scotron11
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EU/US Open Skies: Why Is CO Against It?

Wed May 03, 2006 2:19 pm

Ft reports that today, the US government will end the implementation of an OpenSkies treaty because of opposition from somefolk in Congress, unions and some carriers, in particular CO.

They are objecting to a US plan to ease, albeit only modestly, the restrictions on the role that foreign investors can play in the management of US airlines.

The resolve of the US government and European Commission to drive through the open skies treaty could also face further difficult tests in the US courts with Continental Airlines warning that it would start legal proceedings to try to block any unilateral move by the DoT to change the foreign ownership and control rules for US airlines.

So instead of be ratified by EU transport ministers this June, the whold shebang will have to be put back until October, and the US government will still have to overcome any objections.

What are they afraid of?
 
vega
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RE: EU/US Open Skies: Why Is CO Against It?

Wed May 03, 2006 2:25 pm

Quoting Scotron11 (Thread starter):
What are they afraid of?

COMPETITION
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stirling
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RE: EU/US Open Skies: Why Is CO Against It?

Wed May 03, 2006 2:35 pm

Quoting Vega (Reply 1):
COMPETITION

Yes, Foreign Competition. Off-Shore Competition coming in from nations with significantly lower labour costs than the US. That kind of competition.
Delete this User
 
COSPN
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RE: EU/US Open Skies: Why Is CO Against It?

Wed May 03, 2006 2:37 pm

I Belive CO will accept in excange for full LHR access.....
 
masseybrown
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RE: EU/US Open Skies: Why Is CO Against It?

Wed May 03, 2006 2:39 pm

CO's point of view is that any open-skies provision that does not include guaranteed slots at Heathrow is not open. They are opposed to any concessions, including a relaxation of foreign ownership limits, until Heathrow is opened.

Interestingly, CO's ex-CEO G Bethune proposed relaxing foreign ownership restrictions a few years ago when he thought CO couldn't get money any other way. Times change, don't they?
 
scotron11
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RE: EU/US Open Skies: Why Is CO Against It?

Wed May 03, 2006 2:44 pm

Quoting Stirling (Reply 2):

Yes, Foreign Competition. Off-Shore Competition coming in from nations with significantly lower labour costs than the US. That kind of competition.

Maybe. But you would think they are shooting themselves in the foot by opposing this, no?

What I don't understand is that in almost any other industry, no one bats an eye over ownership (except of course DubaiPorts). Banks, utilities, auto, even defense companies. But when it comes to airlines....whoa...hold on a minute...can't go there!

Makes no sense whatsoever to me!
 
scotron11
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RE: EU/US Open Skies: Why Is CO Against It?

Wed May 03, 2006 2:47 pm

Quoting COSPN (Reply 3):

I Belive CO will accept in excange for full LHR access.....

Well that is the intent. Any EU/US OpenSkies would encompass the entire EU and do away with Bermuda II, so any US carrier could use LHR.
 
saturn5
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RE: EU/US Open Skies: Why Is CO Against It?

Wed May 03, 2006 2:47 pm

Continental is an exception. Most other US airlines would welcome Open Skies (DELTA and United had no objections). Also lets not forget who is against this agreement most - labour unions, AFLCiO, etc. They dislike all such free market propositions, be it NAFTA or Open Skies.
 
Mir
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RE: EU/US Open Skies: Why Is CO Against It?

Wed May 03, 2006 2:51 pm

Would Open Skies allow for airlines like AF, BA, LH to operate domestic US flights (and airlines like UA or CO to operate intra-European flights)?

Sorry if that's a stupid question, I haven't really been following this.

-Mir
7 billion, one nation, imagination...it's a beautiful day
 
scotron11
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RE: EU/US Open Skies: Why Is CO Against It?

Wed May 03, 2006 2:56 pm

Quoting Mir (Reply 8):

Would Open Skies allow for airlines like AF, BA, LH to operate domestic US flights (and airlines like UA or CO to operate intra-European flights)?

No, but it would lift the restrictions on EU airlines from having to operate only from their home country. The EU would be treated as one country, so any EU airline would be able to fly from any EU city to any US city, and vice-versa.
 
masseybrown
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RE: EU/US Open Skies: Why Is CO Against It?

Wed May 03, 2006 3:06 pm

Quoting Scotron11 (Reply 6):
Any EU/US OpenSkies would encompass the entire EU and do away with Bermuda II, so any US carrier could use LHR.

CO says that access, i.e. open skies, without actual slots at usable times is no accesss at all; and CO would like 10 landing/departure slots immediately, please. (Something like 6 for EWR, 3 for IAH, and 1 for CLE.) BA, speaking for the UK, (or is it the other way round?) says CO should go about acquiring slots over time like other new entrants to Heathrow.

CO is asking for too much and might be happy with less. I wonder if all their 757 flights to Belfast, Bristol, etc. would survive if they got into Heathrow with, say, 4 dailies.
 
ikramerica
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RE: EU/US Open Skies: Why Is CO Against It?

Wed May 03, 2006 3:10 pm

Quoting COSPN (Reply 3):
I Belive CO will accept in excange for full LHR access.....

