The United States and the European Union have provisionally agreed to expand their 2007 Open Skies air services agreement to allow for greater U.S.-EU cooperation on a wide range of aviation issues, in a deal the European Commission says could put 26 million more passengers on transatlantic flights over a period of five years.
Signed on March 25, the new provisional agreement ― intended to lead to a second stage of the 2007 U.S.-EU Open Skies deal that would create much greater civil-aviation cooperation between the two parties ― was concluded after eight rounds of talks, the most recent of which included three days of talks in Brussels.
“Today’s agreement strengthens our already close aviation relationship with our European partners,” says U.S. Transportation Secretary Ray LaHood. “President Obama promised European leaders that we would reach an agreement this year, and today we fulfill that promise.”
Among the key elements of the new provisional agreement is a commitment by both the EU and the United States to begin reforming airline-ownership rules, over which the U.S. has been stubbornly protectionist.
Even though the 2007 EU-U.S. Open Skies agreement called for the U.S. to increase the allowed level of foreign ownership in U.S. carriers over time, to date Congress ― influenced in large part by pressure from trade unions ― has refused to consider allowing the level of foreign ownership in U.S. airlines to go above 25 per cent despite the fact that U.S. airlines have lost many billions of dollars throughout the past decade and may have welcomed new sources of investment. (The EU allows foreign ownership of domiciled airlines to be as much as 49 per cent, and in some cases has allowed non-EU parties to hold majority or outright ownership of EU-based carriers.)
However, a clause in the 2007 Open Skies agreement (which went into effect on March 30, 2008) would have allowed the EU unilaterally to dissolve the agreement by 2010 if the U.S. continued to block progress, and as the deadline neared top EU transport officials issued clear warnings that the 2007 deal would be scrapped immediately if the U.S. refused to budge on airline ownership. The March 25 provisional agreement appears to promise enough in the way of concessions on the U.S. airline-ownership issue to satisfy the EU.
According to the U.S. Department of Transportation (DOT) and the European Commission (EC, the EU’s civil service), the March 25 accord builds on the U.S.-EU Open-Skies agreement of April 2007. The original agreement eliminated restrictions on services between the United States and EU member states, allowing airlines from both sides to select routes and destinations based on consumer demand for both passenger and cargo services, without limitations on the number of U.S. or EU carriers that can fly between the two parties or the number of flights they can operate.
The DOT and EC say the new agreement affirms that the terms of the 2007 agreement will remain in place indefinitely. It also deepens U.S.-EU cooperation in aviation security, safety, competition, and ease of travel. In addition, it provides greater protections for U.S. carriers from local restrictions on night flights at European airports.
Air France's first A380 lands at New York JFK to complete its first transatlantic commercial flight
The provisional second-stage agreement also includes what the DOT describes as “a ground-breaking article on the importance of high labor standards in the airline industry” ― an article that indicates the final second-stage agreement will contain clauses safeguarding U.S. and EU jobs in the two areas’ respective airlines should the agreement allow for increased levels of foreign ownership.
“A process has been agreed towards the further expansion and consolidation of the transatlantic aviation market. Both sides have agreed to increase regulatory co-operation, and remove the barriers to market access that have been holding back the development of the world’s most important aviation markets,” says Siim Kallas, the European Commission vice-president responsible for transport. “Building on the success of the 2007 EU-US Open Skies Agreement, this draft deal represents a significant breakthrough in the process of normalizing the global airline industry.”
Kallas welcomed the preliminary agreement reached by EU and US negotiators on a second-stage Open Skies aviation agreement as “a major step forwards”. A study by Booz Allen Hamilton in January 2007 estimated that the creation of a full EU-U.S. Open Aviation Area would be worth up to €12 billion in economic benefits and would create up to 80,000 new jobs.
Additionally, the new agreement underscores the importance of close transatlantic cooperation on aviation environmental matters in order to advance a global approach to global challenges, according to the EC. During the negotiation rounds, U.S. and European negotiators made significant progress in agreeing a new framework for jointly addressing the environmental effects of aviation, as well as advances in the areas of security, competition, and social matters, according to the EU. Kallas will submit the draft agreement for approval to the EU’s Transport Council in June under the Spanish presidency of the EU. (The presidency of the EU changes every six months.)
See page 2 for more on the expected effects of the second stage of the U.S.-EU Open Skies deal
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