Tuesday, March 6, 2007

U.S. and EU Conclude New Draft Open Skies Agreement and Passenger Bill of Rights Legislation Introduced In U.S. House

U.S.-EU Agreement

Last Friday, the U.S. and the EU concluded a new draft open skies agreement.  The specific terms of what was substituted for the withdrawn U.S. NPRM on 'actual control' of U.S. air carriers are discussed in a recent EU press release.

An aviation conference that was held in London yesterday gave many of the parties involved in, or impacted by, the negotiation of the agreement the chance to give their opinion on the new agreement.  Not surprisingly, European Commission VP-Transport Jacques Barrot and U.S. Deputy Asst. Secretary for Transportation Affairs at the State Department John Byerly touted the benefits of the agreement for their respective constituents (Barrot speech and Byerly speech).  BA Chairman Martin Broughton said the draft agreement was based on a U.S. open skies model which was a ‘template designed to bolster U.S. interests’ that the agreement offered ‘minuscule concessions dressed up as significant breakthroughs’. Download martin_broughton_speech.doc

While the International Aviation Law Institute strongly supports the new draft agreement, there are many questions that have yet to be answered:

(1) Will the transport ministers from the 27 EU governments approve the agreement by unanimity when they meet on March 22 or will a qualified majority system need to be used?  If the agreement is approved by the Council it could potentially be signed at the April 30 U.S.-EU Summit.

(2) Is the UK government as sympathetic to the position of BA as Chairman Broughton seems to believe and will the economic impact on BA be as dire as the markets seem to think?

(3) Will the U.S. Congress weigh in on the deal?  Congress may not be able to veto the agreement per se as it is an executive agreement, but they could potentially enact legislation blocking one of the elements of the proposed deal.

(4) Are the new provisions stating that EU ownership of more than 50% of a U.S. carrier will not be presumed to violate the 'actual control' requirement (as long as foreign ownership of voting equity does not exceed 25%) and setting forth the terms by which U.S. and EU airlines may enter into franchising agreements meaningful enough changes to secure approval from the EU transport ministers?

(5) Will the EU transport ministers press for cabotage as they did in 2004?

(6) Is liberalized access to Heathrow meaningful for the U.S. if BAA is not able to free up more slots at the congested airport (currently operating at 98% capacity)?

We will be following these issues closely and will examine further developments in upcoming blog postings.

Passenger Bill of Rights

On March 1, as discussed in our previous blog posting, Rep. Mike Thompson (D-CA) introduced the "Airline Passenger Bill of Rights Act of 2007".  (full text of bill, outline of main provisions)   The Air Transport Association has come out against any legislative action on a passenger bill of rights arguing that inflexible government standards in this area may cause more harm than good (James May USA Today editorial).


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