Exactly. Not free slots, but the right to fly there. Unless that is part of it, all open skies would do is make PERMANENT the advantage AA and UA have out of NY while hurting CO even more in IAH, where BA would be allowed to open up IAH-LHR service but CO would not be able to respond.

The whole idea that this is an "open skies" agreement is laughable. Call it Bermuda III or something like that, but not open skies.
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Gemuser
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RE: EU/US Open Skies: Why Is CO Against It?

Wed May 03, 2006 3:22 pm

Quoting MasseyBrown (Reply 10):
CO says that access, i.e. open skies, without actual slots at usable times is no accesss at all; and CO would like 10 landing/departure slots immediately, please. (Something like 6 for EWR, 3 for IAH, and 1 for CLE.) BA, speaking for the UK, (or is it the other way round?) says CO should go about acquiring slots over time like other new entrants to Heathrow.

CO wont get this because it is impossiable for the UK/EU/BAA to provide those slots. They simply do not exist. The only way to get them would be to take them off somebody else, obviously that would cause problems with who ever lost them AND it would cause problems with all other airlines at LHR who have had to buy/trade/lease at big dollars to get slots. They would be saying, well give them to us!

It would very quickly get to the point where the UK, in particular, will just walk away from the whole deal and the status quoe will remain.

Gemuser
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artsyman
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RE: EU/US Open Skies: Why Is CO Against It?

Wed May 03, 2006 3:56 pm

Most other US airlines would welcome Open Skies (DELTA and United had no objections).
****

This is inaccurate, every single major US carrier objected except for AA/UA because they already have the benefits of LHR access. It is just that CO took a leading role on it.
 
UAL777UK
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RE: EU/US Open Skies: Why Is CO Against It?

Wed May 03, 2006 4:38 pm

Quoting Artsyman (Reply 13):
This is inaccurate, every single major US carrier objected except for AA/UA because they already have the benefits of LHR access. It is just that CO took a leading role on it.

I cannot comment for AA, but Glen Tilton, UA's CEO is on the record stating he wants opens skies out of LHR as soon as possible and welcomes competition. It will afford them the oppertunity of opening up new routes especially to DEN.
 
Mir
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RE: EU/US Open Skies: Why Is CO Against It?

Wed May 03, 2006 4:41 pm

Quoting Scotron11 (Reply 9):
any EU airline would be able to fly from any EU city to any US city, and vice-versa.

Sounds a lot more beneficial for the EU airlines than the US airlines, who can fly from the US to any country in the EU as it stands today.  confused 

-Mir
7 billion, one nation, imagination...it's a beautiful day
 
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par13del
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RE: EU/US Open Skies: Why Is CO Against It?

Wed May 03, 2006 9:24 pm

Fundamental difference is the purpose airlines play in the US versus the EU.
EU nations used / use taxes on oil to establish and maintain road and train links, someone from the EU could give a percentage of the travelling public who use airlines versus other means, I'm certain the number is much larger than the US.
The result of that is that the US has airports all over the country and for the most part they are not closing down or consolidating them, the EU on the other hand is trying to minimize the number of airports. Under open skies, EU carries have numerous markets to open in the US, vice versa does not apply.
For US carries to believe that only LHR is the market is a mistake in my opinion,
concentrate on only one thing and miss the whole game.
 
JoFMO
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RE: EU/US Open Skies: Why Is CO Against It?

Wed May 03, 2006 9:37 pm

Quoting Mir (Reply 15):
Sounds a lot more beneficial for the EU airlines than the US airlines, who can fly from the US to any country in the EU as it stands today

Just because the current situation is much in favor of the US airlines.

Every US airline can choose the most lucrative city in the US (say New York) and fly to any lucrative city in Europe (say Paris), while poor TAP for example has to stay in its niche with Lisbon.

The current situation also prevents Europe from consolidating it's airline industry. Mergers are very difficult because you have to fear to loose traffic rights. Europe's airline industry would be even healthier with an open sky. They could even further show their superiorty.
 
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scbriml
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RE: EU/US Open Skies: Why Is CO Against It?

Wed May 03, 2006 9:47 pm

Quoting Ikramerica (Reply 11):
Exactly. Not free slots, but the right to fly there. Unless that is part of it, all open skies would do is make PERMANENT the advantage AA and UA have out of NY while hurting CO even more in IAH, where BA would be allowed to open up IAH-LHR service but CO would not be able to respond.

Welcome to a slot-constrained airport! yes 

There are slots available at LHR, just not at the times that CO would ideally want. With an open skies agreement in place CO would be free to spend millions of $s purchasing slots from other airlines. Why should CO get something for free that other airlines have had to spend time and money acquiring?

Unless there is some radical shake-up of how slots at LHR are allocated (which probably needs to be done at a Governmental level), I don't see how this gets resolved. From a US perspective I guess all AA and UA slots could be reallocated amongst all the airlines wanting LHR services, but that would seriously piss off AA and UA.

Given the situation at LHR, there's no way any EU/US agreement can allow all US airlines free access without those airlines having to acquire slots the hard way.

Now, where does CO sign up for some A380s for their 3.30pm arrival slot from IAHduck 
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commavia
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RE: EU/US Open Skies: Why Is CO Against It?

