New salvo in ‘open skies’ battle

Date: 26/10/1995

By Tim Jones

THIS week's collapse of talks between the US and UK governments over mutual access to each other's aviation markets underlines the need to conduct air transport negotiations at EU level, according to European Commission officials.

“In the area of trade, member states recognise they should act together for efficiency and as the best way of obtaining results,” an official said. “When you move to transport and particularly air transport, it's always a different attitude, but it shouldn't be.”

The failure of the talks on a minimalist market-opening deal will give fresh ammunition to Transport Commissioner Neil Kinnock in his fight to block the growing number of bilateral 'open skies' deals between the US and EU member states and win a mandate to negotiate with Washington as a 15-nation bloc.

But the Association of European Airlines said this week that they remained to be convinced about the value of giving the Commission such a mandate. It said that such a move must ensure “significantly greater benefits” than national negotiations.

The UK/US talks were a follow-up to a 'mini-deal' signed in June, which gave slightly greater access to Heathrow's prized 'slots', the planned timings for landing and take-offs. Since September, United Airlines has joined American Airlines in offering a Chicago-Heathrow service.

In return, British Airways won extra flights for its Philadelphia-Heathrow route and the US relaxed its 'Fly America' rule for government workers.

They can now use some USAir routes linked by a marketing and ticketing arrangement with British Airways.

The talks which failed this week aimed to go a tiny step further. The UK offered to allow one US airline to make one extra daily return flight to Heathrow for two years and a further daily flight from 1997, while in return it sought the right to bid freely for contracts to fly US civil servants.

“Heathrow is the last jewel. We're not going to give it up for just nothing,” a UK official said.

This is what the 'open skies' issue is really about. While the US invited the wrath of the Commission when it signed the agreements almost simultaneously with Belgium, Denmark, Luxembourg, Austria, Sweden and Finland, its real aim lies elsewhere.

Prising open these markets is valuable, but the real prize is the French and German markets and Heathrow. The smaller agreements were reached quickly. Access to Heathrow's slots will be much more difficult to achieve and not only for US airlines. Virgin Atlantic has already filed a complaint after it was refused slots to fly from Heathrow to Washington, Chicago and Bombay.

Kinnock fears bargaining separately makes member states weak negotiators, while a progressive opening of the EU market to the US could leave the Union with a completely open market and nothing in return.

“We would witness the implementation of a policy that would not just put America first but America first, America last, America foremost,” he told the European Parliament in April.

The mandate he is seeking proposes reciprocal access for EU and US carriers, including the right to internal flights, measures to avoid unfair competition and a rise in the US threshold for foreign ownership of carriers to 49&percent; from the current 25&percent;.

Transport ministers put off a decision at their last meeting in June and the Commission services were asked to draft a detailed analysis of the need for a joint mandate. This will be ready in the third week of November.

In the meantime, the Commission has left open its threat to take the seven signatories of 'open skies' deals with the US to the European Court of Justice for infringing EU law.

“We have a stick, which is the infringement proceedings and the draft negotiating mandate, which is the carrot,” said a Commission official.

The 9 December meeting of transport ministers will be crucial. “If things are starting to move in the right direction, then we can slow down the proceedings. If not, we will speed them up,” the official said.