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Brussels, 28 March 2008

The EU-US "Open Skies" Air Transport Agreement- Q&A

When will the Agreement enter into force?

The EU-US Air Transport Agreement, signed on 30 April 2007, will be applied from 30 March 2008 at 0:00 GMT, with the start of the 2008 summer season.

What are the new rights for EU airlines?

  • The recognition of all European airlines as "Community air carriers" by the US, allowing for the consolidation of the EU aviation sector and the compliance with the November 2002 Court cases in the so-called 'Open skies judgments'.
  • The possibility for any "Community air carrier" to fly between any point in the EU to any point in the US, without any restrictions on pricing or capacity. This freedom did not exist before 30 March.
  • The possibility to continue flights beyond the United States towards third countries ('5th Freedom').
  • The possibility to operate all-cargo flights between the United States and any third country, without a requirement that the service starts or ends in the EU ('7th Freedom').
  • So-called '7th Freedom rights' for passenger flights between the US and a number of non-EU European countries, i.e. direct flights between the US and Croatia or Norway.
  • A number of access rights to the US 'Fly America' programme for the transport of passengers and cargo financed by the US Federal Government.
  • More freedom to enter into commercial arrangements with other airlines (code-sharing, wet-leasing etc.).
  • Rights in the area of franchising and branding of air services to enhance legal certainty in the commercial relations in between airlines.
  • Possibility of antitrust immunity for the development of airline alliances.
  • Rights for EU investors in the area of ownership, investment and control of US airlines; Rights in the area of inward foreign investment in EU airlines by non-EU European investors; Rights in the area of ownership, investment and control by EU investors of airlines in Africa and non-EU European countries.

Which rules applied for EU-US air services until now?

Germany, France, the Netherlands and 13 other Member States[1] had already bilateral "open skies" agreements with the US. Those "open skies" agreements gave EU airlines the right to fly without restrictions on capacity or pricing to any point in the US, but only from their home country – French airlines from France, German airlines from Germany and so on. These "open skies" agreements included the so-called '5th freedom' and thereby gave US airlines the rights to operate flights within the Community.

In the United Kingdom, Ireland, Spain, Greece and Hungary, air services were restricted to a certain number of weekly frequencies or a certain number of airlines. For example, transatlantic flights from London-Heathrow were restricted to four airlines only. Now, this biggest transatlantic gateway will be open for all EU and US airlines.

Finally, in Bulgaria, Cyprus, Estonia, Latvia, Lithuania and Slovenia there was no legal basis at all for direct flights from and to the US.

Do airlines take advantage the new commercial opportunities?

Yes. Already from the first day of the application of the Agreement numerous new flights between the EU and the US will take off to new destinations. It is reported that the total number of flights between the EU and the US in April-June 2008 will be 8% higher than in 2007.

Transatlantic services will increase particularly in those Member States where there had been restrictions so far. In London-Heathrow alone, flights to the US are increased by 18 daily flights, an increase of more than 20%. The number of direct flights between Spain and the US will significantly increase.

Airlines make use of the opportunity to operate transatlantic flights from outside their home country. Air France operates now direct flights from London to Los Angeles. British Airways with its subsidiary Open Skies has announced operations from Paris to New York.

Many airlines make use of the extended code-sharing opportunities from 30 March. 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 2008.

What are the economic benefits of the Agreement?

The transatlantic market is by far the biggest international air transport market with about 50 million passengers in 2007. More than 400 daily flights are operated between the EU and the US in April 2008.

Among the benefits, this Agreement opens the possibility of an additional 25 million extra passengers on transatlantic flights over a period of 5 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 travellers and leisure passengers. As a consequence, the Agreement could generate economic benefits up to 12 billion over a period of 5 years, and around 80.000 jobs in the US and the EU.

How will the EU and the US cooperate in regulatory issues?

The Agreement introduces unprecedented mechanisms for regulatory convergence, notably in competition, state aid and security. The objective is to minimize incompatibilities between the rules and policy approaches on either side of the Atlantic.

The provisions on security are key towards a 'one-stop security' approach. The regulatory cooperation includes also provisions on EU-US technical cooperation in relation to climate change, on consumer protection and on the development of joint EU-US approaches in international organisations.

Are there concrete examples of this regulatory cooperation?

  • In the field of aviation security, a working arrangement has been reached on 11 March 2008 between the European Commission and the U.S. Transportation Security Administration on reciprocal airport assessments. This is an important step toward enhancing the compatibility of security measures.
  • In the field of air traffic management and environmental protection, the European Commission and the U.S. Federal Aviation Authority have created the Atlantic Interoperability Initiative to Reduce Emissions (AIRE) Partnership to improve the environmental footprint of air transport with environmentally friendly air traffic procedures from gate to gate.
  • In the field of competition policy, the European Commission and the U.S. Department of Transportation have started to work together to achieve compatible regulatory approaches.

How does the Commission monitor the implementation of the Agreement?

The Agreement establishes a new mechanism: The EU-US Joint Committee will monitor the implementation of the Agreement and ensure regulatory cooperation. In order to prepare the necessary steps for the application of the Agreement on 30 March 2008, preliminary meetings of the Joint Committee were already held in June and November 2007. The next Joint Committee will be held on 15-16 April 2008 in Washington, D.C.

What are the next steps in EU-US air transport relations?

The EU-US Air Transport Agreement will deliver substantial benefits for passengers, shippers and the air transport industry on both sides. The EU is determined to go further, to remove further barriers to trade, in particular in the area of foreign investment, where aviation remains restricted and closed in comparison with other sectors of the economy.

The EU-US Agreement commits both sides to continue negotiations aiming at further liberalisation of traffic rights and additional foreign investment opportunities. These second-stage negotiations will start on 15-16 May 2008 in Ljubljana, under the Slovenian EU Presidency.

The Agreement includes a mechanism to guarantee progress towards the second stage agreement in view of the ultimate EU objective of an Open Aviation Area between the European Union and the United States. If no substantial progress has been made by November 2010, the EU can decide to suspend certain rights granted to US airlines.

[1] Austria, Belgium, Czech Republic, Denmark, Finland, Italy, Luxembourg, Malta, Poland, Portugal, Romania, Slovakia, Sweden.

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