The Transport Council of the European Commission today, as expected, issued a mandate for the EC to engage the United States in negotiations on a new transatlantic air agreement covering all 15 member states. The mandate is part of a package of decisions that also calls for liberalized airline investment regulations that could trigger long-awaited cross-border consolidation.
"Today we have reached a deal that will enable the European Union to assert itself at the international level and to work for the benefit of its consumers and its aviation industry," said Loyola de Palacio, EC vice president and transport commissioner. "We aim to launch negotiations with the United States within a month on an agreement that will bring together the two largest aviation markets in the world."
The mandate covers several issues including traffic rights, capacity and slots, fares, competition rules, safety and security, and, importantly, liberalized airline investment regulations.
The U.S. Congress currently is evaluating a proposal to up limits on foreign ownership of domestic carriers to 49, percent from 25 percent, and administration officials have stated their willingness to negotiate with a single E.U. entity. Several obstacles remain--notably the thorny issue of access to London Heathrow Airport--and any common transatlantic aviation area, first discussed publicly in the United States by de Palacio in 1999
(BTN, Jan. 10, 2000), could be years in the making.
E.U. transport ministers also agreed that existing ownership rules "must be dismantled within the European Union to permit the emergence of pan-European airlines" and to stimulate liberalized airline investment regulations around the world. The Council's decision to change restrictive nationality clauses, which were designed to protect national flag carriers in their home markets, is aimed at giving struggling carriers an opportunity to find cross-border synergies and "greater access to international capital."
Today's announcement follows a November ruling by the European Court of Justice that prevents any E.U. government from discriminating against carriers from other member countries in favor of its own national carrier
(BTN, Nov. 5, 2002). Such nationality clauses prevented any airline based inside the European Union from flying between a point outside its local market and the United States and helped thwart a proposed merger in 2000 between British Airways and KLM Royal Dutch Airlines
(BTN, Oct. 2, 2000).
The Association of European Airlines welcomed the Council's decision. "This is a landmark decision that paves the way for a truly liberalized European air transport industry and the creation of an open aviation area covering Europe and the United States," said AEA chairman and British Airways CEO Rod Eddington. "An aviation agreement between the United States and Europe is good for airlines because it will create a level playing field for fair and equal competition."
Aside from the mandate to open negotiations with the United States, the Council also authorized the European Commission to renegotiate other bilateral agreements between member states and foreign countries "in order to secure market access for all Community airlines on a non-discriminatory basis."