EU-US Open Research Articles

EU-US Open Skies Agreement: What Is Changed in the North Transatlantic Skies?

Abstract This article presents analysis of air service levels and competition dynamics in the transatlantic market before and after the EU-US Open Skies Agreement (OSA) signed in 2008. By comparing direct and connecting flights in a typical off-peak week, we investigate whether the EU-US OSA has led to more choices for transatlantic travelers. We examine the impact of the EU-US OSA on competition between carriers, alliances, and hub airports. The results show that the number of direct transatlantic connections and served airport pairs decreased and only indirect competition increased.

Economic development and the impact of the EU–US Transatlantic Open Skies Air Transport Agreement

This article examines the economic impacts on the United States east coast regions of the EU–US Open Skies Agreement that liberalized air service over the North Atlantic. It considers the link between air travel volumes before and after the Agreement and the economies of the main metropolitan areas. It finds, using a number of model specifications, that the economic impacts of air traffic increased after the enactment of the Agreement.

When Jumbo Jets Share the Sky: Civil Aviation in the European Union and the United States of America

The global scope of civil aviation has increased at an exponential rate since the signature of the Chicago Convention in 1944. However, when it comes to recognizing zones of regional integration, such as the European Common Aviation Area (ECAA), international aviation law lags in progress. This article examines the new challenges in civil aviation arising for the European Union and Europe's relations with third countries, as seen through the lens of the EU-US Open Skies Agreement (OSA).The unification of European airspace and specifically the creation of the Schengen Area are clashing with traditional definitions of international and domestic flights. This incoherence between international air law and the European Union's novel creation is leading to inequalities in Europe's external air transport agreements. Open Skies liberalized civil aviation between the world's two largest aviation markets, but inequalities still remain, notably regarding the granting of air rights to passenger carriers and investment opportunities for European nationals in American air carriers. This article oversimplifies the technicalities of aviation law, and is destined for those with little or no knowledge of the subject.

Prospects and Implications of a US-EU FTA

Ever since the 1990s, there has been a stream of unofficial studies and reviews discussing the possibility of a US-EU FTA. The average tariff rates for manufactured goods, however, in the US and EU are each a mere 2.0% and 2.4%, and both possess largely open economies. In this context it was generally accepted that a FTA between two parties would not bring about impact in terms of export growth. Accordingly, the US and EU have been concentrating on pursuing FTAs with emerging countries. In trade relationships with developed countries they have, meanwhile, focused on abolishing non-tariff barriers; they continued to discuss on liberalization in services and initiated several regulatory cooperations by industry, rather than on comprehensive FTAs. Key achievements in bilateral cooperation between the two sides are the US-EU MRA (1998), the EU-US Open Skies Agreement (2007) and the formation of consultative groups on different issues and industries under the auspices of the Transatlantic Economic Council. Industrial circles from both sides have from time to time brought up the necessity of a US-EU FTA, but the feasibility of an actual agreement has been considered low. However, the global financial crisis and the European debt crisis have led to the develop-ment of economic and political contexts that support the cause for a comprehensive FTA between the two economies. Such changes can be discussed in both internal and external contexts.

The relation between the European Commission and the EU member states in the transatlantic Open Skies negotiations: an analysis of their opportunities and constraints

This article examines the internal decision-making process in the European Union with regard to the 2007 EU-US Open Skies Agreement. By exploring the principal-agent relation between the European Commission and the member states, it analyses the constraints and opportunities the Commission faced in avoiding an involuntary defection. Based on interviews and document research, the process-tracing in the article reveals that the main constraints for the Commission were the high degree of political sensitivity in certain member states, the struggle over external aviation competences, and an ambitious mandate. However, during the process, the Commission was able to overcome these constraints by making use of the following opportunities: closely involving the member states in its negotiation task and increasing the cost of no agreement for the member states, not at least by making an appeal to European allies, such as the Court of Justice, the Presidency, and member states with Commission-like preferences.

The Impact of the EU–US Open Skies Agreement and the Resulting British Airway's Open Skies Initiative: Passenger Numbers in London, Amsterdam and Paris

The advent of the EU–US Open Skies Agreement has been widely anticipated. A number of consequences have been predicted, for example, impacts on fares, passenger volumes, choice and consumer welfare. Airline costs are also predicted to fall as a result of increased competitiveness and increased cooperation among airlines. For the short period since the implementation of the Agreement, it is relatively easy to assess the supply-side changes that have been made, but more difficult to make wider judgements. This paper indicates the data that will be required to make these judgements and notes some methodological difficulties. Early estimates of the impact on passenger numbers are given using time series analysis focusing on London airports, in particular London Heathrow and airports served by British Airway's Open Skies Airline from Paris Orly and Amsterdam Schipol. Impact de l'accord Ciel Ouvert entre l'UE et les États-Unis et de l'initiative Open Skies résultante de British Airways: nombre de passagers à Londres, Amsterdam et Paris Résumé L'avènement de l'accord Ciel ouvert entre l'UE et les États-Unis avait été très largement prévu, et on a prédit un certain nombre de conséquences, notamment l'impact sur le prix des billets, sur les volumes de passagers, sur le choix pour les consommateurs et sur leur bien-être, entre autres. On prévoit également que les coûts des compagnies d'aviation devraient baisser, en conséquence de l'augmentation non seulement de la compétitivité, mais aussi de la concurrence entre les compagnies. A l'issue de la courte période qui s'est écoulée depuis l'implémentation de l'Accord, il est relativement aisé d’évaluer les variations qui se sont produites du côté de l'offre, mais beaucoup plus difficile de formuler des opinions plus générales. La présente communication indique les données qui seront requises pour formuler ces jugements, et souligne certaines difficultés sur le plan de la méthodologie. Des premières évaluations de l'impact sur le nombre de voyageurs ont été avancées, sur la base d'analyses à série temporelle concentrées sur les aéroports de Londres, notamment l'aéroport Heathrow de Londres et les aéroports desservis par la compagnie Open Skies de British Airway entre Paris Orly et l'aéroport Schipol d'Amsterdam. El efecto del Acuerdo de Cielos abiertos entre la UE y EE.UU. y el resultado de la Iniciativa de Cielos abiertos de British Airways: número de pasajeros en Londres, Ámsterdam y París Resumen El advenimiento del Acuerdo de Cielos abiertos entre la EU y EE.UU. era algo ampliamente esperado. Se han pronosticado muchas consecuencias, por ejemplo, los efectos sobre las tarifas, los volúmenes de pasajeros, las opciones y el bienestar de los consumidores. También se ha pronosticado la caída de los costes de las aerolíneas debido a una mayor competitividad y el incremento de la cooperación entre las aerolíneas. En el corto periodo de implantación del Acuerdo, es relativamente fácil evaluar los cambios que se han dado en el lado de la oferta, sin embargo, es más difícil realizar estimaciones mayores. Este trabajo indica que se necesitan datos para realizar estas estimaciones y hace referencia a algunas dificultades metodológicas. Los primeros estimativos del efecto sobre los números de pasajeros se han obtenido mediante análisis de series de tiempo centrados en los aeropuertos de Londres, en particular, el de Heathrow, y en los aeropuertos atendidos por la Aerolínea de Cielos abiertos de British Airways de Orly, en París, y Schipol, en Ámsterdam.

