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Europe Gets Ready To Fly

The European Commission won the right on June 5 to start talks with the United States on airport landing rights, in a move destined to lead to a wholesale shake-up of transatlantic aviation.

The decision, taken by EU ministers in Luxembourg, ends a lengthy political and legal battle between national capitals and Brussels, and paves the way for a new round of mergers in the airline business.

At present 11 EU countries have bilateral deals with the US which restrict the airlines that can use European airports to fly across the Atlantic to national carriers. However, such deals were declared illegal by the European Court of Justice last November in a long-running case against eight countries including the UK.

The European Commission will now try to negotiate a deal with the US under which EU carriers can offer transatlantic services from any European country.

The Government won one concession under which the current bilateral deal with the US will stand until a new EU arrangement is clinched. But the climate was also changed by the massive financial support given by the US to its carriers after 11 September 2001. The Commission has convinced EU member states that it would have more clout to combat the granting of subsidies if it negotiates on behalf of all 15 countries.

The EU’s transport commissioner, Loyola de Palacio, said she hoped to start negotiations with the US “within a month.”

Last month’s move was welcomed by some large carriers which argue they are at a disadvantage to their American competitors. They say that, while US airlines can fly into EU countries from anywhere in the States, European airlines can only fly into the US from their home countries. The restriction helped derail a British Airways bid for KLM in 2000 because the Dutch carrier risked losing its rights to fly across the Atlantic from Amsterdam. The Association of European Airlines on June 5 welcomed the decision by the Transport Council to grant the European Commission a mandate to negotiate a new air services treaty with the United States on behalf of the European Union, replacing the existing bilateral agreements between the Member States and the United States. Rod Eddington, chairman of the AEA and chief executive of British Airways said: “This is a landmark decision that paves the way for a truly liberalised European air transport industry and the creation of an open aviation area covering Europe and the United States.

“An aviation agreement between the USA and Europe is good for airlines, because it will create a level playing field for fair and equal competition and help to deal with differing policies on competition, security, state aids and insurance.

“It will be good for consumers because it will foster competition and innovative new air services and it is good for Europe because the EU will be able to negotiate on equal terms with the United States. It could also pave the way for a framework agreement leading to cross border mergers, acquisitions and joint ventures.”

He also praised the Council and Commission for agreeing a way forward for amending bilateral agreements between EU Member States and third countries, other than the United States, to bring them into conformity with EU treaties. “It is crucial that we now move ahead together. The industry is eager to be involved in the next steps,” Mr Eddington added.

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