More on open skies
First time here? Check out the site's "greatest hits" or read a random post from the archives. Feel free to ask a question, and consider subscribing to the latest posts via RSS or e-mail. Thanks for visiting!
A reader e-mails:
Why is it necessary for the EU-US open skies agreement to be linked to changes in ownership rules??
Good question. The short answer is that the EU wants a level playing field. The United States’ restrictive ownership rules, they argue, are out of step with the norms of global capitalism. Air France and KLM crossed borders and became one company recently. Lufthansa reached across its southern border and bought Swiss. Why not transatlantic combinations?
Perhaps it’s noteworthy that United is one of the airlines protected by the existing bilateral arrangement, but supportive of the change in the ownership rules. (Wonk out by reading the February 8, 2006 Congressional testimony, both pro and con, here.) United stands to lose its oligopoly on London Heathrow landing rights, yet it actually favors the open skies treaty. Why?
The WSJ cites “greater integration of U.S. carriers and overseas partners.” Integration could mean timetable alignment between alliance members, or it could be an outright merger. Forbes Magazine speculated that a Lufthansa-United merger could be in the cards, among other possible transatlantic combinations (e.g., American-British, Continental-Virgin, Northwest-AirFrance-KLM).
At the other end, Continental, which could presumably bid for slots at Heathrow, opposes the deal. Perhaps because of fear of an LH/UA matchup? Who can say…
Perhaps this is a case where the “open skies” portion of the deal is really the sideshow, and that opinions on open skies are really a matter of jockeying for a merger? If so, then the consumer might NOT benefit as much as I earlier suggested.
tags: travel | air travel | mergers | open skies
RSS Feed / Subscribe
Subscribe to Posts by Email
March 4th, 2007 at 8:04 pm |
[…] The proposed open skies treaty between the United States and the European Union (earlier commentary here and here) suffered another setback last week, when the US Department of Transportation restated its proposed rules for foreign ownership of US-based airlines. At present, non-US individuals or entities can hold no more than 25% of the voting stock of America’s airlines; the EU wants the US to raise that number to 49% — the same limit that Europe mandates for its own airlines. […]
March 4th, 2007 at 8:59 pm |
[…] In the past, an open skies deal was stymied by parallel negotiations over airline ownership.: Another key aspect of the deal, described by a U.S. government official who spoke on condition of anonymity, would enable European companies to own as much as 49.9% — and in some circumstances, more than 50% — of U.S. airlines, up from the current 25% limit. Yet another provision could help Richard Branson’s Virgin Group Ltd. gain regulatory approval needed to launch a U.S. subsidiary, Virgin America Inc. […]
June 1st, 2007 at 8:07 am |
[…] the context of the recent debate over “open skies” treaties, George Monbiot makes the most forceful case against air travel. (Apparently, his […]