I thought they switched them b/c some latter part of the morning slots opened up

nope.


First any European carrier can fly to any US airport that is capable of handling International flights (as long as there is a treaty).

This post seems unaware/forgetful of the fact that Bermuda2 limits USA-LON gateways to a number of 29, with only 12* having permanent access to Heathrow


*15 are in current operation, due to BA's switchover of SAN/PHX/DEN

I think the British should get a new runway built at Heathrow, followed by a new terminal or two. THey will need to do something to keep LHR the premier European gateway and end the bickering between airlines.

"He said that there were flights back then where he would leave Berlin and fly to another airport in Germany, cabotage"

Indeed this is a poor comparison, West Berlin was controlled by Britain, France and the US. Pan Am after WWII. Techically it was not a Domestic flight from the Allied controlled sector of Berlin to Dusseldorf etc.

Anyways there are no more intra Germany flights.

but what would happen if foreign airlines could operate in the US domestic market and offer better service, or cheaper service?

You mean cherry-picked service?

I'm sure BA/AF/SQ/CX/etc would love to fly JFK-LAX or SFO-IAD, and would probably provide great service in doing it..... but what incentive would the have to serve Billings, Montana; or Concord, New Hampshire. We're basically getting a sense of that affect now with the advent of LoCo carriers.

Having to defend such transcon routes could cause the domestic airlines to reduce their focus on more marginal routes, therefore causing the smaller communities to suffer. Therein lies the real crux of allowing cabotage.

Motech722,

Another problem is that some foreign carriers are either partially or fully owned by Governments, Air France is partially owned by the French Government.

Why should they be allowed to operate within the US against publicly traded US Airlines which have to seek investor capital from the private sector.

In the past, both BA and Virgin have both made false arguments in order to undermine the success of any open-skies negotiations between the US and Britain.

Among the false arguments:

1) Cabotage - For any foreign carrier, the logistics of doing so on a medium to large scale would be enormous. No foreign carrier has the US infrastructure to mount a US domestic network of their own. And, their US partners wouldn't be too keen about helping them since it would literally mean setting up their own competition.

What cabotage would likely turn out to be for the biggest of the European transatlantic carriers is a network of tag-on flights, such as JFK-LAX tagged onto for example LHR/CDG-JFK. However, that isn't as easy to pull off either. Even if the US agreed to that, facilities at LAX to handle those additional flights do not currently exist. The Tom Bradley terminal certainly can't handle them. Moreover, "peak-time slots" at JFK, specifically domestic ones, are restricted. So, any European carrier contemplating such a flight would have to buy or lease a couple of slots (just for JFK) from an incumbent carrier. At JFK the biggest holder of those slots is AA. I just don't see them handing them over to Air France, so that they can erode AA's yields on that route.

Moreover, you have to imagine what such actions on the part of EU carriers would do to their currently established relationships with US partners. The basis of any cooperation would effectively disappear if instead of relying on Delta to ferry codeshare passengers from JFK to LAX Air France would now try to compete directly with Delta on that lucrative route.

Provided the EU airlines, including Virgin Atlantic, have thought this through, you see, then, that there is nothing really to be gained from cabotage. US carriers, like Delta and TWA, realized that long ago. Both had European hubs and the right to pick up European passengers at points beyond the hub. Those hub operations are long since defunct.

2) "Fly America" rule.

EU carriers would also gain nothing from removing this restriction.

Unless removing this restriction results in structural and deep philosophical changes in the way that the US government awards military or government contracts, civil cervants and military personnel on government business will continue to fly US airlines exclusively. Why couldn't that happen? Well, because in the one other instance where a similar policy was also altered in response to a trade dispute (over military procurment projects), the track record has shown that the US continues to do business only with US-based companies. I am, of course, referring to the circumstances related to the air-tanker procurement. Despite all appearances to the contrary, Airbus was never a serious candidate to win the contract.

3) Foreign ownership of US airlines

This argument is both false and true, depending on who makes it.

If Richard Branson is making it, it most likely is false. Truth is, and Branson knows it, that the window of opportunity for launching a low-cost airline in the US has long since past. The market can probably only sustain the one's currently in existence and their continued level of growth.

