Elagabal
Topic Author
Posts: 195
Joined: Tue Mar 22, 2005 7:40 am

US-EU Open Skies - What's New?

Fri Sep 23, 2005 5:46 am

Hi Peeps,

I did a search for the above topic and all I got was smaller, casual
posts in other threads. Apologies if there's a hidden motherlode
somewhere in here...

Anyway, what's the current status of the US-EU open skies talks?
Ongoing / suspended / progressing...? News has been kind of slow
of late.

Crystal ball gazing welcome, but ideally I'd like to hear current facts first.

 Smile
 
IADLHR
Posts: 612
Joined: Wed Apr 27, 2005 10:25 pm

RE: US-EU Open Skies - What's New?

Fri Sep 23, 2005 6:43 am

A few weeks ago there were reports on the web that representatives from the US and EU were meeting in DC to explore restarting the talks in October.
Since that I have not seen or heard a word more.

The reports alo said that the US was quite concerned and skepitcal about what the EU could really deliver in the talks. The US is still upset that, last year, an agreement of sorts was reached during the talks and later voted down by the EU membership. So the US is playing hardball, of sorts, and does not want a repeat performacne of that.
 
commavia
Posts: 10081
Joined: Mon Apr 25, 2005 2:30 am

RE: US-EU Open Skies - What's New?

Fri Sep 23, 2005 7:41 am

Quoting Elagabal (Thread starter):
Anyway, what's the current status of the US-EU open skies talks?

The E.U. is still holding out for stuff it is never going to get. And thus, the talks are going nowhere.
 
Elagabal
Topic Author
Posts: 195
Joined: Tue Mar 22, 2005 7:40 am

RE: US-EU Open Skies - What's New?

Fri Sep 23, 2005 8:19 pm

Thanx for the tips - & too bad really. I think near-total deregulation is the way to go, and would help with both quality in the States, and some airport protectionism in Europe (LHR, SNN etc.).
 
zvezda
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Joined: Sat Aug 28, 2004 8:48 pm

RE: US-EU Open Skies - What's New?

Fri Sep 23, 2005 8:54 pm

Quoting Commavia (Reply 2):
The E.U. is still holding out for stuff it is never going to get.

Could you be more specific?
 
commavia
Posts: 10081
Joined: Mon Apr 25, 2005 2:30 am

RE: US-EU Open Skies - What's New?

Fri Sep 23, 2005 10:03 pm

Quoting Zvezda (Reply 4):
Could you be more specific?

The E.U. wants to get cabotage within the United States for E.U. carriers.

That will never, never, ever happen -- partly because of the U.S. political climate, and partly because it would be completely unfair.

Politically, no President, Senator, or Congress -- of either party -- would ever vote for or sign off on a bill that would give foreign companies the right to come in and get free and open access to U.S. markets where U.S. competitors operate. While this would, of course, be a manifestation of a true free market, the reality is that it would be politically dead on arrival before it ever even got to Washington.

However, in this specific instance, it truly would be a completely unfair trade. The United States and Americans are not stupid (contrary to what many in the world think). The U.S. government is not going to trade open access to the world's largest air market, with hundreds of millions of passengers annually, so that American carriers can earn the right to not fly into any of Europe's largest air markets because they are regulated, government-controlled, slot-restricted and capacity constrained.

In other words: why would the U.S. give a European airline the right to set up a hub in any one of a dozen U.S. (MCI and STL immediately come to mind)cities that could support it and currently have the capacity, while no U.S. carrier would ever be able to have any meaningful presence at any major European airports. All of them are already full, capacity constrained and slot-restricted. In the U.S. -- only two airports (LGA and DCA) have slots, and a few others (SNA, ORD, et al) have some other form of restrictions. In Europe, virtually every single major airport with a local O&D cachment area worthy of a major operation by a potential U.S. competitor has slot controls and would be pretty much a no-go. In essence, much like with the U.S.-Japan bilateral of the 1990s, it's wonderful (in the abstract) if the E.U. lets the U.S. carriers have cabotage in Europe and visa versa, but if only the E.U. carriers could actually take advantage of this -- in practice -- and the U.S. carriers largely couldn't, that it's a total waste of time for the U.S. and for U.S. carriers.

Thus, it is completely unfair for the E.U. to demand cabotage for their carriers in the U.S. domestic market, when they know full well that U.S. carriers would never -- in practice -- have comparable access to the E.U. market.

