Five-Month Delay Gives Heathrow Carriers Time To Shore Up Defenses

Thursday morning, transport ministers in the European Union unanimously approved an Open Skies treaty agreement with the United States, that throws open new competition for lucrative trans-Atlantic airline routes.

The agreement came after British Transport Secretary Douglas Alexander received approval on a five-month delay in implementing the deal, to give British carriers at London's Heathrow Airport -- Virgin Atlantic and British Airways -- time to revise their game plans in the face of potential competition from American carriers.

Ministers expect the plan to be fully implemented by March 2008, according to The Guardian. As written, the agreement is valid for two years; a second phase of the treaty will be voted on in 2010. That plan includes one of the more contentious sticking points in the Open Skies debate -- easing US regulations on foreign ownership of domestic airlines.

Should all parties not agree to that second phase, the skies would be "closed" once more.

"We all accept a mechanism that will suspend the benefits of the agreement for US companies if we don't have a second stage by 2010," said EU Transport Commissioner Jacques Barrot, who also noted "I am confident that the process will deliver greater freedom for investors in aviation and even closer integration and an even healthier industry in general."

British Airways -- whose planes now dominate the ramp at Heathrow -- remained opposed to the deal, with CEO Willie Walsh calling Open Skies "a poor agreement for Britain and Europe."

Walsh also took issue with provisions in the plan that prevent foreign-owned carriers from flying between US airports -- as no such limitations exist for US carriers flying between airports in the EU.

"So far the US has made no meaningful concessions. American carriers can now fly into Heathrow, Europe and beyond while their own backyard remains a no-go area for EU carriers and foreign ownership of their airlines remains unchanged," said Walsh. "We will hold the government to its word to fight for Britain's interests if America doesn't play ball."

The Air Transport Association, which represents most large US carriers, voiced its support for the deal.

"This Open Skies agreement paves the way for much-desired increased service between the United States and Europe. It has the potential to provide enormous benefits to our respective customers and economies," said ATA President James May.

US Secretary of Transportation Mary Peters also heralded the agreement, that gives American carriers much greater access to potentially lucrative European markets.

"The historic decision by the European Council of Ministers to endorse an Open Skies agreement between the US and the EU will bring new and valuable benefits to air travelers and communities on both sides of the Atlantic," Peters said.

FMI: www.dot.gov, www.eu.int, www.ba.com