Wed May 03, 2006 9:48 pm

Continental doesn't want to have to pay for access to Heathrow like everybody else has had to. They want any prospective E.U.-U.S. deal to include provisions setting aside slots/gates at Heathrow just for new entrant U.S. carriers, presumably by taking them away from AA and BA. Both AA and BA, and the E.U. and U.S., have already pretty much said that any deal would not include such a provision, so Continental is unhappy. However, as has been said, just about everyone else in the U.S. wants the deal, with perhaps a few minor reservations here and there. Delta is willing to take Heathrow however they can get it, and would probably be happy to just buy the slots at Heathrow -- albeit at a skyrocketing price if the airport is opened up -- and be done with it. United wants ATI with bmi, and wants to be able to finally fly Denver-Heathrow. AA would probably welcome the flexiblity of not having to deal with any regulations, but would face more exposure at Heathrow, which would likely drive its yields on Heathrow flights down. However, on the upside, AA would be able to fly to Heathrow from all its U.S. gateways, including DFW and Raleigh, and it would finally be free to pursue ATI with BA, which in and of itself would probably more than compensate for the loss of revenue from falling yields on U.S.-Heathorw flights.

Sidenote: in general, I think it is pothetic that Congress, as usual, is pandering in an election year and putting on hold such an important piece of free-market legislation. I've already written my congressman and senators to tell them to support this, but alas, I doubt it will be much help.
 
PlaneGuy27
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RE: EU/US Open Skies: Why Is CO Against It?

Wed May 03, 2006 9:58 pm

Quoting Artsyman (Reply 13):
This is inaccurate, every single major US carrier objected except for AA/UA because they already have the benefits of LHR access. It is just that CO took a leading role on it.

Actually you are inaccurate. Remember this deal would open up the RIGHTS for everyone at LHR but what people don;t fully comprehend is the idea that RIGHTS doesn't couple with SLOT access.

Every single carrier is in favor of this deal except for Continental. Essentially, DL, NW and CO, all current LGW carriers are okay with the deal because through FF partnerships within Skyteam, Star, they know they would be able to negotiate new slots from partners. Continental, which isn't in a true major transatlantic parntership, feels like they would be screwed at the end. DL could get from AF, NW could get from KL and US could get from BMI or LH or SK....

Also, CO wants the status quo to remain in place. They are the only US LGW carrier that is currently able to code share in LHR via Virgin Atlantic. Think about how much money they would lose if everything is opened. Selling high yield high fare NY area passengers into LHR on a CO ticket is good for them and their corporate NY Area contracts.
 
scotron11
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RE: EU/US Open Skies: Why Is CO Against It?

Wed May 03, 2006 10:04 pm

Quoting Commavia (Reply 19):

Sidenote: in general, I think it is pothetic that Congress, as usual, is pandering in an election year and putting on hold such an important piece of free-market legislation. I've already written my congressman and senators to tell them to support this, but alas, I doubt it will be much help.


I like that, well done! It's about time this dilly-dallying ended and airlines be allowed to operate like any other industry.
 
airbazar
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RE: EU/US Open Skies: Why Is CO Against It?

Wed May 03, 2006 10:07 pm

Quoting Scotron11 (Reply 6):
I Belive CO will accept in excange for full LHR access.....

Who wouldn't! Full LHR access is very different from Full LHR access RIGHTS. CO and other US carriers are highjacking the Open Skies negotiations to try and get slots at LHR without paying for them. Ain't gonna happen, ever. LHR access rights wouldn't serve them either because they probably can't afford them in the open market, at this time. So what they're doing is stall tactics until hopefully some day, when they have the money to compete in a true free market, they can buy those slots. For now, the US government protectionism serves them better. It's that simple.
 
nateDAL
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RE: EU/US Open Skies: Why Is CO Against It?

Wed May 03, 2006 10:58 pm

I understand CO's concerns.

They seem to be fine with open skies and even foreign ownership, but feel screwed because they have been denied LHR access by regulation for decades (Berm. II) and now have no reasonable opportunity to get it. They have a legitimate grievance. That said, other airlines have been shut out and there probably is not a workable solution other than just saying sorry.

Maybe look at the bright side, they might free some 777s when they have to cancel one of their IAH-LGW flights and convert a EWR-LGW to a 752 when BA goes 4x day LHR-IAH.  scratchchin 
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masseybrown
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RE: EU/US Open Skies: Why Is CO Against It?

Wed May 03, 2006 11:16 pm

Quoting Airbazar (Reply 22):
CO and other US carriers are highjacking the Open Skies negotiations to try and get slots at LHR without paying for them. Ain't gonna happen, ever.

Didn't the British create a dozen or so no-cost LHR slots for Indian airlines to go with the new UK-India agreement? As at all slot-controlled airports, I suspect LHR can find or create slots when they want to.

[Edited 2006-05-03 16:18:41]
 
scotron11
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RE: EU/US Open Skies: Why Is CO Against It?

Wed May 03, 2006 11:39 pm

Quoting MasseyBrown (Reply 24):

Didn't the British create a dozen or so no-cost LHR slots for Indian airlines to go with the new UK-India agreement? As at all slot-controlled airports, I suspect LHR can find or create slots when they want to.

I kinda agree with you there, but then again the slots created could be ones that are were available anyhow, giving schedules to/from India.

