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EU-US sign second stage of open skies agreement

25-Jun-2010

The second stage of the EU-US open skies agreement was signed yesterday during a transport council meeting in Luxembourg by European Commission Vice-President Siim Kallas, Spanish Minister for Transport José Blanco and the US Ambassador to Luxembourg Cynthia Stroum, together with the Member States' transport ministers. The agreement ushers in the potential economic boost of EUR12 billion and the creation of up to 80,000 new jobs split evenly between the US and EU, once the first and second-stage agreements are fully implemented.

Studies indicate significant economic benefits to removing EU-US barriers, including the expansion of traffic by about 26 million additional passengers (a 24% spike) on trans-Atlantic flights over a five-year period and an annual fare reduction resulting in savings of between EUR6.4 billion and EUR12 billion. Annual trans-Atlantic passenger numbers in 2007 – just before the second-stage negotiations began in 2008 – were about 50 million. The cargo market would record growth of between 1% and 2%.

The agreement provides clear commercial advantages, including greater access for EU airlines to the "Fly America" programme. The US and Europe have committed to the goal of removing remaining access barriers and will review progress towards this objective on an annual basis. Additional commercial rights will be exchanged in the future subject to legislative change. The next move is obtaining the consent of the European Parliament and ratification by all Member States.

The newly signed agreement provides for reciprocal liberalisation of airline ownership and control but hinges on legislative changes in the US where increasing foreign ownership beyond the current 25% could be problematic. US legislators are already grousing about the labour and competition implications of alliances and the growing consolidation of the US industry. However, the legislative change would allow greater ownership in EU airlines by US nationals, something much desired by the industry on both sides of the Atlantic. 

Legislative change must also come about in the EU, as the agreement calls for changes in the process for introducing noise-based airport restrictions that would result in the EU gaining additional flights to the US and a number of non-European countries. In addition, a number of obstacles for EU investment in third-country airlines will be removed. Similar rights will be available for US airlines when the US laws allow EU majority ownership of US airlines.

The agreement also calls for increased cooperation in a number of technical areas including issues surrounding the environment, employee rights and security. It requires harmonisation on emissions trading schemes, greater transparency for noise-based airport measures and on new technologies such as alternative fuels and air traffic management, all considered key for international aviation sustainability

At the same time, it preserves the existing legal rights of airline employees which is expected to result in higher labour standards. The agreement also increases the cooperation on security, promoting maximum mutual reliance on each other’s security measures, as well as swift and coordinated responses to new threats. Finally, by extending the role of the EU-US Joint Committee, which oversees the agreement’s implementation, red tape and duplication of resources will be reduced. That would mean mutual recognition of regulatory decisions, joint safety initiatives, one-stop security and other measures to facilitate travel.


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