As Open Skies Phases In, Heathrow First To Show Results

Corporate travel professionals expect the first phase of the Open Skies agreement between the United States and European Union, which goes into effect at the end of this month, to increase competition, put pressure on fares and expand services across the Atlantic, but it may be a while before such benefits are felt equally across markets. The most immediate impact for corporate travel managers likely will come at London Heathrow, as entrants to the airport launch service and airline alliances develop joint facilities.

Though 90 percent of nearly 300 travel buyer, agency and supplier respondents to a poll during a BTN Webcast on Open Skies last month were optimistic the aviation agreement will offer more competitive fares across the Atlantic, Calyon Securities airline analyst Ray Neidl said such benefits may not be "as great or as quick as some people think."

Open Skies "represents the beginning of the true globalization of the airline industry," Neidl said. "The key markets, including Heathrow, will come under pressure—and that's one market I think you'll see immediate pricing pressure."

There is "quite a bit of opportunity at Heathrow" for corporate travel buyers, said Thomson worldwide travel manager Cindy Heston. "What a travel manager will have to do is a dive into all of your contacts and see where Open Skies will apply, where it can bring you value and where it can't," she said.

Continental Airlines, Delta Air Lines, Northwest Airlines and US Airways are among the carriers that plan to commence service from various U.S. origins to Heathrow, beginning this month (BTNonline, Dec. 10, 2007). Meanwhile, American plans to switch all of its London Gatwick flights from the U.S. to Heathrow. As such, more than 100 new flights per week between the United States and Heathrow will take off starting March 30.

Airline alliance partners are working more closely there. Oneworld carriers this month will begin to consolidate from four to two Heathrow terminals. By early next year, members either will be at BA's new $8.6 billion Terminal 5 or in Terminal 3, the closest existing terminal to Terminal 5, Oneworld said.

SkyTeam last month unveiled plans to collocate its members in Terminal 4, to be renovated and expanded by spring 2009, saying Heathrow will become the first airport where "SkyTeam members will share kiosks, allowing alliance passengers to access travel reservations with any of the 10 carriers."

Star Alliance, meanwhile, already has collocated the bulk of its members at Terminal 1.