EU And US Agree Open Skies Pact

by Glen Shapiro, LawAndTax-News.com, New York

29 November 2005

After years of negotiations, the EU and the US reached tentative agreement on the text of a comprehensive first-step air transport agreement which would allow every EU and US airline to fly between every city in the European Union and every city in the United States.

Delegations representing the European Union and the United States met from November 14-18 in Washington, DC to negotiate over a comprehensive first-step air transport agreement.The deal must now be approved by the EU’s Transport Council of Ministers, which represents all 25 EU member states, and by Congress in the US.

The deal would allow US and EU airlines to determine the number of flights and their routes and fares according to market demand, as well as to enter freely into such cooperative arrangements with other airlines as code-sharing and leasing.

“It provides new opportunities for U.S. and European airlines, healthier competition for a growing travel market, and greater connections between cities and towns of all sizes on both sides of the Atlantic,” said U.S. Transportation Secretary Norman Mineta in a statement welcoming the pact. “More broadly, this agreement would bring nearly 750 million people and twenty-six countries together to comprise the largest and most lucrative open aviation market ever created,” he added.

In the joint statement, the EU delegation said the Transport Council of Ministers, in making a decision on the proposed agreement, will take into account the outcome of the rule-making process recently initiated by the US Department of Transportation (DOT) to expand opportunities for foreign citizens to invest and participate in the management of US air carriers. What this means is that the EU wants to see foreign ownership barriers in the US raised from the existing 25% to nearer the EU's 49%.

Air services between the United States and European Union countries currently are conducted under bilateral aviation agreements with each of the EU member states. Some of these agreements set liberal ground rules for international aviation markets and minimize government intervention, but others, such as the controversial UK/US pact, are highly restrictive. The new agreement, which would replace all existing bilateral agreements between the United States and individual EU member states, could take effect as early as late October 2006, according to the State Department.

The Agreement, if approved, would authorize every EU and every US airline:

• to fly between every city in the European Union and every city in the United States;
• to operate without restrictions on the number of flights, the aircraft used, or the routes chosen, including unlimited rights to fly beyond the EU and US to points in third countries;
• to set fares freely in accordance with market demand; and
• to enter into cooperative arrangements with other airlines, including code-sharing and leasing.

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