The European Commission appears set today to call for a single European air-travel accord with the US, challenging European governments to scrap national treaties that it says drive up fares and prevent airlines from merging.
Transport Commissioner Loyola de Palacio wants the power to negotiate an agreement governing the US$17 billion Atlantic air-travel market after Europe's top court ruled that parts of "open skies" accords between the US and eight countries break EU free-trade laws by favoring national carriers.
Airlines say the proposal may touch off a power struggle between the commission and the 15 EU governments, undermining the EU's bargaining position and delaying mergers that would make Europe's air carriers more competitive.
"We are very concerned that there might be a political stalemate," said Rene Fennes, public affairs manager at the Association of European Airlines, whose members include British Airways Plc, Deutsche Lufthansa AG and Air France SA.
"It's important for us that we can continue to expand and grow -- we're not healthy at the moment."
European airlines are cutting capacity, jobs and costs after the Sept. 11 attacks plunged the industry into its worst slump since World War II. Europe's full-service airlines lost US$3 billion last year and Swissair and Sabena SA went out of business.
Under the current setup, a European airline can only fly to the US if it is majority owned by nationals of its home country.
That rule helped wreck British Airways' attempt to buy KLM Royal Dutch Airlines NV in 2000.
New treaties may allow carriers such as Lufthansa to offer direct flights to the US from the home markets of European rivals, boosting the likelihood of consolidation in the trans-Atlantic air travel market.
"It is important that the commission acts quickly and decisively in order to protect the rights" of EU airlines, De Palacio said in the proposal obtained by Bloomberg News. "The continued fragmented approach by individual member states has prevented a restructuring of the European industry."
Palacio will propose blocking governments from further accords with the US and replacing them with EU-wide agreements "with no limits on the number of routes flown or carriers designated."
She will also recommend that the commission take over antitrust enforcement.
The commission's responsibility has "substantially widened" into areas including safety, the environment and passenger rights, De Palacio said.
"It would now be practically impossible for member states to enter into balanced air services agreements that contain adequate safeguards for companies and consumers."
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