And thus, furthermore, it will never happen.

[Edited 2005-09-23 15:08:11]
 
DLPMMM
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RE: US-EU Open Skies - What's New?

Fri Sep 23, 2005 11:31 pm

Last I heard, the EU finally gave up on cabotage as an issue. It turns out that mort of the EU airlines did not really want it (there was a quote from the LH MD to this effect at least).

The remaining sticking points are airline foreign ownership % limitations (presently at 25% in the USA, the EU wanting complete removal of limitations), and Bermuda II / Heathrow access.
 
commavia
Posts: 10081
Joined: Mon Apr 25, 2005 2:30 am

RE: US-EU Open Skies - What's New?

Fri Sep 23, 2005 11:40 pm

Quoting DLPMMM (Reply 6):
The remaining sticking points are airline foreign ownership % limitations (presently at 25% in the USA, the EU wanting complete removal of limitations), and Bermuda II / Heathrow access.

If, indeed, this is true (which I was not aware of), then I think an agreement is definitely doable.

While it would definitely take some political will and courage from Senators who would have to resist protectionist pressures from labor unions, I do believe that the U.S. government would be willing to up the 25% U.S. carrier foreign ownership cap to 49%. This would, however, have to come with a major quid pro quo by the Europeans, and -- DLPMMM, as you said -- LHR is pretty much the only thing big enough to satisfy that.

While the unions would go nuts over the ownership cap being raised, I think that the airlines (and their checkbooks) -- especially CO and DL -- could definitely persuade elected representatives that access to LHR for other U.S. carriers would be worth it.

That being said, the issue then -- of course -- becomes actually securing the rights at LHR. The U.S. is not going to pull another Japan. They aren't going to secure the route authority for its airlines to fly to Heathrow, and then not secure slots for them to actually land the plane. The U.S. is going to want actual take-off/landing slots, at viable times. I'd imagine that CO and DL are both going to want 4-5 daily slots each, and then NW and US would each want 2. That means a total of 12-14 daily slots at LHR. It doesn't seem like much, but at LHR, it would definitely take some major muscle by the British government, the E.U. and the BAA to get that many slots -- at peak transatlantic times -- for U.S. airlines. Hopefully, when T5 opens, that will free up some capacity!
 
stirling
Posts: 3897
Joined: Sat Jun 12, 2004 2:00 am

RE: US-EU Open Skies - What's New?

Sat Sep 24, 2005 12:17 am

Quoting Commavia (Reply 5):
However, in this specific instance, it truly would be a completely unfair trade. The United States and Americans are not stupid (contrary to what many in the world think). The U.S. government is not going to trade open access to the world's largest air market, with hundreds of millions of passengers annually, so that American carriers can earn the right to not fly into any of Europe's largest air markets because they are regulated, government-controlled, slot-restricted and capacity constrained.

In other words: why would the U.S. give a European airline the right to set up a hub in any one of a dozen U.S. (MCI and STL immediately come to mind)cities that could support it and currently have the capacity, while no U.S. carrier would ever be able to have any meaningful presence at any major European airports. All of them are already full, capacity constrained and slot-restricted. In the U.S. -- only two airports (LGA and DCA) have slots, and a few others (SNA, ORD, et al) have some other form of restrictions. In Europe, virtually every single major airport with a local O&D cachment area worthy of a major operation by a potential U.S. competitor has slot controls and would be pretty much a no-go. In essence, much like with the U.S.-Japan bilateral of the 1990s, it's wonderful (in the abstract) if the E.U. lets the U.S. carriers have cabotage in Europe and visa versa, but if only the E.U. carriers could actually take advantage of this -- in practice -- and the U.S. carriers largely couldn't, that it's a total waste of time for the U.S. and for U.S. carriers.

Thus, it is completely unfair for the E.U. to demand cabotage for their carriers in the U.S. domestic market, when they know full well that U.S. carriers would never -- in practice -- have comparable access to the E.U. market.

And thus, furthermore, it will never happen.

So my first question is; You're not really 16-20 are you?
Because the above synopsis is better than anything written on the subject I've read up to now....by men twice, three, four times your age.
So well presented in fact, there's nothing of substance I can add.

Well maybe just a couple of things.... Wink

Why is the cabotage issue so important to the EU? Do they realize how unrealistic it is?

