kaitak
Posts: 8934
Joined: Wed Aug 18, 1999 5:49 am

EU/US Open Skies Talks: 10/11 January 2007

Thu Jan 11, 2007 3:40 am

Today and tomorrow, negotiators from the EU Commission and the US DOT will meet to discuss a way forward on Open Skies (or I should say, have met today and will meet tomorrow!)

Here's a snippet from a UK paper and if you look past the title, it's actually quite a good article.

http://money.guardian.co.uk/businessnews/story/0,,-1986586,00.html

What is the general feeling here and what are the predictions going forward?

To my mind - and you'll understand that I'm from a country whose airline has absolutely no interest in buying into US carriers, I think that the removal of the US airline ownership issue actually simplifies things immensely. True, we still have the LHR issue and the UK will probably want a quid quo pro, but will the UK be sufficient, on its own, to block any deal? I don't think so; there is qualified majority voting.

Now, the EU member states could, of course, sulk at the gross unfairness (yeah, right) of not being allowed to invest in US carriers, but where would that get them. The thing is that what is now on the table is what they should have been going for all along: the right of any EU airline to fly from any point in the EU to any point in the US. That's now available; if common sense wins through, it would mean that airlines could now plan on the basis of Open Skies going forward. Sure, special arrangements would have to be made for LHR, but does that REALLY need to hold everyone else up?

The EU could seek a quid quo pro, for example, restricting fifth freedom rights for cargo airlines, but what exactly would that achieve? It could also reduce the limits of ownership for US airlines buying into EU carriers, but if that meant scuppering the deal, would it be worthwhile? Again, doubtful.

The thing that really worries me, however, is that the Commission could dig its heels in on the whole emissions thing and that could really scupper a deal.

Maybe what is needed is an acceptance that even though what's on the table is not exactly what the EU wanted, you rarely get 100% of what you want in negotiations. What is on the table is what the EU should have been seeking all along and if they refuse this deal now, is it likely that the passage of time will lead to the EU getting what it wants in two, four or six years' time? Very unlikely. So, in other words, they should go for it.

Will they? Well, I hope so, but I have my doubts.

And what if they don't? What about Ireland and other countries severely disadvantaged under the current system? Will the Commission stop Ireland from moving ahead with a separate deal (one which includes a community air clause?), given that it was in favour of the deal and other countries scuppered it? Hopefully, some provision will be made for countries which want a deal tomorrow, but which were thwarted by other (larger) countries.

Thoughts (apart from "you need to get out more"!)?
 
kaitak
Posts: 8934
Joined: Wed Aug 18, 1999 5:49 am

RE: EU/US Open Skies Talks: 10/11 January 2007

Fri Jan 12, 2007 3:11 am

These talks have now concluded; the ATI suggests no progress, although I think the intention was to have a meeting between the two sides, which would plot a way forward and then, the EU would report back to the member states and obtain directions for the next round of negotiations, on the 6th February (or week of).

Here's a more upbeat report:

http://www.breakingnews.ie/business/?jp=CWSNMHAUAUKF

There is still time for a deal to be done, as long as the Commission has a realistic approach and of course, that depends on member states. Let's hope common sense prevails.
 
macilree
Posts: 106
Joined: Fri Dec 29, 2006 12:13 pm

RE: EU/US Open Skies Talks: 10/11 January 2007

Fri Jan 12, 2007 10:53 am

Although I appreciate that this has been discussed in other threads over recent years before this one, I am still waiting to read a really decent, thorough analysis of the EU-US "open skies" issue.

Rather than speculating about what form a final agreement could take and whether a staged approach could be adopted (see, for example, an article that appeared in Aerlines recently), the key question to me seems to be: Why has no deal been reached by now?

A subsidiary question: What in practical terms would an achievable deal change? The US has already signed "open skies" agreements with most EU member states, albeit without exchanging seventh freedom passenger, eight freedom and/or ninth freedom rights, and significant extra slots are not going to become available any time soon at LHR (What is the situation re non-UK EU airlines operating fifth freedom services beyond say LHR to the US making use of their existing slots for this purpose? Most EU states would already have the rights from the US under their "open skies" bilaterals but would also need fifth freedom beyond rights from the UK - do any EU airlines have them?).

