ReviewingU.S./EU AviationRelations
By Diane Peterson, ACI-NA Senior Vice President, International Affairs
Last November, the United States and the European Union reached a draft agreement to liberalize their aviation relationship. The U.S. Department of Transportation (DOT) Rulemaking on the Actual Control of U.S. Air Carriers was instituted earlier that month. ACI-NA and several U.S. airports participated in the U.S./EU negotiations and in the DOT rulemaking.
After a year in the works, both the draft agreement and rulemaking have encountered some interesting twists and remain in limbo.
ACI-NA has been an outspoken advocate for increased air service liberalization and has worked with ACI Europe on increased liberalization over the Atlantic. Given the tremendous opportunity that expanded liberalization between the U.S. and EU presents, the ACI-NA U.S. International Air Service Program, which promotes the interests of participating U.S. airports in international air service development, has emphasized U.S. aviation relations with the European Union in recent years.
Draft U.S./EU Agreement
If the draft agreement were finalized, it would extend U.S. Open Skies principles to all 25-member states of the EU starting March 25, 2007. In the case of Ireland, the rights would be phased-in starting on October 29, 2006, with respect to non-stop Dublin services and additional U.S. points for Irish carriers.
The agreement contains a number of features that are not included in other U.S. Open Skies-type agreements. The most innovative addition is the “EUcarrier concept” underwhich any EUcarrier could operate between any point in the EU and any point in the U.S. as opposed to being limited to operating from its member state.
The agreement includes an emphasis on increased cooperation in safety, security, competition, government subsidies and support, environment and consumer protection and establishes a Joint Committee to review implementation and resolve questions under the agreement aswell as develop further cooperation. The two sides also agreed to conduct a second stage of negotiations to continue opening the market.
DOT Rulemaking
The DOT rulemaking proposes to allow more foreign participation in the commercial aspects of U.S. airlines, so long as U.S. citizens remain in control of core organizational documents, safety, security and national defense commitments and provided that the investor's home country is an Open Skies partner and that U.S. investors have reciprocal rights to participate in that country's airlines. The U.S. maintains that the rulemaking is being pursued on its own merits, whereas the EU has stated that its evaluation of any DOT final order will be key to whether the Council of Transport Ministers approves the draft agreement.
ACI-NA filed comments on behalf of its U.S. airport members supporting DOT’s proposal because it would reduce government involvement in aviation; encourage foreign investment in U.S. carriers; and enhance domestic and international air service opportunities. ACI-NA indicated that many of its member airports also supported the DOT proposal because they hope a final DOT order will facilitate the conclusion of the EU/U.S. agreement, which they view as bringing transportation and trade benefits.
The rulemaking has encountered fierce opposition from many Members of Congress. The latest development in this saga is that DOT determined that the original timeline envisaged for concluding its rulemaking would not allow it to adequately address the concerns raised by Congress in time for the Transport Ministers meeting on October 12.
What Next?
Most recently, in mid-September the U.S. and EU reaffirmed their commitment to concluding the agreement by the end of this year. However, it is very unclear whether DOT will complete the rulemaking in time for the Transport Ministers to factor it into their consideration of the draft agreement during their meeting in December.
The longer the EU/U.S. agreement is not finalized the more likely other issues could arise to complicate the ability of the two sides to conclude the agreement. The European Commission (EC) has threatened to take the EU member states back to the European Court of Justice (ECJ) to enforce the court's decisions.
In November 2002, the ECJ found that the U.S. agreements with eight member states are inconsistent with EU law, particularly with respect to the airline nationality provisions. If the EC presses its case against the member states, it would cast doubts on the current U.S. agreements with the EU member states including the 15 Open Skies agreements and thus on the airline alliances which have been granted antitrust immunity by DOT premised on the existence of those agreements.