EU-US Open Skies Agreement

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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 agreement was signed in Washington, D.C., on April 30, 2007. The agreement became effective March 30, 2008.

1 Impact
2 References

[edit] Impact

[edit] 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.

Singapore Airlines had been allowed to fly the LHR-USA routes. However, due to an extreme shortage of aircraft, the airline was unable to fly the route. Singapore Airlines intends to fly the route once it receives new incoming aircraft.^{[citation needed]}

Continental Airlines announced it will begin service to London Heathrow from Newark and Houston.^[2]

Delta Air Lines announced it will begin service to London Heathrow from Atlanta and New York (JFK).^[3]

Northwest Airlines announced it will begin service to London Heathrow from Detroit, Minneapolis/St. Paul and Seattle.^[4]

US Airways announced it will begin service to London Heathrow from Philadelphia.^[5]

Nevertheless, expansion of transatlantic flights to or from Heathrow will continue to be limited by lack of runway capacity, government limits, and the fact that many take-off slots are owned by incumbent airlines. British Airways holds 40% of slots, while bmi holds 12%.

[edit] 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 LHR. For example, BMI is trying to buy slots from Varig.^{[citation needed]}

British Airways has set up a new subsidiary, OpenSkies. OpenSkies is due to begin service between New York JFK and Paris Orly, on June 19 2008. Over the next year, the aircraft fleet is expected to rise to 6 planes serving additional destinations. Brussels is long considered the next airport to fly to and from.

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.^[6]

KLM announced new service from Dallas/Fort Worth to Amsterdam.^[7]

[edit] Industry consolidation

The agreement has apparently renewed interest in airline industry consolidation, according to Bloomberg.com.^[8] For example, British Airways was trying to take over Iberia Airlines as long as it could secure one or more private equity partners.

[edit] 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.^[9]

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 5-6 U.S. cities, including Baltimore and Providence, Rhode Island. The carrier, unlike traditional low-cost airlines, would sell both economy and premium-class tickets.