Let's Open All The Skies
This was an incredible week for global aviation. The U.S. struck an open-skies deal with Germany, complained that Japan was rallying protectionists to fight against free aviation competition in Asia, and reminded Britain that its recalcitrance in opening Heathrow Airport to American carriers threatened its position as the busiest hub in Europe.
The deal with Germany, which ends virtually all restrictions on travel between the two countries, is the 10th such open-skies agreement signed between Washington and European governments. In Asia, the U.S. has signed open-skies deals with the Philippines, Thailand, Hong Kong, India, and China.
The German pact will boost the long-term prospects for struggling Lufthansa, which has a joint operating agreement with United Airlines Inc. The deal is contingent on United and Lufthansa getting an exemption from antitrust restrictions from the U.S. Justice Dept. so that the two may coordinate schedules and reduce expenses. Both airlines expect to generate savings of up to $40 million while pumping up revenues to the tune of several hundred million dollars annually. Tourists and business travelers will benefit from lower fares and better flight connections.
With Germany now committed, the European Union is expected to step up and attempt a grand open-skies negotiation with the U.S. For those hungering for a transatlantic trade agreement between the U.S. and Europe, this would be an important step in that direction.