- The Washington Times - Friday, March 2, 2007

The U.S. and European Union have reached a tentative agreement that would give airlines greater freedom to choose trans-Atlantic routes and potentially lead to lower fares, the Bush administration said yesterday.

Transportation Secretary Mary E. Peters said the agreement “will offer more choice and convenience to American consumers.”

While details of the pact were not released, it is intended to allow European airlines to fly from anywhere in the European Union to any point in the U.S., and vice versa, while shedding rules that restrict how much carriers are allowed to charge passengers.

EU Transport Commissioner Jacques Barrot said he would ask EU nations to back the deal when the bloc’s transport ministers meet March 22. Congress also must back the deal before the new rules would kick in Oct. 28.

“We have an opportunity to unlock major benefits on both sides of the Atlantic,” Mr. Barrot said. “In economic terms, this unprecedented agreement would represent a step change.”

Air travel in Europe and the United States accounts for 60 percent of global air traffic, and an ambitious EU-U.S. open skies deal could allow more airlines to fly the lucrative trans-Atlantic routes, possibly offering cheaper tickets.

The European Union forecasts that within five years the deal could put an extra 26 million people on trans-Atlantic flights. Just under 50 million travelers now make that trip every year.

“Any agreement … would provide enormous benefits to airline passengers,” said David Stempler, president of the Air Travelers Association.

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

But the deal also creates the possibility for the European Union to restrict U.S. investments in European airlines — a tit-for-tat move that follows the U.S. administration’s failure to lift a 25 percent limit on foreign ownership of U.S. carriers’ voting shares — effectively turning down one of Europe’s key demands.

The European Commission, the EU’s executive arm, said it had negotiated EU investors’ rights to own stakes in U.S. airlines.

An EU official — speaking on the condition of anonymity because the deal has not been approved — said the U.S. would scrap a rule requiring U.S. officials to authorize any bid a European would make for more than 50 percent of an American airline’s capital.

He said the U.S. also has agreed to drop current rules that make it harder for EU airlines to buy stakes in carriers based in Africa or non-EU European countries. Currently, if a British airline buys a Nigerian one, the new purchase loses the right other Nigerian airlines have to fly to the U.S. because American authorities view it as a European airline.

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