EU–US Open Skies Agreement

The EU–US Open Skies Agreement is an air transport agreement between the European Union and the United States. The agreement allows any airline of the European Union and any airline of the United States to fly between any point in the European Union and any point in the United States. Airlines of the United States are also allowed to fly between points in the European Union. Airlines of the European Union are also allowed to fly between the United States and non-EU countries like Switzerland.^[1] The treaty disappointed European airlines as it was tilted in favor of United States airlines: while they are allowed to operate intra-EU flights, European airlines are not permitted to operate intra-US flights nor are they allowed to purchase a controlling stake in a US operator.^[2] The Agreement replaced and superseded previous open skies agreements between the US and individual European countries.

The initial agreement was signed in Washington, D.C., on April 30, 2007. The agreement became effective March 30, 2008. Phase two was signed in June 2010.^[3]

Impact

London–United States

Under the agreement, London Heathrow Airport has been opened to full competition. This ended the exclusive right granted for only two US airlines and two UK airlines (Bermuda II) to fly transatlantic services out of Heathrow. These four airlines were British Airways, Virgin Atlantic Airways, United Airlines, and American Airlines.

This right also exists for third country carriers with incumbent fifth freedom rights to carry passengers between London Heathrow and the United States. These rights were previously exercised by Air New Zealand (between Los Angeles-London Heathrow), Air India (between New York-London Heathrow), and Kuwait Airways (also between New York and London Heathrow). El Al also had such rights but chose not to use them, and Iran Air technically also had similar rights, but is prohibited from flying to the US due to US government economic sanctions against Iran.

Continental Airlines announced it will begin service to London Heathrow from Newark and Houston.^[4] Continental also announced that it will begin seasonal service to London Heathrow from Cleveland.^[5]

Delta Air Lines announced it will begin service to London Heathrow from Atlanta and New York (JFK).^[6]

Northwest Airlines announced it will begin service to London Heathrow from Detroit, Minneapolis/St. Paul and Seattle.^[7] Northwest ended service between Seattle and London Heathrow in January 2008. Northwest completed its merger with Delta on January 31, 2010 and service between London and Detroit and Minneapolis/St. Paul are now operated by Delta Air Lines.

US Airways announced it will begin service to London Heathrow from Philadelphia.^[8]

Nevertheless, expansion of transatlantic flights to or from Heathrow will continue to be limited by lack of runway capacity (currently its two runways are operating at over 98% of its capacity), government limits (especially when expansion plans to build a third runway and a sixth terminal was cancelled on 12 May 2010 by the new coalition government^[9]), and the fact that many take-off slots are owned by incumbent airlines. British Airways holds 40 percent of slots, while bmi holds 12 percent.

Other routes

Several airlines are changing their routes and schedules now that the agreement has come into effect. Many airlines are also buying take-off and landing slots at Heathrow. For example, bmi is trying to buy slots from Varig.^{[citation needed]}

Meanwhile, Virgin Atlantic had said that it intended to add daily flights to New York from several European cities, such as Paris, Frankfurt, Milan, Amsterdam, and Zurich, but has since ruled out such services until 2010 at the earliest.^[10]

KLM announced new service from Dallas/Fort Worth to Amsterdam.^[11]

Industry consolidation

The agreement seems to have generated renewed interest in airline industry consolidation,^[12] although mergers or acquisitions among international flag-carrier airlines are difficult to facilitate in the face of sometimes emotional national and financial interests. British Airways' 2007 plan to buy Iberia Airlines had to be shelved when it became apparent that a Spanish investment bank would prevent the deal. In 2008 a merger was proposed instead, which would retain both brands along the lines of the 2004 Air France and KLM merger.^[13]

Fares

There is little consensus about whether increased transatlantic competition will have any effect on fares. Some believe the market is already highly competitive. Other sources have been predicting radical changes, such as €10 flights.^[14]

In April 2007, Ryanair confirmed it was planning to start a new airline (RyanAtlantic) that would operate long-haul flights between Europe and the United States. According to Ryanair's chief executive, Michael O'Leary, the airline intends to start flying in 2010, with flights to five or six US cities, including Baltimore and Providence. The carrier, unlike traditional low-cost airlines, would sell both economy and premium(B&B)-class tickets.

References

1. ^ Air Transport Agreement Official Journal of the European Union, L134 (volume 50, May 25, 2007)
2. ^ EU-US Open Skies Deal - Not So Open for European Airlines, IACA press release, 22 Mar 2007
3. ^ "Phase two of EU-US Open Skies to be signed tomorrow". flightglobal. 2010. http://www.flightglobal.com/articles/2010/06/23/343593/phase-two-of-eu-us-open-skies-to-be-signed-tomorrow.html. Retrieved 2010-06-26. 
4. ^ Continental Airlines To Begin Service To London Heathrow From Newark and Houston (Continental Airlines: November 15, 2007)
5. ^ Continental announces seasonal service between London/Heathrow and Cleveland
6. ^ Delta Air Lines To Begin Service To London Heathrow From Atlanta and New York (JFK) (Delta Air Lines: October 17, 2007)
7. ^ Northwest Airlines To Begin Service To London Heathrow From Detroit, Minneapolis/St. Paul, and Seattle In 2008 (Northwest Airlines: December 10, 2007)
8. ^ US Airways To Begin Service To London Heathrow From Philadelphia (US Airways: November 20, 2007)
9. ^ BBC News - Heathrow third runway plans scrapped by new government
10. ^ Virgin Atlantic rules out continental Europe to US service until 2010 (Travel Weekly: March 4, 2008)
11. ^ Northwest/KLM expands service to Europe from the Northwest Airlines website
12. ^ Bloomberg.com: British Airways May Make Iberia Bid With Equity Group
13. ^ BBC: BA's long-haul route to Iberia tie-up
14. ^ International Herald Tribune: Visions of a €10 ticket to fly across the Atlantic