Global Economics

Open Skies Treaty Goes into Effect


The much-heralded EU-U.S. aviation liberalization deal will go into effect this weekend. Will cheaper airfares follow?

An EU-US deal liberalising the airlines market coming into force this weekend is expected to result in better choice for passengers and cheaper airfares.

The 'Open Skies' deal -- starting Sunday (30 March) -- ends most of the restrictions on airlines from the US and the EU operating between the two continents.

US airlines will now be free to fly both to airports in the European Union and from there to third destinations while European airlines will be able to fly to US airports and then on to other destinations.

At the moment, the market is governed by 21 bilateral agreements between individual member states and the US -- including six restrictive ones for the UK, Ireland, Spain, Greece and Hungary.

Ticket pricing restrictions whereby a government can say that a foreign airline flying to its country has ticket prices that are too low will also come to an end.

EU transport commissioner Jacques Barrot said the open skies deal represents a "veritable revolution" in transatlantic aviation.

Traffic between the two continents is expected to increase by 8 percent during summer this year.

The agreement is expected to represent a boom for London's Heathrow airport, with 16 additional flights to the US per day. Under the current 30-year-old rules, only British Airways, United Airlines, American Airlines and Virgin Atlantic may fly between the airport and the United States.

AFP reports that French carrier Air France and US joint venture partner Delta Airlines will launch transatlantic services on Monday from Heathrow.

Heathrow's new terminal, which officially opened on Thursday (27 March), is also expected to profit from the open competition.

At the moment, Heathrow carries some 67 million passengers per year to over 180 destinations and is the world's busiest airport, according to information from airlines operator BAA.

EU transport ministers gave the deal the green light in 2007 after years of bitter wrangling on the issue.

However, one problem was left untouched after no agreement could be reached and is expected to be revisited by both sides later this year.

Talks on opening airlines to foreign investment failed, with Washington opposed to the idea. Under US rules foreigners may not own more than 25 percent of a domestic airline.

The next round of talks on this issue is to take place in May but is unlikely to yield an immediate result, with US presidential elections scheduled to take place in November.

Provided by EUobserver—For the latest EU related news

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