I think the following explains why there has no new agreement since Bermuda II
. It is high time both sides sat down and hammered out some sort of compromise to end it.(Apologies if it is a little "long").
Although negotiations have been going on for five years by the end of 2004 the USA and UK had failed to reach any agreement on ‘open skies'.
Extracts from the evidence given to a US Congressional Committee in 1999 give some idea of the conflicting views held by these two States :-
(quoted from US evidence)
"The United Kingdom is the United States' second largest international passenger market with 17.2 million passengers in the 12 months ending May 1999 and is the second largest international cargo market for the US
"Prior to 1976, the bilateral agreement between the US and the UK was a relatively open one. However, in that year, the British renounced the bilateral. When a new one (known as Bermuda II
) was negotiated a few years later, it was much more restrictive. Bermuda II
is the most restrictive agreement negotiated with a developed aviation partner. For passenger services, the Agreement restricts access to Heathrow, London's preferred airport, to two US airlines. Bermuda II
also limits US cities eligible for nonstop service to London; and caps entry in most markets at one US and one UK airline.
"Prior to Bermuda II
, US airlines carried 59% of the passengers between the US and UK Since Bermuda II
, US airline passenger market share has dropped dramatically and now stands at 37%. Currently, British Airways alone carries a higher percentage of passengers (41%) than all the US airlines combined. British carriers combined control over 59% of this market. For the 12 months preceding June 1999, British carriers flew 10.5 million passengers in the US-UK market, while US carriers only flew 6.5 million passengers. This is consistent with the 123,000 seats offered weekly in this market by British carriers compared to the less than 90,000 seats offered by US carriers.
"Under Bermuda II
, service to London is restricted in that US carriers can only operate to London from a limited number of specified US gateways. British Airways alone serves 21 US airports nonstop to and from London. All US carriers combined serve only 19 US airports nonstop to and from London. In addition, British Airways operates 9 monopoly routes to and from London.
"The major point of contention between the US and the UK involves access to Heathrow Airport. There are two airports that can be flown into when flying to London: Heathrow and Gatwick. In the US-UK market, approximately 66% of the passengers use Heathrow as their primary gateway. Currently only 2 U.S. carriers (United and American) can fly into Heathrow."
In reply to the US government the UK Statement contained the following rebuttal :
( quoted from the evidence)
" The UK Government is firmly committed to liberalising air services between the United Kingdom and the United States. Throughout recent negotiations on the revision of the Bermuda II
agreement we have made it clear that we are willing to envisage a wide-ranging liberalisation that would open up the market to more carriers from both sides and increase competition to the benefit of consumers – but only on a balanced basis that will provide equal opportunities for UK carriers as well as US ones. We are not willing to accept proposals that would put UK carriers at a competitive disadvantage with others.
"The domestic market for UK carriers is effectively the whole of the European Economic Area (the 15 Member States of the European Union and Iceland, Liechtenstein and Norway). The US Government's "Open Skies" proposals would give US carriers access to that domestic market while denying access to the US domestic market to UK carriers. On transatlantic routes US carriers have the advantage of access to feed traffic from a large domestic market, while UK carriers are at a competitive disadvantage at US hub airports where a very large proportion of traffic is carried by a single US carrier (a larger proportion in many cases than any UK carrier has at any UK airport)."................
...... ."If US carriers are to get unrestricted entry into the UK's international and intra-European market, UK carriers need effective access to the US domestic market to provide a fair competitive balance. In negotiations throughout the 1990s the UK Government has put forward a number of options for achieving this and thereby allowing a wide-ranging, balanced, liberalisation of UK-US air services to the benefit of both consumers and carriers:
(a) alliances, such as that proposed between British Airways and American Airlines;
(b) a liberalised inward investment regime, which would allow UK carriers to buy a controlling interest in a US carrier (foreign ownership is currently limited to 25%);
(c) a grant of cabotage rights . "
THE U.S. USE OF
PREVENT FOREIGN ACCESS TO
ITS VAST INTERNAL MARKET
About 75% of the US airline industry ‘s revenue comes from passengers and about 15% from freight, of which the largest contributor is the US Postal Service; and 10% from other sources. Of the passenger revenue nearly 80% is currently derived from domestic traffic and only 20% from international traffic. Retention of this vast domestic ‘cabotage' market exclusively to US operators is jealously guarded by the US government.
14.2. Whilst the US wishes to freely operate between European States on the basis of unfettered fifth freedom rights through "Open Skies" type bilaterals it appears so far that it has not been prepared to relinquish its own "Cabotage" rights, in respect of the USA, gained from the Chicago Convention. In respect of the component States of the USA, Air Pacific (a Fiji carrier), under this policy, when operating a route such as Nadi - Honolulu - Los Angeles - New York would be unlikely to be given the privilege to pick up passengers originating in Honolulu for either Los Angeles or New York. Hardly "open skies".
Some States which have negotiated "open sky" type agreements at the present time either have no or insignificant services into the USA.
So far most ‘open skies' agreements have generally incorporated unrestricted rights for both US and bilateral partner carriers to operate between the two countries, including to intermediate and beyond points. However, they have not included cabotage rights, have not relaxed the limits on foreign ownership of US carriers and have not provided the right of the establishment of services by foreign airlines within the United States. Nor have they removed the advantages conferred on US carriers by virtue of the ‘Fly America' policy, one which generally requires persons travelling on US government related journeys to fly on US airlines