kaitak
Posts: 8944
Joined: Wed Aug 18, 1999 5:49 am

Next Steps Towards Open Skies

Thu Jan 04, 2007 3:49 pm

As you're all aware, the Open Skies process has been delayed, due to difficulties over foreign ownership of US carriers, the US DOT having decided not to issue a rule on this, which would have been the basis of an EU Commission decision.

Here's an archived thread from early last month:

http://www.airliners.net/discussions...general_aviation/read.main/3131070

When we left off, on December 5th, the EU Transport ministers were due to have met to discuss the issue, receiving information from the Commission on the current position.

So, where now?

With Chancellor Merkel going to the US this week (today) to discuss an EU/US free trade area, I wonder if the problems re Open Skies will figure in these talks; there's certainly a connection.

I understand that the EU Transport ministers and airlines are to meet in Brussels in the near future, to plan a way forward. Ireland's transport minister, Martin Cullen, has said that he is willing to wait to the end of January (when the EU and US are to have their next round of talks on this issue), but not much longer. The Irish plan is to enter into a "side deal" with the US, as the current position severely restricts growth options. Ireland has one of the most restrictive bilaterals with the US, which limits EI to only four US cities and of course, our SNN stopover policy.

I don't know when exactly this next meeting in Brussels (involving EU ministers and airlines) is due to take place. I think most people would be surprised to see Open Skies in place for this Summer and there is also the possibility that those who want to scupper it can do so.

So, where to from here?
 
flyf15
Posts: 6633
Joined: Tue May 18, 1999 11:10 am

RE: Next Steps Towards Open Skies

Thu Jan 04, 2007 3:59 pm

Foreign ownership rules may be relaxed, but majority ownership won't be allowed. Its flat out not going to happen. Sorry to rain on anyone's parade....
 
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LTU932
Posts: 13072
Joined: Fri Jan 06, 2006 12:34 am

RE: Next Steps Towards Open Skies

Thu Jan 04, 2007 4:11 pm

Quoting Flyf15 (Reply 1):
Foreign ownership rules may be relaxed, but majority ownership won't be allowed.

In Europe, foreign companies can only own 49% of a European company as well (e.g. SQ, which owns 49% of VS), so I doubt majority ownership is that important to Europe, just the foreign ownership rules and perhaps how much foreign investors can hold in terms of voting stock.

Why is the foreign ownership issue so important to the EU-US Open Skies talks anyway? Perhaps both should go a different approach and separate foreign ownership rules from the treaty and negotiate that part separately, so we can finally get rid of restrictive bilaterals such as Bermuda II quicker.
 
atmx2000
Posts: 4301
Joined: Wed Oct 13, 2004 4:24 pm

RE: Next Steps Towards Open Skies

Thu Jan 04, 2007 4:49 pm

Quoting LTU932 (Reply 2):
In Europe, foreign companies can only own 49% of a European company as well (e.g. SQ, which owns 49% of VS), so I doubt majority ownership is that important to Europe, just the foreign ownership rules and perhaps how much foreign investors can hold in terms of voting stock.

I'm not so sure that is a EU legal requirement, or a requirement for these airlines to maintain their foreign route rights, as bilateral agreements with other countries (such as the US) may require a foreign carrier to be majority owned and controlled by nationals of the foreign country. Hence the Virgin Nigeria can't get rights to the US.
ConcordeBoy is a twin supremacist!! He supports quadicide!!
 
ANother
Posts: 1833
Joined: Thu Nov 03, 2005 2:47 am

RE: Next Steps Towards Open Skies

Thu Jan 04, 2007 5:01 pm

Quoting Flyf15 (Reply 1):
Foreign ownership rules may be relaxed, but majority ownership won't be allowed. Its flat out not going to happen. Sorry to rain on anyone's parade....

Nobody is asking for majority ownership. The US rule is one of the most restrictive (75% of voting stock) and also applies other 'control' restrictions unknown elsewhere in the West - for example the CEO and 75% of the board must be US citizens.

