Open skies agreement takes off

Airport checks also have been lifted for most EU countries and transatlantic flights in what is publicized as a new era for air travel.

By ARI SYRQUIN
Just months after the European Union's passport-free area opened up eastward to include another nine countries, border checks at airports were removed on Sunday. Airport checks also have been lifted for most EU countries and transatlantic flights in what is publicized as a new era for air travel. For Europeans traveling between the 24 countries concerned - whether by air, sea or land - border checks are now a thing of the past. And visitors to the EU need just one visa to travel to all these states. The EU's open skies deal with the United States has also entered into force. By lifting flight restrictions in a market that accounts for 60 percent of world air traffic, this deal is expected to generate more than €15 billion in benefits for consumers in its first five years, and 80,000 new jobs in the EU and the US combined. For the first time, European airlines can fly without restrictions from any point in the EU to any point in the US. The new EU-US Air Transport Agreement, signed last April 30, is intended to create more competition and cheaper flights for the biggest international air transport market. This agreement establishes closer cooperation between the EU and the US to tackle new challenges, such as security and the environment. This should facilitate the operations for airlines and airports and reduce hassle for passengers. This agreement could be an important first step toward the normalization of the international aviation industry. The EU's official objective is to create a transatlantic "Open Aviation Area" - a single air transport market between the EU and the US with free flows of investment and no restrictions on air services, including access to the domestic markets of both parties. To this end, the European Commission will engage in second-stage negotiations with the US this May. Transatlantic travel will no longer be the lucrative privilege of a few fortunate airlines. Instead, EU and US airlines will be free to fly to airports in each other's territory, and from there to other destinations. The deal is part of the EU's overall plan to create a common aviation area by 2010, including its neighbors in the Mediterranean and countries further east, as well as the US. These closer relations will do more than just open markets - they will allow the EU to ensure higher safety standards for international travel. Negotiations on a second open skies agreement will begin at the end of May, to consolidate the EU-US air transport market as it takes shape and introduce further liberalization. Do airlines take advantage the new commercial opportunities? According to EU reports, numerous new flights between the EU and the US will take off to new destinations. The number of flights between the EU and the US this April and June is expected to be 8% higher than in the same period last year. Transatlantic services reportedly will increase the most in EU member states where there had been restrictions up until now. At London's Heathrow Airport, 18 daily flights to the US are being added, an increase of more than 20%. The number of direct flights between Spain and the US will significantly increase. Airlines are supposed to make use of the opportunity to operate transatlantic flights from outside their home country. Air France now operates direct flights from London to Los Angeles. British Airways, with its subsidiary Open Skies, has announced operations from Paris to New York. Many airlines are expected to make use of the extended code-sharing opportunities. Following the agreement, SkyTeam partners Air France-KLM, Delta and Northwest have applied for antitrust immunity for a four-way joint venture. Oneworld partners Iberia, Finnair, Malev and American have also applied for antitrust immunity for a closer alliance. Furthermore, there has been new transatlantic investment in the airline industry. German airline Lufthansa acquired 19% of US carrier JetBlue in February. What are the economic benefits of the Agreement? The transatlantic market is by far the biggest international air transport market; there were about 50 million passengers in 2007. More than 400 daily flights are expected to operate between the EU and the US this April. Among the benefits, this agreement opens the possibility of an additional 25 million extra passengers on transatlantic flights over the next five years. By eliminating the restrictions of the bilateral agreements, it is expected that the price of flights between the EU and the US will fall for both business travelers and leisure passengers. As a result, the agreement could generate economic benefits of up to €12b. within five years. syrquin@013.net Ari Syrquin is the head of the International Department at Joseph Shem-Tov Law Firm.