‘Open skies’ leads to more transatlantic flights
By Kevin Done in London and Andrew Bounds in Brussels
Published: March 30 2008 20:02 | Last updated: March 30 2008 20:02
The more liberal “open skies” regime agreed last year by the US and the European Union came into force at the weekend ushering in a new era of much tougher competition in transatlantic flights.
The most immediate impact will be felt at London Heathrow, the most important European gateway for flights to and from the US, which had previously been protected from full competition.
The number of flights between Heathrow and the US is set to rise by 22 per cent with just under 10,000 seats a day, an increase of 19 per cent, added to what is already the biggest transatlantic market.
Under the new “open skies” regime it will be possible for any EU and any US carrier to fly between any two points between the regions. Previously for European airlines flights to the US were limited to national carriers from each individual state.
At Heathrow direct flights to the US were limited to only four airlines, British Airways and Virgin Atlantic from the UK and American Airlines and United Airlines form the US.
Several airlines including BA, American, Delta and Continental have taken the opportunity offered by the “open skies” treaty to move some of their London services from Gatwick to Heathrow.
A total of 18 daily departures to the US are being added at Heathrow including a service by Air France to Los Angeles, services by Northwest Airlines to Seattle, Detroit and Minneapolis, a service by United Airlines to Denver and by US Airways to Philadelphia.
The UK Civil Aviation Authority has forecast fare reductions eventually of up to 10 per cent as a result of the “open skies” deal.
Willie Walsh, BA chief executive, has dismissed concerns about the impact of the increased competition, partly in the belief that the airline’s appeal in particular to business travellers and transfer passengers will be considerably enhanced once it is able to make a success of its move to the new Terminal 5 at Heathrow.
Last week’s T5 opening was a service disaster, however, with flight cancellations, misplaced baggage and thousands of stranded passengers due to problems with baggage handling and other systems.
BA is also planning to launch in the summer a new subsidiary called OpenSkies to operate flights between the US and leading continental European business centres, starting with the New York/Paris route.
The large number of new transatlantic services are being launched, as the US economy weakens and with financial markets in turmoil, however, and recent US data has already shown weaker passenger loads on US carriers’ transatlantic flights.
Jacques Barrot, the EU transport commissioner, said prices would fall as competition increased in London and other airports including Paris and Amsterdam.
With Europe, the US and the transatlantic routes between the two covering more than 60 per cent of global air traffic EU airlines hailed the start of the “open skies” era.
However, they backed Mr Barrot’s tough stance on completing full liberalisation by 2010.
Under the deal, talks begin on May 15 to sweep away big remaining restrictions in the US, most importantly covering the issues of ownership and control and the current ban on foreign airlines holding more than 25 per cent of US carriers.
EU airlines also want the right to fly within the US and to carry US officials.
Mr Barrot said he would not hesitate to revoke US rights if talks had not progressed by the end of 2010.
He said he would also push environmental concerns. Airlines flying to and from the EU will have to buy pollution permits, probably from 2012, though the US has denounced this as illegal.
Copyright The Financial Times Limited 2008
By Kevin Done in London and Andrew Bounds in Brussels
Published: March 30 2008 20:02 | Last updated: March 30 2008 20:02
The more liberal “open skies” regime agreed last year by the US and the European Union came into force at the weekend ushering in a new era of much tougher competition in transatlantic flights.
The most immediate impact will be felt at London Heathrow, the most important European gateway for flights to and from the US, which had previously been protected from full competition.
The number of flights between Heathrow and the US is set to rise by 22 per cent with just under 10,000 seats a day, an increase of 19 per cent, added to what is already the biggest transatlantic market.
Under the new “open skies” regime it will be possible for any EU and any US carrier to fly between any two points between the regions. Previously for European airlines flights to the US were limited to national carriers from each individual state.
At Heathrow direct flights to the US were limited to only four airlines, British Airways and Virgin Atlantic from the UK and American Airlines and United Airlines form the US.
Several airlines including BA, American, Delta and Continental have taken the opportunity offered by the “open skies” treaty to move some of their London services from Gatwick to Heathrow.
A total of 18 daily departures to the US are being added at Heathrow including a service by Air France to Los Angeles, services by Northwest Airlines to Seattle, Detroit and Minneapolis, a service by United Airlines to Denver and by US Airways to Philadelphia.
The UK Civil Aviation Authority has forecast fare reductions eventually of up to 10 per cent as a result of the “open skies” deal.
Willie Walsh, BA chief executive, has dismissed concerns about the impact of the increased competition, partly in the belief that the airline’s appeal in particular to business travellers and transfer passengers will be considerably enhanced once it is able to make a success of its move to the new Terminal 5 at Heathrow.
Last week’s T5 opening was a service disaster, however, with flight cancellations, misplaced baggage and thousands of stranded passengers due to problems with baggage handling and other systems.
BA is also planning to launch in the summer a new subsidiary called OpenSkies to operate flights between the US and leading continental European business centres, starting with the New York/Paris route.
The large number of new transatlantic services are being launched, as the US economy weakens and with financial markets in turmoil, however, and recent US data has already shown weaker passenger loads on US carriers’ transatlantic flights.
Jacques Barrot, the EU transport commissioner, said prices would fall as competition increased in London and other airports including Paris and Amsterdam.
With Europe, the US and the transatlantic routes between the two covering more than 60 per cent of global air traffic EU airlines hailed the start of the “open skies” era.
However, they backed Mr Barrot’s tough stance on completing full liberalisation by 2010.
Under the deal, talks begin on May 15 to sweep away big remaining restrictions in the US, most importantly covering the issues of ownership and control and the current ban on foreign airlines holding more than 25 per cent of US carriers.
EU airlines also want the right to fly within the US and to carry US officials.
Mr Barrot said he would not hesitate to revoke US rights if talks had not progressed by the end of 2010.
He said he would also push environmental concerns. Airlines flying to and from the EU will have to buy pollution permits, probably from 2012, though the US has denounced this as illegal.
Copyright The Financial Times Limited 2008