ...

[Edited 2005-12-05 21:32:14]

User currently offlineDLPMMM From United States of America, joined Apr 2005, 3592 posts, RR: 10
Reply 19, posted (8 years 10 months 1 day 9 hours ago) and read 3200 times:

I've said for quite a while that this is all politics, and that the net results of the negotiations will not involve either cabotage within the USA or foreign control. The USA negotiators have no flexibility on these matters as congress may be willing to increase minority ownership, but never control.

The USA is in no hurry to reach an agreement as the status quo is fine for them.

With respect to your quotes, the negotiations were started again from ground zero after the EU failed to ratify the last agreement. Notice that Byerly said they were "reviewing their options" and did not rule anything in or out. Given the questions asked by the EU press, I would not expect the USA's representative to do anythin by give the initial negotiating position, as to do otherwise is to be negotiating with the press (who cannot negotiate for EU).

Most of the smoke seems to be political posturing within the EU countries for their own countries' respective incumbant airlines. The only problem I have with this is the incessant USA bashing by politicians (and their mind numbed robots) that has been going along with it, blaming the USA's alleged intransigence when it is actually a matter of disagreement among EU members. (look at BMI vs. BA as an example).

As I said, there is no hurry. Word has it that Ireland has already reach an agreement with the USA for open skies and phasing out the Shannon stops to be announces after these talks break down.

Cheers.


User currently offlineIkramerica From United States of America, joined May 2005, 21534 posts, RR: 59
Reply 20, posted (8 years 10 months 1 day 8 hours ago) and read 3185 times:

Which type of cabotage are we talking here? 8th or 9th freedom?


Of all the things to worry about... the Wookie has no pants.
User currently offlineDLPMMM From United States of America, joined Apr 2005, 3592 posts, RR: 10
Reply 21, posted (8 years 10 months 1 day 8 hours ago) and read 3178 times:

Between points within the USA by EU flagged carriers.

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