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New 'open skies' agreement takes off

Latest update : 2008-03-30

After four years of negotiations, a new transatlantic agreement has taken effect, allowing EU carriers to fly from anywhere in the bloc to any point in the United States, raising hopes for a new era of travel. (Report: T.Adamson-Coumbousis)

Passengers flying between Europe and the United States should get more choice and cheaper tickets if all goes as officials plan under a new EU-US aviation pact taking effect on Sunday.
   
After more than four years of often tense negotiations, hopes are high that the new "open skies" agreement will usher in a new era of transatlantic travel.
   
"This marks the start of a new era in transatlantic aviation," said EU Transport Commissioner Jacques Barrot. "This agreement will bring more competition and cheaper flights."
   
The EU estimates that the accord could provide a major boost to transatlantic air traffic with more than 26 million extra passengers expected over the next five years.
   
Meanwhile, the deal is estimated to deliver benefits worth 12 billion euros (19 billion dollars) for consumers and create 80,000 new jobs in the European Union and the United States combined.
   
The pact is supposed to meet those high ambitions by replacing with a single EU-US accord the patchwork of 21 bilateral aviation agreements that previously existed between Washington and individual European nations.
   
Previously, six EU countries without such bilateral accords could not even have direct flights to the United States.
   
The new agreement's main innovation is that it will allow any EU carrier to fly from anywhere in the bloc to any point in the United States, and then on to a third country, and vice versa. This was previously not possible.
   
However, EU airlines will still not be able to operate domestic US routes, and nor will American carriers be allowed to fly between cities in the same European country.
   
"The US-EU open skies agreement is a win for consumers because more carriers will be able to compete in more markets," Delta executive vice president Glen Hauenstein said.
   
"More competition will bring better service, lower fares, more destinations and more frequencies," he added.
   
The pact will also lift restrictions on which airlines can fly from which airport, having an important impact on lucrative transatlantic routes from London's busy Heathrow airport.
   
Under Britain's current bilateral aviation accord with the United States, only British Airways and Virgin Atlantic of Britain, and US carriers United Airlines and American Airlines can fly routes from Heathrow to the United States.
   
Airlines not previously in that exclusive club have seized on the opportunity to fly new routes out of Heathrow.
   
"Continental has waited a long time to gain access to Heathrow and this is a great day for us, as well as for all trans-Atlantic travellers," Continental Airlines chief executive Larry Kellner said announcing new Heathrow routes.
   
The route between Heathrow and the United States is a lucrative one, with a first-class BA return ticket costing as much as 7,000 pounds (9,000 euros, 14,000 dollars).
   
Heathrow, which lies west of the British capital and handles 68 million passengers a year, is the world's third largest airport in terms of total passengers.
   
While BA is losing its grip on Heathrow, it is also seeking to take advantage of the pact by launching a new subsidiary named OpenSkies to fly from continental Europe to the United States.
   
The new pact also lifts restrictions on EU carriers buying stakes of more than 50 percent in US airlines although their voting rights in a US company will remain capped at 25 percent.
   
US airlines will in turn be able to hold voting rights of up to 49 percent in a European carrier although that could come back down to 25 percent if there is no progress in negotiations on further liberalisation.
   
Those talks are due to get underway in mid-May, setting the stage for another round of long and tough bargaining.
 

Date created : 2008-03-30

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