U.S. and E.U. Near Air Travel Pact

By AOIFE WHITE

BRUSSELS, Belgium – EU and U.S. negotiators made “decisive progress” in talks to lift restrictions on what trans-Atlantic routes airlines can offer, the European Union said Friday, a move that could mean lower prices for air travelers.

The pact will allow European airlines to fly from anywhere in the EU to any point in the U.S. without strict rules that dictate ticket prices.

The EU said this would bring economic benefits of up to euro12 billion (US$15.8 billion) in five years and create as many as 80,000 jobs in Europe and the United States.

Air travel in Europe and the United States accounts for 60 percent of global air traffic, and an ambitious EU-U.S. open skies deal could allow more airlines to fly the lucrative trans-Atlantic routes, possibly offering cheaper tickets.

Within five years, the deal could put an extra 26 million people on trans-Atlantic flights, the EU said. Just under 50 million travelers now make that trip every year.

But the deal may also mean the EU would be allowed to restrict U.S. investments in European airlines – a tit-for-tat move that follows the U.S. administration’s failure to lift a 25-percent ceiling on foreign ownership of U.S. carriers. Dropping the restriction has been among the EU’s key demands.

The EU’s executive arm said EU investors’ rights to own stakes in U.S. airlines were negotiated – but did not give details.

EU airlines would have some access rights to the “Fly America” program that requires U.S. government agencies use American airlines to fly passengers or freight, according to the EU.

The pact also would create antitrust immunity to help airlines develop alliances.

American and European negotiators as part of the pact would work together on climate change rules, the European Commission said, though no details were released. U.S. officials have threatened to sue the EU over rules that apply to all airlines – including non-EU carriers – to trade carbon emissions permits in an effort to cut greenhouse gas releases.

EU Transport Commissioner Jacques Barrot said he would ask EU nations to back the deal when EU transport ministers meet March 22.

The U.S. Congress must also support it before the new rules would kick in beginning Oct. 28.

“We have an opportunity to unlock major benefits on both sides of the Atlantic,” Barrot said in a statement.

The pact picks up on a stalled agreement that will allow European airlines to fly from anywhere in the EU to any point in the U.S.

Right now, for example, a French airline can only fly to the U.S. from a French airport.

EU airlines will also be able to operate all-cargo flights starting outside the EU, stopping in the U.S. and going on to another country. At the moment any cargo flights making a U.S. stop must start their trip in Europe. The EU said this was “highly significant” because both regions account for 70 percent of the global fleet.

This was negotiated in November 2005 but a deal fell apart as the EU demanded the U.S. drop protectionist laws that restrict foreign ownership or control of U.S. airlines – requirements that go back to security concerns allowing a government to requisition aircraft in wartime.

U.S. Transportation Secretary Mary E. Peters said in December that her department bowed to job and security fears when it withdrew a proposal to lift the 25 percent limit on foreign ownership of U.S. carriers.

U.S. officials said they were willing to seek a less ambitious deal and would try to find other ways to open the U.S. aviation sector to foreigners.

The Association of European Airlines welcomed the deal but said it needed to read the small print.

“Some fairly fundamental issues needed to be resolved,” said AEA Secretary General Ulrich Schulte-Strathaus, citing the “inequality of opportunities” for European airlines to invest in U.S. airlines.

“If the benefits can be confirmed … today’s agreement will be seen as a historic step in redefining international relations in air transport,” Schulte-Strathaus said.