Strategic Liberalization Policies in Bilateral and Multilateral Settings: The Case of China and Vietnam

While the trend towards air transport liberalization is global in scope, variance in its patterns of depth is shaping the regulatory geography of the industry. Particularly, the signing of the EU-US Open Skies Agreement and the potential for a Trans-Atlantic Open Aviation Area have increased the relative competitive advantage enjoyed in the global ‘north-west’ of Europe and the United States. The increase in competitiveness caused by regulatory relaxation is in turn causing, inter alia, patterns of regionalization in the ‘eastern’ and ‘southern’ states of varying degrees. The push towards intra-regional liberalization is further reinforced by the regionalization of production processes and tourism, increasing the relative demand for intra-regional transport networks. In many instances, the desire to protect the air service sector for national participants may thus inhibit development of the larger economy. This problem is exacerbated by the recognition of the principles of participation and efficiency in the Chicago Convention. The potential conflict between these objectives is nowhere more apparent than in the emerging markets of East Asia. This paper critically analyses the position of two emerging markets, China and Vietnam, and the legal regimes governing their air services sectors. It does so by first reviewing the current processes in the restructuring of air transport regulation. It then analyses the current liberalization process in both China and Vietnam, looking at both commonalities and critical distinctions between the two. Next, analysis turns towards the air services agreements between China, Vietnam, the US, and the Association of Southeast Asian Nations (ASEAN). These agreements evidence a process of power bargaining, a process which may be counterproductive to developing equitable air transport networks and efficient markets. Finally, this paper offers critical guidance on developing a process of phased liberalization with increasingly more competitive partners so as to support overall economic growth.

The assessment of the EU–US Open Skies Agreement: The counterfactual and other difficulties

The advent of the EU–US Open Skies Agreement has been widely anticipated. A number of consequences have been predicted, for example, impacts on fares, on passenger volumes, choice and on consumer welfare. Airline costs are also predicted to fall as a result of increased competitiveness and increased cooperation among airlines. In the short period since the implementation of the Agreement, it is relatively easy to assess the supply-side changes that have been made, but more difficult to make wider judgements. For example, can traffic growth be attributed to Open Skies and does airline and alliance market power result in less fare flexibility with consequently less influence on changes in passenger volumes? Have airline costs changed and what has been the source of the savings? This paper offers some insight into the data that will be required to make these and other wider judgements and discusses some methodological difficulties.

Aviation and the environment in the context of the EU–US Open Skies agreement

We examine the impacts of the EU–US Open Skies agreement on the environment on emissions from the aviation sector. We use the Hamburg Tourism Model of domestic and international tourist numbers and flows, to estimate these impacts. The Open Aviation Area will result in increased competition between carriers and falls in the cost of transatlantic flights. This will not only have implications for the size and structure of the industry but also for climate policy. The paper assesses what effects the expected increases in passenger numbers will have on CO 2 emissions and tests whether this increase in travel will result in a corresponding rise in emissions. Simulations show that passenger numbers arriving from the US to the EU will increase by between 1% and 14% depending on the magnitude of the price reductions because of substitution between destinations, the percentage increase in global emissions is much smaller (max. 1%) than the increase in cross-Atlantic traffic.

The impact of the EU–US Open Skies agreement on international travel and carbon dioxide emissions

We use a model of domestic and international tourist numbers and flows to estimate the impact of the EU–US Open Skies agreement that is to take effect in March 2008. The Open Aviation Area will result in increased competition between transatlantic carriers and consequently falls in the cost of flights, therefore we look at the change in visitor numbers from the US into the EU and corresponding CO 2 emissions. We find that passenger numbers arriving from the US into the EU will increase by approximately 1% and 14% depending on the magnitude of the price reductions. This increase in passenger numbers does not, however, result in a corresponding rise in emissions as arrivals into other countries from the US fall by a comparable amount. The number of tourist arrivals from the US to countries outside of the EU will fall and overall emissions would then increase by a maximum of 0.7%. If we assume that domestic holidays and foreign holidays are close substitutes, these effects are strengthened and US passengers switch from domestic trips to foreign destinations as airfares converge.