kaitak
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Current US Position On Open Skies?

Wed Nov 29, 2006 4:58 am

Now that the Democrats are in control of Congress and Mr. Oberstar is head of the Congressional Transport Cttee, does anyone know what the current position is, in relation to Open Skies?

As I understand it, the EU is still awaiting a proposal on the US's rule on foreign ownership of US carriers, but even if the US comes up with something remotely attractive to the EU, it's likely to be shot down by Congress; will they have it agreed by Congress first, or will they try to get it approved by the EU, only to be shot down later? Hopefully, they'll try and get it agreed first; although's there's a fat chance of that happening, at least it will mean less time will be wasted.

Then there are the US proposals on the extension of carbon emission trading to airlines, something which has gone down like a lead balloon with the Americans; even if the foreign ownership issue goes through, this issue is likely to cause serious problems; the US authorities have already said that the proposal will undo many of the advantages expected of Open Skies.

So, in brief, the whole issue is in a stalemate. Where do we go from here; please - no EU -v- US. Just let's stick to what needs to be done to get us out of this mess.
 
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ERJ170
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RE: Current US Position On Open Skies?

Wed Nov 29, 2006 5:01 am

I don't think the foreign ownership level will be raised and I don't think there will be open skies agreement in the US except with potentially Canada.
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redflyer
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RE: Current US Position On Open Skies?

Wed Nov 29, 2006 5:19 am

Quoting ERJ170 (Reply 1):
I don't think the foreign ownership level will be raised and I don't think there will be open skies agreement in the US except with potentially Canada.

 checkmark 

Don't expect a lot of movement on this issue from the new Congress. They are going to tread lightly and avoid enflaming anyone's passions in the hopes of retaining/expanding power in the 2008 elections. Besides, raising the foreign ownership levels would be political suicide for the Democrats because the Republicans will condemn them over the Dubai Ports fiasco. And it was primarily the Democrats that tarred-and-feathered that one.
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PanAm747
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RE: Current US Position On Open Skies?

Wed Nov 29, 2006 5:23 am

As long as LHR is restricted to two U.S. airlines, the other U.S. airlines will fight against any "Open Skies" policy between the U.S.A and the E.U., led by Continental, I'm sure.

The only one that would have a chance is USA and Canada.
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777FlyGuy
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RE: Current US Position On Open Skies?

Wed Nov 29, 2006 5:25 am

Ditto the above. Congress isn't going to back down on the ownership rule and it seems unlikely the EU is going to change their position without it, so don't start booking those DL flights into LHR just yet.
 
kaitak
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RE: Current US Position On Open Skies?

Wed Nov 29, 2006 5:34 am

So, basically, for the foreseeable future, it's stalemate.

With the greatest respect to US carriers, LHR and the UK carriers, my main concern is - as the flag will tell you - the Irish position. The EU is currently stopping us from negotiating with the US, to allow us to increase the number of US routes and of course, change our damaging Shannon stopover policy.

If the situation is now at a stalemate, it may (hopefully) encourage the EU to let us move forward.
 
commavia
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RE: Current US Position On Open Skies?

Wed Nov 29, 2006 5:37 am

As others have said, the odds of any meaningful, long-term U.S.-E.U. Open Skies solution pretty much died on November 7. Many of the Democrats who won (re)election in the House and Senate earlier this month were elected, at least partly, on protectionist platforms as a bow to their labor union financiers and many middle Americans scared of globalization. In that kind of environment, I'm not holding my breath on any type of movement towards substantially opening up any U.S. industry, particularly one as fascinating to politicians and susceptible to government meddling as the airline business, anytime soon. Sad.
 
SJCRRPAX
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RE: Current US Position On Open Skies?

Wed Nov 29, 2006 6:08 am

What's in it for Americans? Should we throw more Americans out of work, hurt our struggling airlines even more, and trash yet another industry in the name of free trade? Well, the Democrats are in charge now and they are not as likely to give everything away.

Heres what James Oberstar has to say about it:

"The DOT’s proposed rulemaking on foreign ownership in effect would trade away the crown jewel of American transportation"

Here is the link:

http://www.oberstar.house.gov/index....FD783-88AC-4CC1-9716-A1D25718E118}
 
commavia
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RE: Current US Position On Open Skies?

