Toward Truly Open Skies

Abstract

the Europe-North America internation-al market is the largest air transport mar-ket in the world, accounting for 419,961billion revenue-passenger-kilometers in2000. It has also traditionally been one ofthe most profitable, and it connects theworld’s largest economic units — the European Union and theNorth American Free Trade Area. Because of its size and vital-ity, there have been numerous calls for the relaxation of regu-lation that limits U.S. and European carriers from expandingservice to each other’s nations.The belief that there should be free trade in services acrossthe Atlantic is not new. There has been a steady move towardthe global liberalization of air transportation markets since t helate 1970s, when the United States initiated the deregulation o fits domestic freight and passenger markets. However, the pat-tern of change has not been consistent across countries.In recent years, a major coalition of interests involving air-lines, user groups, and governments has advocated a freetransatlantic market in air services. But it will not be easy t o cre-ate a fully open transatlantic air transportation market. Thereare significant political obstacles that would need to be over-come, and they — in practice — would seem to dominate theagenda, at least in the short term.But even if the institutional difficulties could be circum-vented, EU airlines would have difficulty competing in an open