In 2010, the US signed open skies agreements with Israel, Barbados and Colombia. The agreement with Colombia is the US’s 100th open skies agreement. The US initiated open skies agreements with national governments during the 1990s to deregulate international air travel. Open skies agreements allow air carriers from each country to set their own routes, capacity and pricing, free from government intervention or limitation. This increases competition between airlines of member nations. Lower fares and more frequent departures between international destinations have generally resulted. Euromonitor International looks at other key agreements from the year.
Second phase of EU and US agreement
The US and the EU signed off on the second phase of the open skies agreement from 2008 in June 2010. While the US did not cave to EU pressure to remove foreign ownership limits, the signed agreement does create a joint committee to explore the issue.
101st agreement is with Brazil
A significant open skies agreement was reached with Brazil, though Brazil’s agreement will be phased in through 2015. Immediate impact includes pricing and route freedom, code-sharing and charter flexibility. The next step to be carried out between October 2011 and October 2014 will allow US airlines to increase scheduled combination cargo-passenger flights, as well as all-cargo and charter flights. In October 2015, when the agreement is fully implemented, airlines from both countries will operate without government restriction on setting routes, destinations, pricing and capacity. Airlines will incrementally increase scheduling combinations and cargo and charter flights to the crowded Sao Paulo and Rio de Janeiro airports. Additionally, it makes Brazilian airlines eligible to secure antitrust immunity against global alliances.
Open skies agreement in effect for Japan in 2010
An open skies agreement with Japan, signed in late 2009, came into effect in October 2010 when US airlines and their Japanese partners received anti-trust immunity (American Airlines and JAL; United Continental Holdings and ANA). Both partnerships developed joint ventures that will go into effect on 1 April 2010, which will allow for closer cooperation on routes, pricing and marketing.
Furthermore, the race was on for the four available international slots at Haneda—five US carriers applied for those slots to serve the airport, which is ideal due to its proximity to downtown Tokyo. United Continental Holdings was the only carrier not to win a slot.
Key countries missing
Some key markets, however, still do not have open skies agreements with the US including, China, Hong Kong, Russia, Mexico and South Africa. In the case of China, US labour unions have weighed in with fears that an agreement with China will bring lower wages to the aviation industry.
In addition, Beijing airport has grown rapidly and suffers from slot congestion. With Russia, negotiations hinge on issues of code-sharing and overflight rights for US carriers. As in the past, resolution of these issues could come quickly if the airlines in these countries push their governments for antitrust immunity with their partners in the US, leading to joint ventures with major US airlines.