U.S., EU achieve breakthrough in open skies talks

U.S., EU achieve breakthrough in open skies talks U.S. and European Union negotiators Friday reached agreement on an accord designed to greatly increase the number of transatlantic flights, and otherwise increase the freedom of airlines to serve each other’s market.
   The preliminary deal must still be approved by the EU’s Transport Council of Ministers, which will next meet on March 22.
   The deal would allow European and U.S. airlines to fly from anywhere in their respective territories to the anywhere in the other market without restriction.
   An open aviation market could increase travel 34 percent by adding 26 million extra passengers during a five-year period over current traffic level of just under 50 million. It would substitute an EU-wide agreement for existing bilateral agreements on traffic rights between U.S. and EU member nations. Eliminating bilateral restrictions could save passengers up to 12 billion euros ($15.8 billion) and lead to the creation of as many as 80,000 jobs, according to the EU.
      The cargo market would see growth of 1 percent to 2 percent, a significant figure given the size of the market globally, it said.
   Among the provisions in the aviation agreement:
   * Increased ownership, investment and control rights by EU investors in U.S. airlines.
   * European Community passenger airline rights to fly from the United States to a third country rather than directly to the home country.
   * European Community rights for airlines to participate in the U.S. “Fly America” program for transporting passengers and cargo financed by the U.S. government. Such rights have never been granted by the United States to a third country.
   * Antitrust immunity to facilitate the development of airline alliances.
   Previous rounds of negotiations established several principles, including:
   * An allowance for European Community carriers to consolidate.
   * The possibility for EU airlines to operate all-cargo flights beyond the United States to a third country, without a requirement that the service starts in the EU.
   It has taken more than three years of negotiations to reach this stage. A deal seemed unlikely three months ago when the U.S. Department of Transportation shelved a plan to allow foreign investors more control of operational decisions while still retaining a minority stake as required by law. The proposal was designed to help the ailing aviation industry consolidate and have access to capital and expertise, but it was unpopular in Congress where many lawmakers argued it would let foreign airlines eliminate U.S. workers.
   The EU had made loosening foreign ownership restrictions a key condition for agreeing on a U.S.-EU open skies pact.
   It appears the Bush administration has gone back to a proposal it tried to get through Congress two years ago to increase from 25 percent to 49 percent the foreign share of non-voting equity in U.S. airlines. U.S. airline citizenship laws allow foreign investors 25 percent of voting stock.
   The administration has found a way to allow non-U.S. citizens to retain increased equity without requiring a legislative change, an EU spokesman told the Financial Times.
   Still unclear is whether European governments will find the move enough a concession of on opening up ownership rights.