EU and U.S. reach for 'open skies'

Adjust font size:

LONDON, England (CNN) -- Despite the usual wrangles and disagreements between transportation negotiators from the EU and USA, a deal has been struck between the two sides that could ultimately provide more choice and cheaper tickets for passengers flying between the EU and the U.S.

Transport Department representatives from the U.S. government and the EU Transport Commission have agreed an "open skies" pact that would allow any airline -- European or American -- to fly any route between any city in Europe and any city in America.

EU nations and U.S. Congress still have to ratify the pact for it to come into force. Transport ministers from EU countries will meet on March 22 to try and reach an agreement.

The EU executive said on Friday the deal would reduce the cost of tickets, claiming economic benefits of up to euro$15.8 billion (12 billion euros) over a period of five years, and that it would create up to 80,000 jobs spread equally between Europe and the United States.

Within five years, the deal could put an extra 26 million people on trans-Atlantic flights, the EU said. Just under 50 million travelers now make that trip every year.

It also opens up new horizons for European airlines that are currently prevented from combining with airlines based in other EU nations or from taking over airlines in other parts of Europe or in Africa.

However, it could be bad news for airlines such as British Airways who have established dominance on the lucrative trans-Atlantic routes, as competition will increase.

British Airways shares fell 6.7 percent on the London Stock Exchange, with analysts attributing the drop to concerns about the agreement that would expose BA to more competition at its Heathrow hub, Europe's busiest.

Passenger rights

EU Transport Commissioner Jacques Barrot said he would also report in a few weeks' time on the state of play of new rules that aimed to compensate passengers when their flight is overbooked, delayed or canceled.

"There is still a certain amount of confusion and frustration," he said, signaling that airlines and airports may not have done enough.

"Most people accept that flights are disrupted by bad weather, terrorist alerts or serious safety problems. But these excuses must not be abused," he warned. "I think we need a further effort to explain these rules more clearly and to apply them more consistently ... There must be an improvement."

Accusations of protectionism

Barrot had been disappointed that further agreement had not been reached that would allow European airlines to take control of U.S. carriers.

"I still believe progress in this area is possible -- and I will work to make trans-Atlantic investment in aviation a reality -- but realistically, this could take a considerable amount of time," he said in a speech at an aviation conference in Chatham House, London.

"We wanted to be very ambitious on cross-border investment. We wanted to agree on changes in the law to completely liberalize ownership of airlines between the European Union and the United States," he said.

"It is clear, however, that there remains considerable political doubts about this step in the United States."

U.S. Transportation Secretary Mary E. Peters said in December that her department bowed to job and security fears when it withdrew a proposal to lift the 25 percent limit on foreign control of U.S. carriers -- a key EU demand that stalled talks on a deal for over a year.

Barrot was in a determined mood when delivering his speech, making thinly veiled threats of legal action against the U.S. over the issue.

"I have asked my staff to make a tentative hotel reservation at the Hyatt in Washington DC for the day of the next summit between the European Union and the United States [on April 13,2007]," he said in his speech at Chatham House.

"But just in case, I have also asked them to check whether rooms are available for the same day at the Sofitel in Luxembourg, just across the road from a certain Court of Justice. I hope I will be in Washington and I promise -- if I go -- I will fly through Heathrow. "

Copyright 2007 CNN. All rights reserved.This material may not be published, broadcast, rewritten, or redistributed. Associated Press contributed to this report.

Get up-to-the minute news from CNN CNN.com gives you the latest stories and video from the around the world, with in-depth coverage of U.S. news, politics, entertainment, health, crime, tech and more.

---

• 'Last Lecture' professor dies
• Obama: I am world citizen
• Pitt-Jolie guards battle paparazzi
• Hole found after emergency landing
• Obama wins hearts, not minds, in Berlin

• Irish PM to quit over payments scandal
• NATO chief: Afghan troop increase likely
• Militants hunted as calm retuns to Basra
• Pressure on Bush to skip Olympics
• BA sending misplaced T5 baggage to Milan

• Recruiting suicide bombers (2:50)
• London was lucky (2:36)
• Cars in London rigged as bombs (3:48)
• Second explosives-packed car foun (2:32)
• Soviet culture returns (3:47)