Another question: What are the implications for the planned Air France/KLM and Lufthansa/Swiss mergers if no deal is reached? Does the US have negotiating leverage here? I recall the US hints about circumvention of bilateral arrangements relating to the proposed British Airways/KLM tie up some years ago.

To look at the issue one needs to take a close look at the real interests of and incentives on all of the major players involved, of which there are many. For example, not only are the European Commission, the US Administration, and the major airlines key players, but also EU member states (who have up until recently had complete sovereignty on air rights matters), airports and industry trade unions. Inevitably consumer and tourism interests tend to get pushed to the back to a certain extent. Are some players demanding a kind of perfection in any deal that they would accept with the cynical attitude that they know it will not be reachable?

The background to the European Court of Justice decisions (what realistic prospect is there of a mass issue of termination notices by EU member states of their existing (illegal?) bilaterals with the US?) together with the differences (even pre-election) between the US Administration and the US Congress over limiting foreign investment and control of US airlines are clearly part of the story (what outcome re Virgin America?), as are the trans-Atlantic airline alliances and the efforts of some on both sides of the Atlantic (particularly in the EU) to bring about airline-industry consolidation.

The aviation emissions issue will certainly add an interesting extra dimension with fairly stark differences emerging on this between the EC and US.

I am left thinking that an academic might usefully bring to understanding the issue some institutional economics or a public choice theory perspective.
John Macilree
 
macilree
Posts: 106
Joined: Fri Dec 29, 2006 12:13 pm

RE: EU/US Open Skies Talks: 10/11 January 2007

Fri Jan 12, 2007 3:06 pm

A scan of the short Record of Consultations signed in Brussels on 11 January 2007 is now available on the web.
John Macilree
 
scotron11
Posts: 1181
Joined: Tue Feb 10, 2004 4:54 pm

RE: EU/US Open Skies Talks: 10/11 January 2007

Fri Jan 12, 2007 3:13 pm

I don't think ownership/control is the only sticking point. Not only are foreign carriers restricted to 25% equity, but two-thirds of the US airline board must be US citizens. So why would anyone want to make any sizabe investment if they didn't have any say on how the airline was run?

As to national security and foreign governements gaining control of US airlines, I think that is just a smoke screen.

That issue aside, I think the deal should be made for the benefit of all, on both sides of the Atlantic.

It would allow unlimited consolidation in the EU and do away with the LHR restrictions once and for all, for good and bad.
 
macilree
Posts: 106
Joined: Fri Dec 29, 2006 12:13 pm

RE: EU/US Open Skies Talks: 10/11 January 2007

Fri Jan 12, 2007 3:36 pm

For official information on this long-running negotiation there are a couple of useful web pages to look at:
Global Partners - United States from the Air Transport Portal of the European Commission web site
Open Skies & Aviation Services from the US Mission to the European Union web site

Also worth a read is a 2004 article by John Byerly's predecessor at the US State Department, Alan Mendelsohn, entitled The US and the EU - Aviation Relations: An Impasse or an Opportunity?
John Macilree
 
Humberside
Posts: 3223
Joined: Sun Jan 01, 2006 12:44 am

RE: EU/US Open Skies Talks: 10/11 January 2007

Sat Jan 13, 2007 3:44 am

Quoting Kaitak (Thread starter):
Sure, special arrangements would have to be made for LHR, but does that REALLY need to hold everyone else up?

I dont think special LHR arrangements do need to be made. LHR needs to opened up to all airlines and the UK government need to stop protecting BA - they are no longer state owned. Let there be free competition with BA moving ATL/IAH/DFW to LHR, AA moving all LON routes to LHR, UA starting DEN-LHR and bmi/DL/CO/US/NW starting LHR-US
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