Quoting LTU932 (Reply 2):
Why is the foreign ownership issue so important to the EU-US Open Skies talks anyway? Perhaps both should go a different approach and separate foreign ownership rules from the treaty and negotiate that part separately, so we can finally get rid of restrictive bilaterals such as Bermuda II quicker.

The two issues are separate, but linked. The current EU position is that we will sign an open-skies, but we want to see US movement on O&C. The US didn't move, the Air Services Agreement is in limbo.

There is a lot of internal EU politics involved here. In a nutshell the European Commission said to the Member States - look you guys, we can do a better job than you can. You give us the authority to negotiate on behalf of all 27 Member States and we will show you. The Member States agree - but set EU-US as a test case. You can do better than us? Show us. Only if the EC succeeds will they be given the mandate to negotiate ASAs with other third countries.

Well the Commission hasn't done any better than the MS could have.

Is there a way forward? Perhaps if the US administration and congress can be convinced to reduce (but not remove) the 75% majority requirement and some relaxation of the control rules.

Can Ireland go it alone? They can try, but any renegotiated agreement with the US will have to have a community air carrier clause to be in line with the ECJ ruling. Would the Americans agree this with one Member State? I'm not so certain as it is a powerful bargining chip.

It shall be an interesting 2007
 
kaitak
Posts: 8944
Joined: Wed Aug 18, 1999 5:49 am

RE: Next Steps Towards Open Skies

Thu Jan 04, 2007 9:30 pm

I think the US will probably agree to what Ireland proposes, given that US carriers don't much like our Shannon stopover policy anyway. A change in the regulations would allow a significant increase in US access to Dublin. Currently, there is one flight from SNN required for every one from DUB; with the new regulations, it would be 3 Dubs for every one Shannon - very much more lucrative.

The deal agreed between Ireland and the US (under EU supervision) in Nov 05 included a community air carrier clause, so once O/S is finally agreed, any EU carrier will be allowed to operate from Ireland to the US.

Ownership and control of US carriers is of no interest to Aer Lingus, so that won't be an issue. It's not as if Aer Lingus is going to buy United in the morning!

Thanks very much for you input on these threads ANOther (and indeed, everyone else!). Basically, the situation is that the member states have more power in this than many people assume? In Ireland, we have been told that the govt wants to change the rules but the Commission won't let us (and indeed, the Commission has made statements to this effect too!). That's really where I'm getting confused!
 
ANother
Posts: 1833
Joined: Thu Nov 03, 2005 2:47 am

RE: Next Steps Towards Open Skies

Thu Jan 04, 2007 10:16 pm

Quoting Kaitak (Reply 5):

Don't disagree with anything you said, but ...

This is turning into a battle of Titans. Ironically both sides want open skies, but the Americans want it without having to change O&C, and the EU wants to 'prove' to the MSs that they can bring value added to the equation.

If we were only talking Ireland-USA, I could see open skies in a minute (although what you describe is not open skies) but Ireland will be under pressure not to go it alone, while the US side may be reluctant to concede the community air carrier clause 27 times.

As I said; much of this is the silly intra-EU politicing mano-a-mano that is going to lead us no-where.
 
IADLHR
Posts: 612
Joined: Wed Apr 27, 2005 10:25 pm

RE: Next Steps Towards Open Skies

Thu Jan 04, 2007 11:31 pm

Quoting ANother (Reply 6):
If we were only talking Ireland-USA, I could see open skies in a minute (although what you describe is not open skies) but Ireland will be under pressure not to go it alone, while the US side may be reluctant to concede the community air carrier clause 27 times.

What exactly is the communioty air carrier clause?
 
ANother
Posts: 1833
Joined: Thu Nov 03, 2005 2:47 am

RE: Next Steps Towards Open Skies

Thu Jan 04, 2007 11:49 pm

Quoting IADLHR (Reply 7):
What exactly is the communioty air carrier clause?

Today's US-IE agreement sets out route rights for US and Irish airlines (i.e. the traditional ownership and control provisions). The European Court of Justice (ECJ) has stated that these provisions are contrary to the European Single Market, as an airline owned by non-Irish EU citizens would be denied access to these rights.

The community air carrier clause (in most simple terms) would provide that any airline majority controlled by EU cititzens would qualify for these rights.

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