It would be like the U.S. asking the EU to drop (or at least curb) it's Agricultural subsidies...to the tune of $41 billlion dollars annually. (2003 figure) The limitations on Food importation to the EU make their duties and import taxes on non-perishable consumer goods seem like a free pass in comparison.
Delete this User
 
commavia
Posts: 10081
Joined: Mon Apr 25, 2005 2:30 am

RE: US-EU Open Skies - What's New?

Sat Sep 24, 2005 12:33 am

Quoting Stirling (Reply 8):
So my first question is; You're not really 16-20 are you?

Yes, I am really 16-20, and I do very much appreciate your comments. I'm humbled.

Quoting Stirling (Reply 8):
Why is the cabotage issue so important to the EU?

Truly -- that is a question for the ages.

Quoting Stirling (Reply 8):
Do they realize how unrealistic it is?

Yes, IMO.

Quoting Stirling (Reply 8):
It would be like the U.S. asking the EU to drop (or at least curb) it's Agricultural subsidies...to the tune of $41 billion dollars annually.

One difference, though: Bush has actually said on repeated occasions that if the E.U. dropped its ag subsidies, the U.S. would drop theirs the next day:

From a 4 July 2005 London Times article:

Asked directly if America would drop its subsidy system if the EU abandoned the Common Agricultural Policy (CAP), Mr Bush said: “Absolutely. And I think we have an obligation to work together to do that.

“Because if we do achieve this business of free trade, and if markets in the West are opened up to countries in Africa, they could be so successful, they could eliminate the need for aid. The benefits that have come from opening up markets — our markets to them and their markets to us — far outweigh the benefits of aid.”


The E.U., on the other hand, has to date -- and to my knowledge -- not made any guarantees of making capacity available to U.S. carriers at key European airports that are slot-controlled and capacity constrained (LHR, LGW, CDG, AMS, BRU, FRA, MUC, ZRH, MXP, FCO, et al).
 
Concorde001
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Joined: Fri Jan 21, 2005 12:53 am

RE: US-EU Open Skies - What's New?

Sat Sep 24, 2005 1:10 am

Quoting Commavia (Reply 7):
The U.S. is going to want actual take-off/landing slots, at viable times. I'd imagine that CO and DL are both going to want 4-5 daily slots each, and then NW and US would each want 2. That means a total of 12-14 daily slots at LHR. It doesn't seem like much, but at LHR, it would definitely take some major muscle by the British government, the E.U. and the BAA to get that many slots -- at peak transatlantic times -- for U.S. airlines. Hopefully, when T5 opens, that will free up some capacity!

The only thing is, I think it will be incredibly difficult to get these slots. Unless, CO and DL can buy or borrow some slots from their alliance partners in Skyteam. I remember reading last month that AF and KL talked about selling some slots to CO and DL if an EU-US deal was agreed. However, even then, we are only talking about one or two slots a day!
I sincerely hope that the US does not demand that BA should give up some of its slots at Heathrow. I think that would be highly unfair - BA barely manage to get hold of 50% of slots and has to compete with the likes of LH,AF and KL who have hold 60% at their respective hubs!
I doubt that the British Government will guarantee slots for US carriers as India was also denied this request! I think Heathrow should be opened up to ALL American carriers, but slots should not be held back for them. They should do what every other carrier has to do....dig deep and pay what the market dictates!
 
kaitak
Posts: 9032
Joined: Wed Aug 18, 1999 5:49 am

RE: US-EU Open Skies - What's New?

Sat Sep 24, 2005 1:10 am

Congrats Commavia, good summary!

Yes, the Eurocrats have indeed dropped the cabotage demand. I am looking forward very much to Open Skies, because we in Ireland have an urgent need for this. Unfortunately, our govt is among the most obstructive and I have a sneaking fear that they might try and hold things up by demanding a special deal for Shannon. If that happens, the US should just revoke the Irish bilateral.

With fuel prices being as high as they are now, airlines need more freedom to open international routes without too much bureaucracy, although I wonder if the EU will raise the issue of Ch11 and the subsidy this is seen as providing to US carriers.

I really hope a deal can be done this year, but I'm not optimistic.
 
commavia
Posts: 10081
Joined: Mon Apr 25, 2005 2:30 am

RE: US-EU Open Skies - What's New?

Sat Sep 24, 2005 1:42 am

Quoting Concorde001 (Reply 10):
The only thing is, I think it will be incredibly difficult to get these slots.