Prior to the emergence of JetBlue, Branson might have been speaking truthfully. Now, it can only be seen as a move to delay any progress.

Even back then, one had to wonder whether Branson had carefully considered the proposition. Because if he had, it would have naturally occurred to him that if foreign ownership were to be allowed under an open skies regime with full access to Heathrow, there would be no stopping AA and BA from fully merging. That would not have been a very good outcome for Virgin in the long run. Personally, I am one who thinks that he had considered this outcome. And, that in opposing open skies unless he got full ownership rights, he really was being disingenuous.

Management at BA has also made this argument from time to time. When they were just starting to form their US strategy, and when that strategy still involved US Air, they actually meant it. Full ownership of US Air would have provided them with control of their own US domestic network. Not sure how much more successfull they would have been at running US Air than others have been since. Remember, British Airways hasn't been any more successful at competing head to head with low-cost carriers in Europe.

After it cashed in its investment in US Air, BA management stopped making this argument. Instead, they became willing to accept full access to Heathrow if the US approved their virtual transatlantic merger with AA. Neither airline was looking to own the other at the time; they just wanted anti-trust immunity in order to operate as a single airline over the Atlantic. Well, we all know what happened to that proposal.

Since then, BA and AA have managed to get approval for a codeshare operation on points beyond their respective gateways and hubs. In light of the AirFrance/KLM merger, BA management is even talking again about a full-merger between BA, Iberia, and AA. What a transatlantic behemoth that would be across North and SouthAmerica! Whatever the case, this argument now holds more truth for BA than it has in the past.

So, having put these false arguments aside, let's deal with the most false argument of all - Continental's outrage at the sale of these slots.

Previous posters have already deduced what makes this argument false, the fact that UA had no choice but to sell them to an incumbent LHR carrier.

You've got to give management at Continental credit, however. They're starting to sense that they are not going to gain much from a Pan-European open skies treaty. All the EU can do is provide empty promises that LHR will be open to all US Airlines. Unlike the British government, it can't provide US carriers with free slots. So, Continental may just have to purchase them on the open market if they are not all gone by the time they earn the rights to fly to LHR. Add to that the specter that with full open-skies between the EU and US, AA and BA will get defacto anti-trust immunty without giving up any slots and now suddenly the situation gets very depressing for Continental. I'd be outraged too. But, you know what. What was really outrageous were the demands Continental/Delta/Northwest made to the DOT when AA/BA last requested anti-trust immunity. Delta alone requested over 120+ weekly slots. So, these three deserve everything they don't get.

"Why should they be allowed to operate within the US against publicly traded US Airlines which have to seek investor capital from the private sector."

STT757, I'm not saying that these airlines should be able to operate in the US, but at the same time I'm not going to say they shouldn't. I'm just pointing out that if the US wants a truly open-skies arrangement, then allowing operations within the US is something that is a must be seen in the future.

You make a good point about Air France being partially owned by the French Government, but let's remember that even so, Air France flies to the US and competes directly with US airlines. Is this fair on international routes? Maybe not, but if Air France flew in the US domestically, then how would it be any different from the effects of the government-backed airline on international routes?

ConcordeBoy, Yes, I'm sure BA/AF/SQ/CX/etc would love to cherry-pick routes in the US, but what is the difference between them doing this versus US carriers doing the same thing? The incentive would be the same as it is today.

I'm not that familiar with Billings, Montana; or Concord, New Hampshire, but it's like Eugene, Oregon and Wichita, Kansas. In order for these city to get improved service, they established an incentive known as a travel bank. In return, Eugene attracted America West Express (Mesa) and Wichita attracted both AirTran and Frontier (operated through Mesa as JetExpress). These travel banks have also helped other cities, like Pensacola, Florida. Perhaps the way to entice US carriers, or even foreign carriers if cabotage was allowed is to set up travel banks throughout the nation. It's sad, but if it must be done, so be it.

Your point about "having to defend such transcon routes could cause the domestic airlines to reduce their focus on more marginal routes, therefore causing the smaller communities to suffer" is very true too. But let's remember that for years smaller communities have been suffering. If it were not for incentives like EAS, then many of the communities that have service today would have nothing at all.

