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EU Wants to Establish One European Market for Air Traffic Deals


The European Commission, the executive arm of the 15 nation European Union, has received legal backing in its four year battle with EU member states to negotiate trans-Atlantic air traffic agreements with the United States. The commission won a tentative victory when the advocate-general of the European Court of Justice asked the court to declare bilateral air traffic agreements between eight EU countries and the United States illegal.

The court will probably not rule on the advocate-general's recommendation until May. But it usually follows his advice and is expected to do so in this case, in which he argues that so-called open-skies agreements negotiated bilaterally between EU member states and the United States are contrary to community law.

The European Commission wants to replace national governments in negotiating air-traffic agreements with the United States. It maintains that the European Union is one big market and not a collection of separate markets. The commission has said aviation accords should come under its purview just as trade agreements do.

The commission has long favored consolidation of the European airline sector and wants European airlines to merge and become more internationally competitive. But the present complicated web of bilateral treaties that govern international air-traffic rights makes that all but impossible.

When two countries sign a treaty allocating landing rights only to each other's airlines, the carriers need to keep their nationalities to operate international services. If British Airways were to merge with the Netherlands' KLM, for instance, it would not be able to acquire KLM's landing rights in America because they can only be used by a Dutch carrier, under the present arrangement.

Under the bilateral treaties European airlines can only fly into the United States from their home countries. The Commission says because Air France is the only European airline allowed to fly from Paris to New York, the agreements violate the EU rule that companies from any member state can operate in any other member state under the same conditions as a national firm.

Analyist Daniel Solon of the aviation consulting firm Avmark International says the advocate-general's recommendation, if approved by the court, would be good for the airline industry and for consumers.

"What the European Commission is trying to get in this power situation would bring a better effective balance, would be an inducement to the United States to come to the table and say, 'Well, let us see what we can do about a trans-Atlantic common-aviation area. We will trade this for this, greater flexibility.' And that could eventually move toward some sort of standardization of the legal position and maybe, ultimately, lead to lower fares," he said.

Mr. Solon has said it will take years before the European Commission obtains control of air-traffic negotiations. But, he says, once that happens, European airlines will be free to merge and become as competitive on trans-Atlantic routes as their U.S. rivals.

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