EU-US expand airline 'open skies' deal

24th June 2010, Comments 0 comments

Europe and the US signed on Thursday an expanded airline "open skies" agreement, but the key new goal of removing restrictions on cross ownership of carriers still faces major hurdles.

The deal aims to allow European and American airlines to take majority stakes in carriers from each side of the Atlantic, but it must be approved by legislatures before it can take effect.

"Today we are taking an important step forward in our mutually advantageous relations with the United States in the aviation sector," European Union Transport commissioner Siim Kallas said in a statement from Luxembourg, where the document was signed.

The deal, he said, "will help the European air transport sector to emerge from the difficult period it has recently experienced."

An "open skies" deal was first reached in 2007 after four years of negotiations. It took effect in 2008, eliminating air service restrictions between the United States and Europe and allowing airlines to fly for the first time between any EU city and any US city.

The new agreement, which was signed by US Transportation Secretary Ray LaHood, deals with the thornier issue of foreign ownership of airlines.

EU companies currently can hold no more than a 25-percent stake in US counterparts.

US operators on the other hand are already allowed to control 49 percent of European carriers, a difference which has long rankled with Virgin Atlantic and others.

But the accord calls for legislative changes both in European nations and the United States, and needs to be signed off by the US Congress, an uncertain and lengthy prospect.

"It is the best we can do for the moment," a European diplomat said on condition of anonymity.

Another diplomat said: "We would have liked to go further, but this allows us to avoid scrapping the 2008 agreement."

The new deal also harmonises environmental rules on aircraft emissions, fuel and noise and will for the first time allow European planes to fly in and out of the United States without landing or taking off in the EU.

A full EU-US Open Aviation Area has been estimated to be worth up to 12 billion euros (14.75 billion dollars) in economic benefits and up to 80,000 new jobs.

© 2010 AFP

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