I believe there is a lot of pressure on the UK government to basically open up LHR so as not to lose business to other EU airports. If that means mixed mode, another runway, whatever they have to do, they will have to do something to "keep" LHR the premium EU gateway that it is.

But, I think the most important issue is to get an OpenSkies agreement first, then worry about the slot issue later.
 
IADLHR
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RE: EU/US Open Skies: Why Is CO Against It?

Wed May 03, 2006 11:45 pm

Wasnt the UK government going to announce, around Easter time, which has come and gone, that they were going to do a study to see if LHR could go to mixed mode on the 2 runways at peak times? That alone would create slots for the US carriers.

I would be willing to bet the farm that if CO got the slots, at the times, they wanted, the openskies would go thorugh PRONTO!!!!1

It is completley unrealistic to expect the US to go out on a limb and approve this deal without the UK or EU doing going out on a limb and providing the slots.

If pushed too far the US could ealily retaliate and start making BA and VS pay for lots at congested US airports. No foreign carrier has ever paid or, had to fight like they do at LHR, for slots at US airports.

Like I said if the slots would be guaranteed at LHR, opposition to this deal would go away instantly.
 
commavia
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RE: EU/US Open Skies: Why Is CO Against It?

Wed May 03, 2006 11:50 pm

Quoting NateDAL (Reply 23):
They seem to be fine with open skies and even foreign ownership, but feel screwed because they have been denied LHR access by regulation for decades (Berm. II) and now have no reasonable opportunity to get it.

Sure they would. If a deal was reached between the E.U. and U.S., Heathrow would be open to any airline that wanted to fly there and was willing to buy the slots on the free market at the prevailing market price. That is -- with generally very few exceptions -- how it has worked at Heathrow for fifty years, and that is how it should work in the future. Why should Continental get for free what everybody else (most notably American and United) has had to pay for? American and United collectively spent $715M in 1990 and 1991 to get their slots and authorities at Heathrow. Any prospective deal would give Continental half that -- the route authorities -- for free. All they'd then have to do is go out and buy some slots which would, admittedly, no doubt be very expensive. I fully expect that if ever Heathrow is opened up, slots there between 0600-1100 are probably going to quadruple in value overnight. But, as is the case with anything in the free market, something is only as valuable as what somebody is willing to pay for it. If Continental wants Heathrow so badly, let they pay for it by fighting it out with everybody else who wants the slots.

Quoting Scotron11 (Reply 25):
I believe there is a lot of pressure on the UK government to basically open up LHR so as not to lose business to other EU airports.

Too late. Because of the U.K.'s refusal to ignore the NIMBYs and environmentalists, I hate to say that Heathrow is already loosing out to Frankfurt, Paris and Amsterdam as 'the' gateway to Europe. It still commands a huge yield premium, largely because the market is so restrictive, but the growth of global alliances, coupled with the infrastructure improvements and airfield expansion at Heathrow's large continental competitors have put it at a huge competitive disadvantage and are already beginning to erode away at its lead. So, so sad.
 
scotron11
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RE: EU/US Open Skies: Why Is CO Against It?

Wed May 03, 2006 11:58 pm

Quoting Commavia (Reply 27):

So, so sad.

That says it all!
 
airbazar
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RE: EU/US Open Skies: Why Is CO Against It?

Wed May 03, 2006 11:58 pm

Quoting Commavia (Reply 27):
Frankfurt, Paris and Amsterdam

They have lost to these other gateways but don't blame the NIMBY's alone. All of the bove airports you mentioned have as much nimby activism as LHR.

Quoting MasseyBrown (Reply 24):
Didn't the British create a dozen or so no-cost LHR slots for Indian airlines to go with the new UK-India agreement? As at all slot-controlled airports, I suspect LHR can find or create slots when they want to.

There are plenty of available slots at LHR, just not at the time CO wants them.
This is just so typical of American corporations. Free market is great only as long as it suits them. When it doesn't they go crying to Capitol Hill  Smile
 
StarGoldLHR
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RE: EU/US Open Skies: Why Is CO Against It?

Thu May 04, 2006 12:03 am

Quoting Ikramerica (Reply 11):
PERMANENT the advantage AA and UA have out of NY while

UA only has 1 flight a day !!
BMI - None
VS - about 5
BA - About 9
AA - About 5

so net approx = 20 flights a day LHR-NYC

With the Open Skies my bet is:

BA - will reduce it's new york, which is over capacity and fly to new US destinations, as will VS.

BMI which has waited for 20 years will do 1, and I bet LH has a say in this as well... so it could be 2 flights with an onward flight in the EU.

DL / KL /AF / NW will do at least 1 (and I bet 2 between them with an onward flight in the EU).

CO - will probably do 1 flight as well (maybe from VS).

Overall New York I bet will lose more flights than carriers it gains, as BA will fly to places with the Aircraft they were unable to before.


UA - 1
VS - 4
BA - 5
AA - 5
BMI / LH - 1 (I bet they would have a go with a FRA or MUC flight connection)
DL / AF/ KL - 1 (I bet one of these has a go too with an onward EU flight)

Net approx 17 Flights a day

Quoting Mir (Reply 15):
Sounds a lot more beneficial for the EU airlines than the US airlines, who can fly from the US to any country in the EU as it stands today

How so ?