Well, that is -- of course -- the key. LHR is so desperately capacity constrained right now.

Honestly, I think that LHR could probably squeeze another 24 operations out of LHR's two runways between 0600 and 1300. In the scheme of things, it really isn't that many flights. CO could get 4 slots (2 IAH/2 EWR), DL could get 4 slots (3 ATL/1 CVG), NW could get 2 slots (1 DTW/1 MSP) and US could get 2 slots (1 CLT/1 PHL). While all these airlines -- and especially CO and DL -- would probably all want more slots (CO would want more for EWR, and for CLE-LHR, and DL would want probably 1 more ATL-LHR and at least 2-3 JFK-LHR), I think that this compromise would be satisfactory to get the U.S. to agree to raise the ownership cap.

Quoting Concorde001 (Reply 10):
I sincerely hope that the US does not demand that BA should give up some of its slots at Heathrow.

Quite frankly, I highly doubt that the U.S. would make such a demand. The reason why is that I really don't think the U.S. cares where the slots come from. The U.S. objection to the not having access for CO/DL/NW/US at Heathrow really isn't that BA is so dominant there (as you said, they're not). It's more just the actual lack of access. If BAA came to the U.S. and said, "we'll create 12 daily take-off/landing slots for your U.S. carriers," I highly doubt that the U.S. would care whether it came from BA or was new.

Quoting Kaitak (Reply 11):
Congrats Commavia, good summary!

Thank you, Kaitak.

Quoting Kaitak (Reply 11):
Yes, the Eurocrats have indeed dropped the cabotage demand. I am looking forward very much to Open Skies, because we in Ireland have an urgent need for this.

Me too! You have such a beautiful, wonderful country with such great people. It's too bad that so many people in America can't see it because air capacity between our two nations is artificially restricted by the ridiculous Shannon stopover requirement. I firmly believe that if that rule is lifted, Shannon will immediately lose all transatlantic flights (except maybe a daily JFK) but that DUB will see a boom of traffic from U.S. carriers.
 
HanginOut
Posts: 522
Joined: Sun May 29, 2005 3:24 am

RE: US-EU Open Skies - What's New?

Sat Sep 24, 2005 6:25 am

Quoting Commavia (Reply 7):
Hopefully, when T5 opens, that will free up some capacity!

T5 will open the gate capacity at Heathrow so that some aircraft that currently land at remote stands will no longer have to. However, T5 will do nothing to open more slots at Heathrow. The only thing(s) that could do that would be if another runway were opened, if they found a way to squeeze in some more slot, or if they extended the opening and closing hours of Heathrow by 30 minutes - adding an extra hour of operations.

HanginOut
Dreaming of the day I can work for an airline
 
IADLHR
Posts: 612
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RE: US-EU Open Skies - What's New?

Sat Sep 24, 2005 8:43 am

Back in the 1990s or so there was a US Senate committee hearing about letting UA start ORD-LHR service. At that time BA and AA were putting up a major fight. BA claimed there were no slots at LHR for the proposed service. BA implied that they would be forced to give up the slots. A number of Senators flat out said that was not the case. Just find UA the slots and they did.

Years later we are in the some position, trying to get other US carriers into LHR. I am quite, quite certain that the US does not care where the slots come from. BA can hold on to their slots as long as the other US carriers get their slots. However, I will say this, there is no way that the US will sit back and watch the US carriers pay money for slots to fly into LHR. IT WIL NOT HAPPEN!!! You can go to the bank on that one.

What ever happened to the plan to go to mixed mode on the runways at LHR? That would create some new slots too.

No foreign airline has ever paid a cent for a slot to land at any US airport. If the UK made the US carriers pay for the slots.BA and VS would find themselves paying for slots to land at ORD,JFK,LAX etc. etc. etc.

On the subject of openskies, I think there is the possibility if the SNN stopover in Ireland bering a bigger deal breaker than even LHR.

If the US had the political willingness to raise the foreign ownership levels to 49%, seriously does the Irish government have the same political backbone and willingness to eliminate the SNN stopover? Also does BA, BAA and the British government have the political muscle and willingness to find the slots at LHR for the US carriers? There are times when I think absolutely not. So I am all for the US to call their bluffs and increase the limits on foreign ownership to 49% If Ireland and the UK does not reciprocate with their tough political decisions, I say , the US should cancel the US/Irish bilateral and Bermuda II.

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