The U.S. and the EU start a second stage of negotiations today to reduce restrictions hobbling international air transportation: Open skies negotiators check in for round two (Kevin Done and Andrew Bounds, Financial Times, May 14).
At the core of the talks is the call from the EU for the creation of an open aviation area, which would dismantle restrictions on foreign ownership of airlines in a liberalised zone accounting for 60 per cent of world aviation.
The limits are especially onerous in the US, where foreign entities cannot own more than a 25 per cent voting stake in a US carrier.
As a result of such rules global aviation remains a fragmented industry with more than 500 sizeable airlines. American Airlines, the world’s biggest carrier measured by traffic volumes, accounts for barely 7 per cent of world capacity....
Today's negotiations are following up on some successes last March:
This [last year's agreement - Ben] was made possible, however, only when both sides agreed to set aside the thorniest issues, most notably ownership and control, to a stage two deal. Talks on this begin in Ljubljana on Thursday. The biggest barrier to ownership reform proved to be opposition in the US Congress.
By taking the stage one deal US and EU negotiators agreed that half a loaf was better than none. They chose to accept some real reforms that could be agreed, most notably the opening to full competition of London Heathrow, the most important European gateway for flights from the US – a long-standing US demand. In return the US accepted Brussels’ call for the introduction of an EU airline nationality designation, to make it easier for EU airlines to merge without jeopardising their traffic rights to the US.
Since the stage one deal came into effect, European and US carriers have rushed to take advantage of the new rights.
But in theory all the gains of stage one could be taken away again as there is a clause giving the EU (or any individual EU state) the right to end the deal if by 2010 the US has not made sufficient progress towards a genuine Open Aviation Area with equal traffic rights and removal of ownership restrictions....
John R. Byerly, the Deputy Assistant Secretary for Transportation Affairs, spoke to the European Aviation Club earlier this week (The U.S.-EU Air Transport Agreement: Making the Most of the Second Stage, May 13), describing the benefits already flowing from the first stage agreement, and outlining U.S. thinking at the start of the second stage.
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