Any US Airline can fly to any european city from anywhere US unlimited times a day in Holland, Germany, France, UK (exLHR), Spain, Portugal, Italy etc etc etc...

but BA only from the UK, IB only from Spain, CSA only from Prague, Olympic only from Athens... how is this fair ?

Quoting MasseyBrown (Reply 24):
Didn't the British create a dozen or so no-cost LHR slots for Indian airlines to go with the new UK-India agreement? As at all slot-controlled airports, I suspect LHR can find or create slots when they want to.

These were purchased from United, who sold them.
United has sold / leased a number of LHR slots over the past few years.


The real gold mine at LHR lies not with BA, but with bmi... who owns 14% of LHR slots and 99% of these are used on overcapacity short haul european routes with low yield....

Qatar Airways is using BMI's spare slots by "leasing" the aircraft and crew to bmi on a flight per flight basis, and BMI stick their flight number on it, and Qatar airlines sell a code share of the "bmi" seats.

bmi (despite it's balance sheet) is in a grim state and soon to be ripe for the picking and the most likely candidate for a slot auction in the short term.
So far in 2008 45 flights and Gold already. JFK, IAD, LGA, SIN, HKG, NRT, AKL, PPT, LAX still to book ! Home Airport LCY
 
Mir
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RE: EU/US Open Skies: Why Is CO Against It?

Thu May 04, 2006 1:08 am

Quoting Par13del (Reply 16):
someone from the EU could give a percentage of the travelling public who use airlines versus other means, I'm certain the number is much larger than the US.

I think that you'd find airline use much higher in the US for short trips, as our train system sucks.

Quoting StarGoldLHR (Reply 30):
How so ?

Any US Airline can fly to any european city from anywhere US unlimited times a day in Holland, Germany, France, UK (exLHR), Spain, Portugal, Italy etc etc etc...

but BA only from the UK, IB only from Spain, CSA only from Prague, Olympic only from Athens... how is this fair ?

I was referring to how the changes would be more weighted in favor of European carriers - I agree that as of now the situation is in the US's favor. I just don't see what American carriers have to gain from this apart from access to LHR.

Quoting Commavia (Reply 27):
Why should Continental get for free what everybody else (most notably American and United) has had to pay for?

Absolutely.

-Mir
7 billion, one nation, imagination...it's a beautiful day
 
airbazar
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RE: EU/US Open Skies: Why Is CO Against It?

Thu May 04, 2006 1:39 am

Quoting Mir (Reply 31):
I was referring to how the changes would be more weighted in favor of European carriers - I agree that as of now the situation is in the US's favor. I just don't see what American carriers have to gain from this apart from access to LHR.

Lets look at it this way. The survival of the American legacy carriers lies in internationl service 'cause there is no way they can compete with LCC's domestically. The EU could do what Canada already does and demand equal rights for their own carriers from the US. If you wanna know what I mean do a quick search as to why neither SQ or EK currently serve Toronto.

European carriers would suffer from any EU action against US carriers but it would be instant doom for American carriers. We've see after 9/11 that American carriers are far more vulnerable to changes to the international travel market than EU or Asian carriers are.

That's just my opinion.
 
ANother
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RE: EU/US Open Skies: Why Is CO Against It?

Thu May 04, 2006 2:11 am

Quoting Scbriml (Reply 18):
Unless there is some radical shake-up of how slots at LHR are allocated (which probably needs to be done at a Governmental level), I don't see how this gets resolved. From a US perspective I guess all AA and UA slots could be reallocated amongst all the airlines wanting LHR services, but that would seriously piss off AA and UA.

There has been a radical shake-up of how slots at all EU airports are allocated. Its called EC Regulation 93/95 and amongst other things states that governments are not to get involved in the process. It also provides that 50% of slots (either newly created or those returned to the pool) are allocated first to 'new entrants'. The British Government cannot take slots away and/or reallocate them.

Quoting Commavia (Reply 19):
Sidenote: in general, I think it is pothetic that Congress, as usual, is pandering in an election year and putting on hold such an important piece of free-market legislation. I've already written my congressman and senators to tell them to support this, but alas, I doubt it will be much help.

Actually there is no legislation to condider. What has happened is that the DOT has proposed to 'reinterpret' how they measure 'control' - for example allowing a non-US citizen to work in the route planning department, or be involved decision making for aircraft purchases. (Yes these are currently prohibited). The ownership rule is not changed. No more than 25% of a US airline can be owned by non-Americans. Congress came down on the DOT like a load of bricks ...

Quoting MasseyBrown (Reply 24):
Didn't the British create a dozen or so no-cost LHR slots for Indian airlines to go with the new UK-India agreement? As at all slot-controlled airports, I suspect LHR can find or create slots when they want to.

No. The Indians got them the same way that everyone else does - through ACL.
 
kaitak
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RE: EU/US Open Skies: Why Is CO Against It?