Wed Nov 29, 2006 6:11 am

Quoting SJCRRPAX (Reply 7):
What's in it for Americans?

You mean besides more choice and lower fares?
 
SJCRRPAX
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RE: Current US Position On Open Skies?

Wed Nov 29, 2006 6:32 am

Quoting Commavia (Reply 8):
You mean besides more choice and lower fares?

Is that all you care about? I see your profile lists you as 16-20 years old. Do you care about getting a good paying job in the future? Would you like to work in Avaiation? You might want to think about protecting your future job prospects a little more, along with your peers. Don't think it can happen? I've seen enough engineers thrown out of work because a cheaper one can be hired in China or India. Did you read James Oberstars comments? Do you think there is nothing to worry about? I'm old enough where I don't need to worry, but I'd like my kids to be able to work in the future.

"
In addition, U.S. airline employees could lose high-quality job opportunities, in favor of employees of the foreign carrier. There could be similar effects on other aviation industry employees. Foreign investors would be inclined to support the purchase of aircraft produced by foreign companies, and to have the airline use foreign repair stations. " -Jame Oberstar
 
supa7E7
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RE: Current US Position On Open Skies?

Wed Nov 29, 2006 6:35 am

Since the US comprises around half the total worldwide airliner traffic, and has very capable investor and capital markets, it is hard to understand why foreign ownership would provide any upside... even lower fares. It is already a fully competitive market. There is no shortage of airline investors within the USA.

Maybe in small countries there is a strong need for foreign influence, but the US in most respects enjoys top capabilities from its booming airline sector.

Virgin America for example... who needs it? If it would work, then B6 or F9 would do it. There are already players on the field for every contingency. The factor of foreign money, decribed as beneficial, may be the opposite. Airlines are so strategic that they can kill each other with hard to track predatory pricing.

To the extent that foreigners are interested in investing in US airlines, I would say it is highly suspicious. It is not a place to make money. Instead they must be interested in either anticompetitive behavior, or something irrational. There is no money to be made in US airlines.
"Who's to say spaceships aren't fine art?" - Phil Lesh
 
commavia
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RE: Current US Position On Open Skies?

Wed Nov 29, 2006 6:52 am

Quoting SJCRRPAX (Reply 9):
Do you care about getting a good paying job in the future? Would you like to work in Aviation? You might want to think about protecting your future job prospects a little more, along with your peers. Don't think it can happen? I've seen enough engineers thrown out of work because a cheaper one can be hired in China or India. Did you read James Oberstar’s comments? Do you think there is nothing to worry about? I'm old enough where I don't need to worry, but I'd like my kids to be able to work in the future.

Let's not get overly dramatic or anything.

Sure, if the aviation industry is opened up, just like as the world's global economy is opened up, people will lose their jobs. But that's only part of the story. When jobs are lost in one place, new jobs are created somewhere else. Diverting non-core activities to lower-cost source producers/vendors in foreign countries frees up U.S. economic capital to be invested in new activities here in the U.S.

So, what's the answer? If globalization is a foregone conclusion, should the U.S. -- the world's largest economy -- just shut down and not open up to the same extent of the world's other major economic players? What effect would that have on U.S. workers' jobs? A look back at the history and impact of the Smoot-Hawley Tariff is quite instructive in telling us all we need to know about what happens when people focus too much on preserving "good paying job[s]" at the expense of economic expansion.

In the U.S. economy -- and, indeed, the world's economy going forward, the emphasis will be on education and flexibility. Generally speaking, people today who want to have a chance at participating successfully and prosperously in the new economy, and getting a "good paying job," simply must have an education -- plain and simple. Secondly, people in today's new economy will be required to be constantly flexibly, moving around as the economy changes, as it will do with increasing volatility in coming decades.

Now, I understand that this is painful for workers of yesterday's generation, born into the old economy, to handle. Thirty years ago, entering the corporate workforce required neither a college degree nor flexibility. One could join a company in their early 20s with little or no meaningful post-secondary education and expect that as long as they did a good job, or even didn't only a mediocre job (if they had a good union), their employer could be counted on to provide good pay, good benefits, a good pension, medical and dental, etc. Well those days are over.

