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selecta · Member Joined: 24 Dec 2006 Posts: 813 Location: ORD

By CHRISTOPHER S. RUGABER
AP Business Writer
source

European companies would be allowed larger stakes in U.S. airlines under a tentative agreement reached Friday between the U.S. and European Union. It also would give carriers more freedom to choose trans-Atlantic routes and potentially lead to lower fares.

The agreement, announced by the Transportation Department, would allow European airlines to fly from anywhere in the EU to any point in the U.S., and vice versa. For example, it would end restrictions on the number of airlines allowed to fly between the U.S. and London's Heathrow Airport, one of the world's busiest. Only four carriers — United Airlines, American Airlines, British Airways and Virgin Atlantic — now serve that market.

Transportation Secretary Mary E. Peters said the agreement "will offer more choice and convenience to American consumers."

Another key aspect of the deal, described to The Associated Press by a U.S. government official who spoke on condition of anonymity, enables European companies to own up to 49.9 percent — and in some circumstances, more than 50 percent — of U.S. airlines, up from the current 25 percent limit. Yet another provision could help Richard Branson's Virgin Group Ltd. gain regulatory approval needed to launch a U.S. subsidiary, Virgin America Inc.

EU Transport Commissioner Jacques Barrot said he would ask EU nations to back the deal when EU transport ministers meet March 22. There is U.S.-EU summit in May at which the deal would then likely be considerd. The U.S. Congress must also back the deal before the new rules would kick in Oct. 28.

"We have an opportunity to unlock major benefits on both sides of the Atlantic," Barrot said in a statement. "In economic terms, this unprecedented agreement would represent a step change."

Air travel in Europe and the United States accounts for 60 percent of global air traffic, and an ambitious EU-U.S. open skies deal could allow more airlines to fly the lucrative trans-Atlantic routes, possibly offering cheaper tickets.

The EU forecasts that within five years the deal could put an extra 26 million people on trans-Atlantic flights. Just under 50 million travelers now make that trip every year.

"Any agreement...would provide enormous benefits to airline passengers," David Stempler, president of the Washington, D.C.-based Air Travelers Association said.

Airlines, meanwhile, were cautious in assessing the tentative deal.

Michael Whitaker, senior vice president at UAL Corp., the parent company of United Airlines, said, "We have long pressed for completing the work of deregulation and are encouraged by the progress and the opportunities that the tentative agreement would bring for United and our customers."

A spokesman for American Airlines said the company would not comment until it had seen the details.

A EU official — speaking under condition of anonymity before the deal had been approved — said the U.S. had also agreed to drop current rules that make it harder for EU airlines to buy stakes in carriers based in Africa or non-EU European countries.

Airline company shares received little boost from the news. Shares of UAL Corp., the parent of United Airlines, fell 91 cents to settle at $39.07 on the Nasdaq Stock Market, while shares of American Airlines' parent AMR Corp. fell 85 cents to $32.88 on the New York Stock Exchange.

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AP Business Writer Aoife White in Brussels contributed to this report.
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stealthpilot · Member Joined: 19 Dec 2006 Posts: 2325 Location: BLR, DXB

Wow, this is big news.
I hope it falls into place eventually.
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selecta · Member Joined: 24 Dec 2006 Posts: 813 Location: ORD

I hope so.... this is a good news for airlines and customers.

I read in the Wall Street Journal this might help speed up mergers within the EU.

ATTN: US carriers take note Laughing

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Nimish · Posted: Mon Mar 05, 2007 10:51 am Post subject:

I'm trying to understand this better and list out what this actually means. Others, please add to this very basic list:

End of Bermuda 2, now all American airlines can fly to LHR (subject to availability of slots)
Possibility for a European airline to fly from any city in Europe to the USA, so hence LH could theoretically launch a FRA-LHR-NYC flight.
Increased overseas ownership for airlines in America, hence making Virgin America a reality

What else?

G-BYGB · Posted: Fri Mar 23, 2007 11:46 am Post subject:

This open sky policy means a lot to DL,CO,NW coz now they can fly to LHR which they've been keen on for so long.This move will bring the fares down,therefore affordable for transit passengers.Yesterday on CNN there was this report that Aer Lingus has already confirmed its plans of expanding its operations in the US.They are likely to fly to new cities like SFO,Dallas and IAD.
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Nimish · Posted: Fri Mar 23, 2007 12:01 pm Post subject:

OK - it's now official - the EU has agreed to the deal (but with a delayed start date of March 2008).

In the end it was basically about opening up LHR, shutting down Bermuda-II, and allowing European airlines the ability to fly from any member EU country.

Hence don't be surprised if we now see VS doing a FRA-JFK or LH doing a LHR-SFO sector!

Congratulations to both sides for making this happen. This is definitely good news for *A FFPs with travel to LHR - they should soon have much more choice. The guess is that LH/SK will fund BD to launch many more American services from LHR.

G-BYGB · Posted: Tue Mar 27, 2007 3:20 pm Post subject:

Soon we'll be seein LH and KLM B744 land at LHR .It'll be good for viewers.
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selecta · Member Joined: 24 Dec 2006 Posts: 813 Location: ORD

The US is still holding out on some key points. European airlines cannot fly privately and foreign ownership is still capped at 25%.

Europe is hoping in the 2nd round the US might change their stance otherwise this whole deal could be jeopardized.
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