Thu May 04, 2006 2:48 am

CO, like so many other airlines, is anxious to get into LHR. I can understand their position; the Open Skies deal will theoretcially allow them to fly new routes to LHR, but in reality, that's not the case. They'll have to buy them and for cash squeezed US carriers, that's not welcome. It's less of a problem for bmi, as they already have quite a lot of slots, so effectively they can argue that the incumbent airlines got their slots through grandfather rights (although UA and AA bought theirs by buying PA and TW slots, respectively).

I think what will happen is that the US and UK govts will do a deal to phase the new rights in gradually; for example, when Heathrow moves to mixed mode, this should add a considerable number of new slots and US carriers will be assigned some of these - either free, or for a nominal cost. Of course, that begs another question: what about those airlines which, like Jet and QF, have bought slots. They're going to be pretty cheesed off - not to mention some regional routes, which have been excluded from LHR because slots were too expensive. In other words, if they please CO and others, they'll have to please many more and you can expect EU Court litigation.

I still hope a last minute deal can be done, but realistically, I think that in an election year, the whole thing will be left for a while.

From an Irish perspective, that's a pain in the rear end, because EI wanted to get new US access. However, the Irish govt will deal directly with the US and arrange a separate deal; this will be along the lines of that already agreed and will see the phase-out of the SNN stopover. Hopefully, the EU will permit this.
 
commavia
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RE: EU/US Open Skies: Why Is CO Against It?

Thu May 04, 2006 3:03 am

Quoting ANother (Reply 33):
Actually there is no legislation to condider.

Now there isn't. However, early on, there was talk of Congress passing some sort of joint resolution, or perhaps a statute, to sanction what DoT was doing. Congress always want's to have control, you know.

Quoting Kaitak (Reply 34):
Of course, that begs another question: what about those airlines which, like Jet and QF, have bought slots. They're going to be pretty cheesed off - not to mention some regional routes, which have been excluded from LHR because slots were too expensive.

Exactly. There are airlines all around the world that have wanted Heathrow access for years but couldn't afford it. So are they all just supposed to still wait in line while CO is just allowed to stroll in and get it for free?

Quoting Kaitak (Reply 34):
I still hope a last minute deal can be done, but realistically, I think that in an election year, the whole thing will be left for a while.

Agreed. I knew this deal would be a no-go in an election year, I was just hopeful they could have gotten something worked out. I should have known better. Too many Congressman and Senators frantically seeking reelection talking about "job preservation" and "outsourcing" and "offshoring," you know, not to mention that this deal would help create jobs in the U.S. by strengthening U.S. carriers. I'm sick of Congress.
 
ANother
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RE: EU/US Open Skies: Why Is CO Against It?

Thu May 04, 2006 3:17 am

Quoting Kaitak (Reply 34):
I think what will happen is that the US and UK govts will do a deal to phase the new rights in gradually; for example, when Heathrow moves to mixed mode, this should add a considerable number of new slots and US carriers will be assigned some of these - either free, or for a nominal cost.

Whooops. That would be illegal in the EU. Any new slots that come from changing to mixed mode would be distributed in accordance with EC Regulation 93/95. No inter-government deals are possible. Slots are free (i.e. no primary trading allowed) when they come from the pool. CO will have to stand in line, with all other new entrants, but at least they are entitled to 50% of any new slots that are created.
 
ScottB
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RE: EU/US Open Skies: Why Is CO Against It?

Thu May 04, 2006 3:42 am

Quoting IADLHR (Reply 26):
If pushed too far the US could ealily retaliate and start making BA and VS pay for lots at congested US airports. No foreign carrier has ever paid or, had to fight like they do at LHR, for slots at US airports.

That seems like the best solution of all; the U.S. Government ought to impose a reverse-Heathrow fee for any route added to the U.S. from LHR equivalent to the current market price of the LHR slots used for the service, with an exemption for airlines using newly-purchased slots to initiate service. That would truly level the playing field by equalizing the cost of starting new services for incumbents and new entrants.

The incumbent U.K. carriers gained many of their LHR slots at little or no cost; it is not equitable for them to be able to use those slots when their competitors, who have been precluded for years by government regulations from serving LHR, are forced to pay today's market prices. One would imagine that Continental, Delta, US Airways, and Northwest would have happily purchased slots at lower prices many years ago had they been permitted to do so.

Quoting Commavia (Reply 19):
Continental doesn't want to have to pay for access to Heathrow like everybody else has had to.

Really? Did BA, BD, and VS pay market prices for their full portfolios of LHR slots? Did BA pay for its designated carrier status under Bermuda II?
 
commavia
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RE: EU/US Open Skies: Why Is CO Against It?

Thu May 04, 2006 3:45 am

Quoting ScottB (Reply 37):
Really? Did BA, BD, and VS pay market prices for their full portfolios of LHR slots? Did BA pay for its designated carrier status under Bermuda II?

Every airline, to an extent, has paid for what it has. BA is sinking billions into infrastructure at Heathrow. VS has payed millions for slots at Heathrow, as has BA. AA paid over $400M for the right to operate at Heathrow, along with slots, while UA paid nearly $300M for its Heathrow rights and slots. So yes, everyone has paid something for what they have.

And, by your logic, should we just take away the slots that CO has at LGA and DCA because new airlines want in, but CO didn't have to pay for its slots years and years ago?
 
atmx2000
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RE: EU/US Open Skies: Why Is CO Against It?