I'm not trying to disagree here, just trying to throw out other ideas. Of course if the US opened up its skies to allow for cabotage, other countries would need to follow suit as well. It is by no means a one-way street, foreign airlines would have to be concerned about US airlines taking over their turf as well. And let's remember, if foreign airlines could own US airlines, the same could be true of US ownership of others. There are no doubt many pros and cons.

Maybe American Airports should close the doors to any new BA expansion and bring Virgin or BMI in instead.

Gosh, you go away for a couple of days and an intelligent and reasoned debate breaks out in your absence!      

To be honest, I'm in favour of the opening up of Heathrow, but with certain conditions. It was quite rightly mentioned that Heathrow is a prized asset...therefore we as the British would be negligent in just "selling it down the river."

The EU has decided, with a timescale of pretty much its own choosing (typical!), that in the future these sorts of agreements will be be negotiated at a supranational rather than national level.

Now, the significance of this may be lost on our American cousins, and I don't blame them, but basically it means that the EU will be the determining authority in all relations. That means, in future, bilateral agreements will be negotiated by the EU on behalf of the member states. In the same way that the US Government negotiates on behalf of Texas, California or Vermont.

The aim from the European perspective is to finally get some weight behind the negotiations from our side of the pond. You're right STT757 in saying that the US domestic market is 40% of the world total.......the US is a titan in aviation and getting an agreement that protects the rights of European carriers can only be achieved if the EU acts as a counterweight to the US.

Eventually I hope to see a common EU-US aviation area, where any carrier is free to fly from anywhere to anywhere. However, having an agreement such as this is all well and good, but it is still subject to practical factors that are irrespective of the treaty governing them.

And this brings us neatly to the question of access to Heathrow. Sometimes I have to remind myself that Heathrow is the 4th or 5th largest airport in the world. It has two runways. It is congested. The skies above West London are crammed full of aircraft waiting to land, all day long. It is the only airport in the world where I have looked out the window whilst in the hold and seen up to 10 aircraft sharing the sky with me. At multiple times in every day Heathrow is "full". It means that aircraft taxy around waiting for a stand to be vacated by another, departing aircraft. Any delay, any runway blocked for whatever reason throws the operation into chaos. It is a miracle that Heathrow works at the best of times.

So, Heathrow's exclusivity is not limited by the treaty, more the available capacity. And all that stuff about slots going to BA is absolute rubbish. BA are actually having to pay money to consolidate their position......unlike US carriers at their fortress hubs who have very cosy relationships with airport operating authorities. Perhaps one could compare the percentage of slots that CO holds at HOU and EWR with the percentage that BA holds at LHR. I think you'll find that CO is in a much more of a monopoly position than BA!

Now, if CO really wanted to operate from Heathrow, then they could offer to buy United's entire operation, which is what United did. That's the only way that they'll be able to operate at Heathrow with any meaningful operation (by meaningful I mean an operation that can provide benefits to the consumer as well as the airline). One return flight from LHR to EWR on Continental metal is not going to help the airline nor deliver value to the UK public.

At the end of the day, Heathrow is a very crowded airport, and US carriers cannot expect the automatic right to fly there.

However, if the US were to drop some of the more overtly protectionist policies that they currently practise then perhaps we could start to trade commodities of equivalent value. In fact, the contributions from certain American members to this thread show a remarkable distaste for the virtues of free enterprise that are so often espoused as being the ultimate in American values.

Some examples:

If the US opens the US Domestic market to British Carriers they would have to open it up to everyone, the US does not need Aeroflot flying from Las Vegas to Sacramento!

Sir Freddie Laker once said that the chief argument British Airways used against his SkyTrain was that "why would anyone want the SkyTrain when we provide wonderful service across the Atlantic?" His message was that the consumer decides what he or she wants in a product: If Aeroflot could offer a better product at a lower price from Las Vegas to Sacramento, why shouldn't they be allowed to compete?

Having to defend such transcon routes could cause the domestic airlines to reduce their focus on more marginal routes, therefore causing the smaller communities to suffer.

