- The Washington Times - Thursday, March 22, 2007

BRUSSELS (AP) — The European Union approved an aviation deal with the United States yesterday that opens up restricted trans-Atlantic routes to new rivals but bowed to British concerns in delaying when the agreement takes effect.

The “Open Skies” deal will allow airlines to fly from anywhere in the 27-nation European Union to any point in the United States, shedding limitations that also discouraged them from charging what they like or combining with other carriers.

The European Union said its 27 nations had unanimously voted for the deal, which will take effect at the end of March 2008 and is expected to lower prices. European negotiators will have to secure U.S. agreement to delay the pact, originally scheduled to begin Oct. 28, and want to push on with new talks to eliminate remaining U.S. barriers on airline ownership.

Britain won its demand for extra time before opening up London Heathrow, Europe’s busiest airport, to more carriers.

Only four airlines — British Airways PLC, Virgin Atlantic Airways Ltd., AMR Corp.’s American Airlines and UAL Corp.’s United Airlines — have the right to fly from Heathrow to the United States, a lucrative route that represents about one-third of all EU flights to the United States.

European governments also stipulated that they could suspend parts of the deal — curtailing U.S. airlines’ new rights in Europe — if further talks don’t lead to more concessions from the United States within three years.

The only nation likely to do this is Britain, which protested opening Heathrow when the United States had not made concessions requested by the Europeans.

“I have ensured that the UK will have the right — in 2010 — to reimpose some or all of the restrictions that U.S. carriers face today,” said British Transport Minister Douglas Alexander. “I hope very much that this will not be necessary. But this sends a very clear signal to the U.S. that we are serious about making early progress to a second-stage deal.”

EU Transport Commissioner Jacques Barrot said he did not think such sanctions would be levied because by 2010, both the European Union and United States would be moving toward total liberalization for the aviation industry.

“The idea behind this clause is to bring pressure to bear on the U.S.,” he said.

British Airways Chief Executive Officer Willie Walsh, however, said Britain had to stand by its pledge to withdraw traffic rights if the United States did not open up to EU airlines. He said the European Union has given away its most valuable negotiating asset by opening up Heathrow.

“So far, the U.S. has made no meaningful concessions,” he said. “American carriers can now fly into Heathrow, Europe and beyond while their own back yard remains a no-go area for EU carriers and foreign ownership of their airlines remains unchanged.”

U.S. carriers will be able to fly from New York to London, where they can pick up passengers and fly on to Stockholm — offering competition on trips within the European Union. But EU airlines still will not be able to operate domestic American routes.

European officials have repeatedly said they were disappointed with the U.S. failure to lift a rule that bars foreign investors from owning more than 25 percent of an American airline’s voting shares — the key precondition that it set for a deal.

The Bush administration tried and failed to win support to scrap the rule amid worries from U.S. airlines and labor unions that such a move could threaten jobs and security.

U.S. Transportation Secretary Mary E. Peters welcomed EU approval, saying the agreement would foster more affordable and convenient air travel. Congress would have the power to block U.S. approval of the deal.

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