Thu May 04, 2006 3:54 am

Quoting Airbazar (Reply 32):
European carriers would suffer from any EU action against US carriers but it would be instant doom for American carriers. We've see after 9/11 that American carriers are far more vulnerable to changes to the international travel market than EU or Asian carriers are.

While US carriers have found shelter in international routes from domestic competition, they still face international competition using 6th freedom rights to siphon off US customers going to beyond destinations. Restricting EU carriers would take away their ability to profit from this traffic. Not to mention many international carriers make significant amounts of money on US routes because of the lower cost structure of their home countries. Restricting foreign carriers would increase ticket prices and make these lower cost advantages less important.

Quoting StarGoldLHR (Reply 30):
How so ?

Any US Airline can fly to any european city from anywhere US unlimited times a day in Holland, Germany, France, UK (exLHR), Spain, Portugal, Italy etc etc etc...

but BA only from the UK, IB only from Spain, CSA only from Prague, Olympic only from Athens... how is this fair ?

I don't have any objection to this, but do you really think these airlines want to fly international from cities other than their hubs? Hell, BA doesn't want to fly much long haul from MAN to other countries. And if the European airlines are so keen on this, why doesn't the EU negotiate an agreement with some other country other than the US that allows these airlines to fly from cities outside of their home country? Probably because it is a worthless right as the national airlines are entrenched for various reasons in their home countries, and making a competitive environment would be a seriously difficult problem.

Quoting Airbazar (Reply 29):
There are plenty of available slots at LHR, just not at the time CO wants them.
This is just so typical of American corporations. Free market is great only as long as it suits them. When it doesn't they go crying to Capitol Hill

But it isn't a free market currently, an there are lingering problems from th

Quoting Commavia (Reply 27):
American and United collectively spent $715M in 1990 and 1991 to get their slots and authorities at Heathrow.

But the US had to pay a penalty for that transfer by allowing Virgin Atlantic in. That means the other US airlines had to face added competition from another carrier, further lessening the value of rights to LGW.
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scotron11
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RE: EU/US Open Skies: Why Is CO Against It?

Thu May 04, 2006 4:53 am

Well folks it seems it is official. The US DOT has decided to delay any changes for a "couple of weeks" for cooler head to prevail in Congress.

I don't get it. All you hear coming from the US is "free trade, free trade". Where is that spirit now?

Daimler ( a German car company) owns Chrylsler. EMI (A UK music company) has just started takeover talks with WarnerMusic. How many Japanese car companies have plants in the US which employ US workers?

Maybe they should rename that old movie "The European Airlines are Coming, The European Airlines are Coming!!"
 
ANother
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RE: EU/US Open Skies: Why Is CO Against It?

Thu May 04, 2006 4:53 am

Quoting Atmx2000 (Reply 39):
And if the European airlines are so keen on this, why doesn't the EU negotiate an agreement with some other country other than the US that allows these airlines to fly from cities outside of their home country?

Shhh. They have a few agreements - Chile I think, a few in the ex-USSR Stans and guess what? Not one EU airline has exercised their rights.

All sarcasm aside - the EU is not negotiating the rights for any European airline to fly from any European gateway (it's more complex than that) what they are in fact negotiating is 'right of establishment'. i.e. If a German airline wanted to fly from the UK to Chile, they would have to establish a subsidary company 'established' in the UK, obtain a UK AOL, employ UK registered flight/cabin crew - etc. Under Chicago the Country of Origin retains this responsibility.

So when can we expect a German airline to fly LHR-JFK (other than using 5ths)? Well, probably not in my lifetime.
 
masseybrown
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RE: EU/US Open Skies: Why Is CO Against It?

Thu May 04, 2006 4:56 am

Quoting Commavia (Reply 38):
And, by your logic, should we just take away the slots that CO has at LGA and DCA because new airlines want in, but CO didn't have to pay for its slots years and years ago?

That has been done before, at DCA and ORD as well as LGA.
 
bmiexpat
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RE: EU/US Open Skies: Why Is CO Against It?

Thu May 04, 2006 7:15 am

Quoting ANother (Reply 41):
So when can we expect a German airline to fly LHR-JFK (other than using 5ths)? Well, probably not in my lifetime.

Don't be so quick to dismiss that idea. If open skies comes about and Sir Michael exercises his put option with LH to buy bmi then I can see LH flying LHR-JFK and a whole host of routes to the USA from LHR.
 
ScottB
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RE: EU/US Open Skies: Why Is CO Against It?

Thu May 04, 2006 7:36 am

Quoting Commavia (Reply 38):
And, by your logic, should we just take away the slots that CO has at LGA and DCA because new airlines want in, but CO didn't have to pay for its slots years and years ago?

Actually, I would not be opposed to the notion of taking away all of the slots of the various incumbent carriers at LGA and DCA and then auctioning them off for rent periodically to the highest bidders as a source of revenue for the government. I'd enforce some restrictions on market concentration and guarantee some minimum number of slots (at prices comparable to what everyone else is paying) to all participants in order to keep the market open. It is not appropriate for a subset of the industry to disproportionately benefit from past government largesse.

Quoting Commavia (Reply 38):
Every airline, to an extent, has paid for what it has. BA is sinking billions into infrastructure at Heathrow. VS has payed millions for slots at Heathrow, as has BA.

