► Air traffic deregulation, a phase of great significance
Following four years of negotiations, an “open skies” agreement was signed by the EU and US in April 2007.
Under the open skies plan, any European or American airline will be allowed to fly from any city within the EU to any city in the US. Air France will, for example, be able to serve New York out of Frankfurt or London. Similarly, SkyTeam member airlines will be allowed to operate flights on a code-sharing basis with Air France between the EU and US.
Until now, traffic between Europe and the US was mainly regulated by bilateral agreements, certain provisions of which will be replaced by the “open skies” agreement due to come into effect on 31 March 2008.
Easing restrictions on travel between Europe and the US is not evenly balanced on both sides of the Atlantic:
- while American airlines will be able to serve European airports out of the US and pick up new passengers en route (intra-EU cabotage, see “freedoms of the air”), EU carriers will not be allowed the same rights on domestic routes within the US;
- under US legislation, which limits any foreign company from owning more than 25% of a US airline’s ownership rights, EU carriers will not be allowed to acquire capital in their US counterparts.
► Antitrust immunity, a remedy to preserve competition
Airlines benefiting from antitrust immunity (ATI) are able to coordinate their sales forces, fare policies and flight offer out of the US, including cargo operations, and propose a common frequent flyer programme.
The US Federal Department of Transportation (DOT) grants ATI after approval by the Department of Justice (DOJ). Antitrust immunity will only be granted if the US competition authorities consider that the grouping of carriers concerned does not violate competition laws.
Air France, Alitalia, CSA and Delta’s ATI application was approved in January 2002.
In June 2007, Air France, KLM, Delta, Northwest, Alitalia and CSA Czech Airlines filed for expanded antitrust immunity. If granted, it would allow Air France, KLM and their respective partners, Delta and Northwest, to set up a joint-venture agreement to integrate their trans-Atlantic operations.
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What is an “open skies” agreement?
The “open skies” agreements set down the conditions for deregulating international air transport for passengers and cargo. Certain principles govern these agreements. For example:
- free access to capacity and routes
- prices are determined by the market, except in a few minor cases
- all airlines based in the countries party to the agreement operate in equal and fair conditions
In Europe, the European Commission, acting on behalf of the European Council, has negotiated the “open skies” agreement with the US authorities.
