- The Washington Times - Wednesday, November 6, 2002

BRUSSELS (AP) The European Court of Justice ruled yesterday that eight EU states acted illegally when they signed bilateral air deals with the United States offering advantages to their national flag carriers.

The EU high court ruling gives the European Commission crucial legal backing in its battle to replace national governments in negotiating air traffic agreements with the United States and other nations.

In its judgment, the Luxembourg-based court said the bilateral "open skies" accords with Washington violated EU law because they infringed on the power of the EU head office to regulate and negotiate air transport accords with non-EU nations.

The court said the bilateral agreements also discriminated against airlines in EU countries that signed no such deals with the United States.

The ruling, which is binding and cannot be appealed, means the eight member nations Denmark, Sweden, Finland, Belgium, Luxembourg, Austria, Britain and Germany must renegotiate their bilateral airline accords with Washington to bring them into line with EU law. The court is still considering similar cases against Italy, France, the Netherlands and Portugal.

"The agreements are now null and void," EU Transport Commissioner Loyola de Palacio told a news conference.

She urged national governments to quickly give the EU Commission a mandate to negotiate a pan-EU "open sky" pact with the United States.

"It will be the commission who will have to negotiate on behalf of the 15 member states," she added, warning that failure of member nations to comply with the ruling would mean they could face hefty fines.

The decision could have far-reaching implications for trans-Atlantic air traffic by allowing European airlines greater freedom to fly to the United States from EU nations other than their own.

The commission says that will increase competition on lucrative trans-Atlantic routes, bring down air fares and make it easier for European carriers to merge.

Miss de Palacio said the commission would shortly introduce proposals setting out how it would hold talks between the EU and Washington in signing a "Trans-Atlantic Common Aviation Area," opening up airline competition between the sides.

In London, Richard Branson, chairman of British airline Virgin Atlantic, said the decision should lead to pan-EU deregulation of the airline industry and more competition, giving consumers cheaper fares and better service.

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