But you still cannot counter my point, which is that BA, VS, and BD did not pay market prices for large portions of their respective slot portfolios; they were simply granted to them by their respective governments. Continental has sunk hundreds of millions (if not billions) of dollars into its infrastructure at IAH and EWR; should BA thus be required to pay several million dollars for each landing right at either airport?

Quoting Scotron11 (Reply 40):
I don't get it. All you hear coming from the US is "free trade, free trade". Where is that spirit now?

When you have artificial, government-imposed barriers to competition such as slot limitations at LHR and similar airports, free trade is not possible.
 
incitatus
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RE: EU/US Open Skies: Why Is CO Against It?

Thu May 04, 2006 7:49 am

Quoting StarGoldLHR (Reply 30):
DL / KL /AF / NW will do at least 1 (and I bet 2 between them with an onward flight in the EU).

Sorry but this makes no sense. No European airline in their right mind is going to put a wide-body on the ground at Heathrow to service it, deplane, clean, refuel, emplane and fly part of its passengers on to other countries in Europe.

Also the coach fares from London to the US are pretty low and no airline will be successful in the market without either feed at London or lots of frequencies to attract corporate contracts.

Quoting JoFMO (Reply 17):
while poor TAP for example has to stay in its niche with Lisbon.

Would poor TAP be successful at serving Paris to London? Likely they would be poorer if they tried.
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BlueSky1976
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RE: EU/US Open Skies: Why Is CO Against It?

Thu May 04, 2006 8:37 am

Quoting Mir (Reply 8):
Would Open Skies allow for airlines like AF, BA, LH to operate domestic US flights (and airlines like UA or CO to operate intra-European flights)?

No.
I believe the proposed agreement states that EU carriers won't be able to do domestic US flights, but they would be able to get 5th freedom rights to points outside of the US, allowing say LH to fly JFK - NRT or ORD - GRU for example, and vice versa - US carriers would get 5th freedom to all points outside EU (AMS - NRT or LHR - SYD on AA for example).
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commavia
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RE: EU/US Open Skies: Why Is CO Against It?

Thu May 04, 2006 8:44 am

Quoting ScottB (Reply 44):
But you still cannot counter my point, which is that BA, VS, and BD did not pay market prices for large portions of their respective slot portfolios

And you can't counter my point that if we "periodically" went around taking things away from companies just because they've had them for a while, this world couldn't function. So BA, BD and VS were granted their slots years ago (many, many years ago in BA's case). So what? That was then, this is now. As others have said, there is hardly a shortage of slots at Heathrow as long as you're willing to pay for them. The recent growth at Heathrow by Air NZ, Qantas, Jet, Air-India, etc. prove that pretty conclusively. If, hypothetically, Heathrow were opened up to all U.S. carriers, Continental would probably not have too much trouble finding somebody to sell them slots. However, they would -- and I'm not disputing this for a second -- have to pay top dollar for them. That's economics 101. The free market says that slots at Heathrow between 0600-1000 are a license to print money. So, guess, what? Continental has to fight it out with everybody else for those slots. Again -- BA has done it, so has VS, so has UA, AA, and many, many other airlines.

Quoting ScottB (Reply 44):
Continental has sunk hundreds of millions (if not billions) of dollars into its infrastructure at IAH and EWR

BA has sunk billions into Heathrow. Your point?

Quoting ScottB (Reply 44):
should BA thus be required to pay several million dollars for each landing right at either airport?

No, because the free market does not require it. At those airports, because of their superior infrastructure capacity, the supply of viable air traffic space (airfield/facility capacity) is far greater than the demand, and thus there is not a price required in order to support air service. Heathrow, unfortunately, is not the same case. There, capacity is so constrained, and the demand for slots so outstrips capacity, that companies have to pay up in order to get access. Airlines have been doing it for decades. I don't see that changing anytime soon, no matter how much Continental wishes for it.
 
ANother
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RE: EU/US Open Skies: Why Is CO Against It?

Thu May 04, 2006 3:25 pm

Quoting BlueSky1976 (Reply 46):
No.
I believe the proposed agreement states that EU carriers won't be able to do domestic US flights, but they would be able to get 5th freedom rights to points outside of the US, allowing say LH to fly JFK - NRT or ORD - GRU for example, and vice versa - US carriers would get 5th freedom to all points outside EU (AMS - NRT or LHR - SYD on AA for example).

Sorry, to clarify EU airlines would get unlimited 5ths allowing LH to fly FRA - JFK - NRT or MUC - ORD - GRU. US airlines would get unlimited 5ths to all points - including to other points in the EU. Note that the US side already have these 5ths from the 15 EU countries that already have open skies agreements. Today AA could fly DFW - BRU - FRA will full traffic rights BRU - FRA.
 
Gemuser
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RE: EU/US Open Skies: Why Is CO Against It?

Thu May 04, 2006 5:45 pm

Quoting ScottB (Reply 44):
When you have artificial, government-imposed barriers to competition such as slot limitations at LHR and similar airports, free trade is not possible.

Artifical??? My understanding is that it ia an actual physical constraint, they cant actually fit more aircraft on to the runways (safely), at least at peak times.


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