The European Court of Justice today deemed illegal bilateral aviation Open Skies pacts between the United States and eight European countries, favoring a pan-European approach negotiated by the European Commission on behalf of all 15 European Union states.
"The Court declares that Denmark, Sweden, Finland, Belgium, Luxembourg, Austria and Germany have infringed the Community's external competence as regards the Community rules on the establishment of airfares and rates on intra-community routes and on computerized reservations systems," the Court said in today's ruling. Though a separate situation, the United Kingdom, according to the Luxembourg-based Court, also may not negotiate unilaterally with the United States.
The decision widely was expected after Antonio Tizzano, advocate general of the European Court of Justice, in February said that aviation treaties between the United States and individual E.U. countries were "incompatible with the unity of the common market and the uniform application of European Community law"
(BTN, Feb. 11).
Today's decision may have far-reaching ramifications, not the least of which is accelerated consolidation among European carriers. "The E.C. sees consolidation as an absolute requirement because the industry is too fragmented with all the flag carriers," said KLM president and CEO Leo van Wijk in an interview with Business Travel News late last month. Van Wijk also is chairman of the Association of European Airlines. "At the same time, competition policies are opposed to that and want to increase competition. Europe seems to be at odds as to what the end game is going to be."
Indeed, the situation is uncertain, as the Court did not provide Brussels with guidance on negotiating with the United States, nor did it state how existing bilateral deals should be treated in the interim. However, an E.C.-negotiated aviation pact with the United States would allow European carriers to fly transatlantic routes from airports outside of their home country.
According to an E.C. statement today, "The Court's finding that the nationality clauses in the agreements, which restrict international traffic rights to the national flag carriers of the countries concerned, are contrary to the treaty. The Court confirms that the clauses concerned discriminate between Community companies on the basis of the nationality of their owners." It instead has lobbied for the creation of a Transatlantic Common Aviation Area, an idea presented by E.U. Transport Commissioner Loyola de Palacio to U.S. officials at a U.S. Department of Transportation conference nearly three years ago
(BTN, Jan. 10, 2000).
"Today's judgment is a major step toward developing a new coherent and dynamic European policy for international aviation," de Palacio said in a statement this morning.
Virgin Atlantic chairman Richard Branson hailed the Court's judgment as a "historic decision that will forever change the landscape of the U.S. and Europe's aviation industry." Branson said the decision "sounds the death knell for any U.K./U.S. mini deal" and that "a new E.U./U.S. agreement would bring many benefits to consumers, including U.S. carriers gaining the right to fly within Europe and British carriers the right to fly within the U.S."