Air Transport World

A slow opening: Airlines are taking a cautious approach to the opportunities presented in the US-EU open skies accord.(COMPETITION)

HISTORY WILL BE MADE ON MARCH 30 WHEN THE first commercial aviation agreement between the European Union and the US enters into force. The accord, which creates a single transatlantic Open Aviation Area in place of the existing regime of individual bilaterals between the 27 EU member states and the US, was no easy delivery. Negotiations were begun in June 2003 and required 11 rounds to achieve an agreement that was initialed in Brussels on March 2, 2007, and signed at the EU-US summit in Washington on April 30, 2007.



For Air France KLM Deputy CEO and Air France President and CO Pierre-Henri Gourgeon, the accord "confirms that we were right to take the risk of buying a Dutch company while not being Dutch," referring to the 2004 merger with KLM. "We bet that with time, the only question of ownership would be European." And, he points out, because this "European nationality" is being accepted for traffic between the EU and US, "one can imagine that this will extend and will become the rule everywhere. Everything will be more consistent."

Or, as Assn. of European Airlines Secretary General Ulrich Schulte-Strathaus puts it: "For the first time in history, aviation is beginning to look for means of reducing its specificities. The idea that aviation can only take place through exchange of rights based on reciprocity is fading. Now we are beginning to see that aviation is not so much a question of equal benefits, it is a question of equal opportunities."

The legal framework is in place, but what will be the effects? A 333-page study entitled "The Economic Impacts of an Open Aviation Area between the EU and the US," undertaken by London-based consultancy Booz Allen Hamilton on behalf of the European Commission, concluded last year that the accord should result in new routes and market entrants generating 3 million additional passengers this year and 26 million over the first five years, which would represent close to a 50% increase over today's numbers. It estimated that the economic benefits from liberalization to consumers will be worth [euro]6.4-[euro]12 billion ($9.4-$17.6 billion) over the same period and that additional demand will create some 72,000 new jobs across the EU and US.

Not everybody is this buoyant. Eurocontrol, for example, "only expect[s] a moderate acceleration of growth," according to a report by the organization's Air Traffic Statistics and Forecast division. The reason? It doubts that the factors that contribute to rapid air traffic growth such as fast-developing economies, economic liberalization and a history of constrained air traffic demand (think India) "really apply in the transatlantic case," which is served by more than 40 airlines.

Some carriers are equally down-to-earth. "We think there is a huge potential behind it," states Lufthansa VP-Sales & Services-Europe Karsten Benz. But he observes that LH always has considered the Europe-US market as one of the pillars supporting its global network and has invested in it for "many, many years." It will add its 18th destination in the US when it commences a daily Frankfurt-Seattle service March 30--possible under the existing German-US agreement. This will bring LH on par with British Airways in terms of number of US destinations served.

"We have already implemented several new ideas and projects, like the six-times-weekly Bankers Shuttle from Frankfurt to Newark aboard a PrivatAir BBJ with 48 business class seats," Benz says. …

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