Sun, Nov 20, 2005 - Page 11 News List

US, EU agree to forge ahead with 'open skies' deal

'CABOTAGE RIGHTS'The deal will allow European carriers to fly to the US from any European city and then from there to a third airport, and applies in reverse to US airlines


US and EU negotiators agreed on Friday to allow unrestricted competition on transatlantic airline routes, opening the prospect of cheaper tickets and more choice for passengers.

The breakthrough came after a week of talks at the US State Department in Washington, the latest round in a two-year drive to forge an "open skies" aviation deal between the US and the EU.

But the EU made clear that the US government will have to give more ground before a comprehensive agreement can finally be signed, perhaps next year.

"Every US airline legally authorized will be able to fly from the US to an airport in the EU, and from the EU to other airports," said John Byerly, deputy secretary for transport at the State Department.

The same will apply in reverse for European airlines flying to the US and then heading to third destinations, he told reporters.

The agreement now goes for approval by the US government and the 25 member states of the EU, whose transport ministers next meet on Dec. 5.

"Basically we want to open the gates for vigorous competition to the greatest benefit of consumers, shippers and our economy," said Byerly, who led the US negotiating team.

"This successful round follows two years of negotiations and is a historic opportunity to maximize the benefits for consumers and airlines," he said.

The EU was more circumspect, stressing that a complete agreement will depend on the US agreeing to lift ownership caps that limit foreign investment in US airlines.

The US limits foreign voting rights in its airlines to 25 percent of the capital. The EU has a higher ceiling of 49 percent.

"This is a first step. We look forward to continue [negotiations] ... in order to open up the access to markets," said Daniel Calleja, head of the transport department at the EU executive commission.

The US Department of Transportation earlier this month proposed new rules giving foreign investors more say in some aspects of US airline operations and making it easier for carriers to obtain overseas financing.

But it made no proposal to change the 25 percent ceiling on voting rights.

Both sides said the full agreement could enter into force by next October, when airlines will start their winter schedules.

The issue of so-called cabotage rights for airlines wanting to fly to wherever they choose had been one of the biggest stumbling blocks in the US-EU negotiations, which were launched in October 2003.

The aim is to do away with the existing patchwork of bilateral agreements between various EU members and the US and set up one system regulating transatlantic air transport.

Whereas now British Airways, for example, can fly from London to New York, it cannot then proceed to service domestic US routes such as Chicago or Atlanta.

US airlines can fly from Washington to Paris, for instance, and then on to Rome. But they cannot then head beyond Europe to points east in Asia.

In principle, the agreement announced after this week's talks will scrap those restrictions.

Airlines will be free to ply routes between any EU city and any US one, as well as to go further afield.

They will be able to use whichever planes they choose in any quantity, while setting whatever fares and forging whatever alliances with other airlines that they wish.

But in practice, airlines will still have to negotiate landing rights at congested airports.

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