Toward the (US-airlines)-Open Skies

Posted on January 29, 2008 by Matthieu Desiderio

Starting April 1, 2008, the EU-US Open Skies agreement will allow any European or US airline to fly any route between any United States and European cities. The Open Skies agreement was negotiated between the United States and the European Union, and finally signed in Washington, DC on April 30, 2007. It will remove current restrictions that prohibit, for example, a French airline to operate a flight between London and the United States.

In the negotiations, I would say (but this only is my point of view) the big winners will be United States airlines: they will be given the right to fly between European cities while Air France, British Airways, Lufthansa, and other European airlines will not be able to operate flight, and this way compete with US airlines, between Chicago and Los Angeles! However, European airlines gain the right to operate direct flights between the United States and non-European countries like Switzerland…

Airlines started to adapt their offers

The agreement has not come into effect yet but airlines are getting prepared. British Airways created OpenSkies, a subsidiary that will begin service between New York and Brussels or Paris by the end of the first semester.

British Airways intends to operate a Boeing 757 with three class: Business, Premium Coach and Coach in a plane that will be only 82 seats:

24 full-bed seats in Business Class;
28 comfortable seats with 1.4 meters between each in Premium Coach Class; and
30 seats in regular Coach Class.

Other airlines, like the French company “L’Avion” (literally, “the plane”) anticipated the need in such new offers and already operates routes with Business Class only aircrafts. As of today, L’Avion operates two planes only (the second one since January 20, 2008), between Paris Orly airport (IATA Code: ORY) to Newark New Jersey airport (IATA Code: EWR).

Flying to and from “smaller” airports allows L’Avion to pay less airport fees, minimize costs when aircraft is on the ground, and this way offer cheaper flights. Tickets cost 30 to 40% less than usual Business Class seats between Paris and New York City, starting at €1,650 round trip. After a year of operation, 34,000 passengers enjoyed the low-cost business airline and planes approached a 80% filling rate in December 2007. The company already thinks about operating a third aircraft either towards Middle East (Dubai?) or the United States east coast (New York again or a big business cities like Washington, Boston, or Chicago?).

Who will win?

Oil companies? More flights, more kerosene, higher petrol prices, higher benefits… that is for sure.

Environment? More flights, more kerosene burnt, more traffic… not so sure.

Airlines? More flights or different offers, more competitors, higher petrol prices, lower fares, eventually more passengers… It is still difficult to conclude, but probably yes.

Passengers? More flights and more competition in a market that is, according to some specialist, already highly competitive may not lower the fares that much. However opinions diverge: Ryanair, a low-cost airline confirmed in April 2007 that it would operate flights between Europe and the United States which could lead the market to provide “airport-fee-plus-€10″ tickets (see article from the International Herald Tribune in references below)…

It will take time to have an evaluation of the impact of the EU-US Open Skies agreement but I hope that for passengers/customers, April 1, 2008 will not be April Fool’s Day!

References

Article: EU-US Open Skies Agreement, Wikipedia online encyclopaedia: here
Article: Visions of a €10 ticket to fly across the Atlantic, International Herald Tribune, Apr. 13, 2007: here
Article: Les compagnies aériennes adaptent leur offre transatlantique, Le Monde (subscription needed), Jan. 20, 2008: here

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