The economy is more volatile and competitive because of global competition and there is no going back. But that is not a bad thing. Americans can today have things they could never afford to have because of globalization and the economic advantages of comparative advantages that it amplifies.

Quoting SJCRRPAX (Reply 9):
In addition, U.S. airline employees could lose high-quality job opportunities, in favor of employees of the foreign carrier.

It's called "compromise." I think you'd agree that even the most pro-Open Skies proponents in the U.S. and the E.U. know, if they're being fully honest, that there is absolutely no way the U.S. will ever allow E.U. carriers cabotage. It won't happen, and the latest proposal to which Oberstar is referring doesn't include any such thing.
 
kaitak
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RE: Current US Position On Open Skies?

Wed Nov 29, 2006 11:51 pm

Thanks for all your replies, everyone!

So, basically, we can take it that Open Skies is off the agenda, in that the NPRM is not going to be to Europe's liking. While this is disappointing up to a point, the silver lining - from an Irish perspective - is that the EU Commission will not really be able to say to Ireland, "sorry guys, you'll have to keep to the 1:1 rule* for the next two years.

However, even though we suspect strongly what the outcome will be, the remaining question is, when will this be announced formally?

(The 1:1 rule? Our government, in its infinite wisdom, currently decrees that for every one flight ex-DUB, there has to be one from Shannon. Of course, Shannon has one 1/10th of the population DUB has and very little business traffic; a deal was done with the US last November - which was to have been subject to Open Skies - which would change this to 3:1 (in Dublin's favour) and allow EI to add three more US cities - likely to be SFO, PHL and either DFW or MIA - for the latter choice, they'll codeshare with AA, so I guess AA will fly to one and EI will take the other.)
 
redflyer
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RE: Current US Position On Open Skies?

Thu Nov 30, 2006 12:13 am

Quoting Supa7E7 (Reply 10):
it is hard to understand why foreign ownership would provide any upside... even lower fares. It is already a fully competitive market. There is no shortage of airline investors within the USA.

The problem is that when any government in a free market puts an artificial ["artificial" in this context meaning where one would otherwise not exist or be required] restriction on an industry then that industry cannot function to its full or natural potential.

I do not necessarily disagree with what you are saying in general, but the airlines should be free to operate from a financial standpoint like any other business. Government intervention almost always ends up having unforseen consequences. The problem -- if you can call it a problem -- is that in a free market it is nearly impossible to predict all consequences. So what if the U.S. market is fully competitive and there are no shortage of airline investors? That alone should be reason enough to remove all barriers.

Quoting Commavia (Reply 11):

 checkmark 

Something I always find interesting is that the very people who are so dead-set against foreign ownership, outsourcing, etc., will toss all beliefs aside when they shop for cars, electronics, and other goods, many of which are made in another country. People -- and companies -- make purchasing decisions based on the best value, country of origin or ownership be damned.

Quoting Kaitak (Reply 12):
Our government, in its infinite wisdom

"Government, it its infinite lack of wisdom"  Wink
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ha763
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RE: Current US Position On Open Skies?

Thu Nov 30, 2006 9:24 am

Quoting ERJ170 (Reply 1):
I don't think there will be open skies agreement in the US except with potentially Canada.

We already have an Open Skies agreement with Canada. If you are talking about cabotage, then yes, Canada would be the likely country. The U.S. has Open Skies agreements with 78 countries and 2 cargo only Open Skies agreements. The U.S. will continue to agree to Open Skies agreements, unless the other side has EU type demands.
 
kaitak
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RE: Current US Position On Open Skies?

Thu Nov 30, 2006 2:14 pm

Here's an extract from the latest issue of Airwise news, which includes comments made at the "Future of Aviation" conference, which has been running in London:

http://news.airwise.com/story/view/1164836282.html

The general feeling seems to be that it's "all engines stop", with the next move in US hands. The EU recognises the US difficulties and the US DOT recognises that Congress is going to veto anything that's likely to change US ownership rules. So, that's it. How long are we going to have this "Mexican standoff"? One side should say, "look, guys, time out; we're going to have to go back to the drawing board on this".

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