Friday, May 16, 2008

Open Skies Round Two: Surprises & Challenges

With the second stage of “Open Skies” talks between the United States and European Union beginning in Slovenia, U.S. Deputy Assistant Secretary for Transportation Affairs John Byerly made the surprising announcement that both the U.S. and EU “forgo existing rights to bar air services on the basis of nationality clauses.”  This proposal would include at least sixty countries and could include all countries which currently have a bilateral air services agreement with the U.S., plus Kenya.  Byerly stated that now is the time to begin “dismantling the sticky spider's web of restriction in bilateral aviation agreements.”  He remained reticent, however, on the prospects of the U.S. easing its current foreign ownership and control rules for airlines.

The question which should be lurking in observers’ minds is whether this surprise announcement amounts to an honest pledge on the part of the U.S. to join in the EU’s expansive vision of air liberalization or simply a smokescreen meant to take attention off of the highly contentious ownership and control issue.  The EU has repeatedly made it clear that it is seeking a truly open aviation area between itself and the U.S..  For the purposes of the “Open Skies” talks at least, the existing nationality clauses with third party countries appear ancillary at best.  This is not to say that there aren’t concrete benefits to be reaped from “dismantling the spider’s web.”  A removal of the existing nationality clauses could open up new investment and operating opportunities for U.S. and EU firms in Asian and African carriers.  In the end, it still won’t bring the EU any closer to its stated policy goal.  Should a successful agreement fail to be reached, EU Member States could begin suspending rights under the first “Open Skies” Agreement as early as 2012.

The question which should be lurking in observers’ minds is whether this surprise announcement amounts to an honest pledge on the part of the U.S. to join in the EU’s expansive vision of air liberalization or simply a smokescreen meant to take attention off of the highly contentious ownership and control issue.  The EU has repeatedly made it clear that it is seeking a truly open aviation area between itself and the U.S..  For the purposes of the “Open Skies” talks at least, the existing nationality clauses with third party countries appear ancillary at best.  This is not to say that there aren’t concrete benefits to be reaped from “dismantling the spider’s web.”  A removal of the existing nationality clauses could open up new investment and operating opportunities for U.S. and EU firms in Asian and African carriers.  In the end, it still won’t bring the EU any closer to its stated policy goal.  Should a successful agreement fail to be reached, EU Member States could begin suspending rights under the first “Open Skies” Agreement as early as 2012.

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