Sorry, this is quite ridiculous. If routes don't pay, cut them. That's the key to a successful airline. If US carriers are actually flying unprofitable routes, then they should be shot. If I was a shareholder and I knew that my carrier was flying a route that was a drain on the financial performance of the company (i.e. it offered nothing in terms of O&D or transfer traffic) then I'd be pretty pissed.....

There's nothing the EU could offer that would provide equal benefits to US carriers, European carriers would benefit tremedously from having access to the US Domestic market.

Nonsense. The EU is a union of 400 million people, and will soon have a GDP to match or exceed the United States. The rights to exploit a largely untapped demand for air travel could be seen as being very prized indeed.....after all, the low-cost carriers have illustrated that the average European doesn't care for free drinks, on-time performance or friendly service......so perhaps your average US network carrier would do rather well!

In all honesty, I'm tired and ready for my bed. But I stand by what I said at the beginning of this thread. No opening of Heathrow until the US market is opened. It seems to bother you that Heathrow is shut more than it bothers us that the US is shut; so in this deal, we have all the bargaining chips.

"Perhaps one could compare the percentage of slots that CO holds at HOU and EWR with the percentage that BA holds at LHR. I think you'll find that CO is in a much more of a monopoly position than BA!"

The problem is LHR is closed to most US airlines, but every single airport in the US capable of handling International flights is open. There are only three slot controlled airports, Chicago Ohare, NY Laguardia and NY JFK.

Of which only two can handle International flights (save LGA's Canadian, Bermuda and Bahama flights).

However ORD's and JFK's slot restrictions do not prevent anyone from launching service, it just regulates the hours of operation. However by 2007 there will be no slot restrictions at any airport in the US.

"That means, in future, bilateral agreements will be negotiated by the EU on behalf of the member states. In the same way that the US Government negotiates on behalf of Texas, California or Vermont.

The aim from the European perspective is to finally get some weight behind the negotiations from our side of the pond"

The problem is even with the EU negotiating for everyone in Europe they are still not equals, the US Domestic market dwarfs the combined EU market.

The US carriers are much less dependent on International travel (especially to Europe) than Carriers such as LH, VS, BA, AF etc. Some European carriers derive as much as 60% of their revenue from trans-Atlantic routes.

The most International dependent US Airlines (AA, UAL, DL, CO etc) probably derive less than 25% OF their revenues from International flying.

What does this mean? The US has an overwhelming advantage in negotiations no matter if it's the EU or Luxemburg they are negotiating with, because US airlines have little to no desire for domestic cabotage rights within Europe where European and Asian Airlines desire those rights in the US.

The US in negotiations with the EU could easily shut out EU airlines from airports such as JFK, EWR in retaliation for not letting more US airlines have access to LHR.

European Airlines are much more dependent on trans-Atlantic traffic than US airlines, if the EU played hard ball their own airlines would suffer.

The US has only one subject of negotiation, open access to Heathrow.

Where EU carriers want..

Access to the US Domestic Market

The ability to own more US airlines

EU-US open skies.

There are minor errors of fact in several posts in this thread. Rather than nitpick individual posts, I suggest the following sites for further reading about Bermuda II and LHR, if you want the whole story:

http://www.lawreports.co.uk/ecjnovc0.2.htm

This is a synopsis of the EC ruling regarding the UK's authority of renegotiate Bermuda II

http://www.parliament.the-stationery-office.co.uk/pa/ld199798/ldselect/ldeucom/156/8070802.htm

This is a memo for discussion in the House of Lords regarding the EC dispute. If you look around, the Stationery Office site also has a good Lords discussion of Bermuda II issues in general.

http://dms.dot.gov/search/document.cfm?documentid=145307&docketid=11029

This is a US Dept. of Justice discussion (from the US point of view, obviously) of competitive issues regarding service to LHR.

There is also a great Danish site which has the ur-text of most international aviation treaties. Unfortunately, I've lost the site, but I'm pretty sure it has been mentioned in previous discussion of Bermuda II on this board. Maybe some kind person can repost that site.

I do'nt know if this was mentioned, but in addition to Virgin, UAL, AAL, and BA, several other carriers fly JFK-LHR. At the very least I know that Air India does.