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Published:January 17th, 2007 14:02 EST
Open Skies Deal U.S., EU To Look at Options

Open Skies Deal U.S., EU To Look at Options

By SOP newswire

Washington – U.S. and European Union (EU) negotiators are exploring ways of moving forward on a stalled civil aviation liberalization agreement between the world’s two largest aviation markets. 

A U.S. delegation visited Brussels, Belgium, January 10 -11 to discuss possible solutions to the stalemate. The two sides reaffirmed their commitment to conclude an open skies agreement and pledged to identify by early February areas where “improvements might be made," according to a January 11 joint statement.

Bilateral open skies agreements give airlines in both countries the right to operate air services from any point in one country to any point in the other, as well as to connect those flights to points in third countries.

In 2005, when U.S. and EU negotiators agreed on the text of the long-sought aviation pact, the EU made its final approval conditional on a proposed regulatory change that would scale back U.S. restrictions on foreign investors’ control over U.S. airlines’ operations.

Despite several extensions of the U.S. rulemaking process by the Bush administration, the proposed regulatory change never was made final because some members of Congress threatened to block its implementation, arguing that increasing foreign influence over U.S. airlines could pose a risk to national security.

“It’s necessary now …  on both sides of the Atlantic to accept the reality that a major change in U.S. rules governing control of U.S. airlines is simply not in the cards, certainly not in the near future," said John Byerly, U.S. deputy assistant secretary of state and the lead U.S. negotiator on the issue.

However, he told reporters before the Brussels meeting that he hopes the two sides can finalize the deal during Germany’s presidency of the EU that ends June 30.

Byerly said that the United States is prepared to sign the agreement in its present form because Washington believes it to be good and balanced. But he said the administration recognizes that the European Union does not share this view.

According to a U.S. source close to the negotiations, during the discussions, the two sides agreed to find “another way forward" by looking at additional enhancements that could make the agreement acceptable to the Europeans.   Both sides want to use the 2005 text as a starting point to any discussions on supplements or revisions, the source told USINFO.

USINFO has learned that the EU expressed interest in exploring opportunities for improvements in certain areas.

Although the Europeans have yet to submit specific proposals, the source said the administration is “open-minded about looking at ideas that they have to supplement the agreement and improve it because of the importance of forging a new path in the trans-Atlantic market that will spur liberalization elsewhere in the world."

One option mentioned in Brussels involves foreign ownership of nonvoting stock in U.S. airlines, according to the source. Current law limits foreign ownership of a U.S. carrier to 25 percent of its voting stock but does not place similar restriction on nonvoting stock. Under a precedent established by the U.S. Transportation Department, as much as 49 percent of the total equity may be owned by nationals of a country having an open skies agreement with the United States.  Other aspects of ownership of interest to Europe, including foreign ownership of EU airlines and EU investments in airlines of third countries, also might be explored.

“So perhaps ownership is an area where the U.S. administration can do something to allay European concerns," the source said.

One minor success of the talks in Brussels, the source said, is a consensus that Bulgaria and Romania, which formally joined the EU in January, will be part of any U.S.-EU open skies agreement.

If no agreement can be reached, the European Commission has made clear that it would ask the European Court of Justice to require EU members to terminate their bilateral agreements with the United States, an action that could destabilize the trans-Atlantic air services market.

The open skies deal with the EU would represent a major improvement over the existing bilateral pacts, U.S. officials say. In the agreed text, the United States accepted the concept of a European carrier that would allow U.S.-bound flights by any EU carrier from any point in the EU, not just from the carrier’s home country. The agreement also calls for cooperation between U.S. and EU competition authorities, enhancement of environmental and consumer protection, regulatory cooperation and the creation of a joint committee to resolve differences.  With these additions, U.S. officials say, the pact could serve as a model for agreements with other regions.

Some U.S. airlines oppose the U.S.-EU agreement because it does not address the issue of landing slots at London’s Heathrow Airport, where only two U.S. and two British carriers now are allowed to fly. That issue was left for the future talks on further liberalization, the source said.

The full text of the joint statement and a transcript of Byerly’s briefing are available on the Web site of the U.S. Mission to the EU.

(USINFO is produced by the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

By Andrzej Zwaniecki
USINFO Staff Writer

Source:DoS