Aviation negotiators try to reach US-EU agreement

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The movie Groundhog Day, where the actor Bill Murray experiences the same day again and again, has resonance for negotiators who have spent years trying to forge a new aviation agreement between the US and the European Union.

As David Batchelor, an EU transportation official, observed: “We have spent the last five of six years discussing the same subjects.”

Even so, EU negotiators will fly to Washington for another round of “informal technical discussions” early next week in the hope of breaking the impasse. Talks collapsed last June over a proposed US-EU Open Skies agreement to replace the current system of bilateral deals between the US and EU member states.

“The present system of bilaterals is totally out of date,” said Dominique Patry, a vice-president at Air France, who, at a Phoenix aviation conference last week, urged both sides to make further concessions.

“Without any Gallic arrogance we are prepared to demand a new US-EU agreement is signed. The EU is too ideological in its approach to negotiations and more interested in grabbing power from member states' authorities so [talks] have been a failure. We need a more pragmatic approach.”

Jeff Shane, undersecretary for policy at the US Department of Transportation, however, noted the US had already made “the single most important concession ever made in the history of air services negotiations”, by accepting the concept of an EU carrier, rather than maintaining the so-called nationality clause.

That would mean that “every EU-US city pair market heretofore limited to one or two EU national carriers by the nationality clause would henceforth be open to all EU carriers”.

Yet the US got little credit for its concession, he says. “Suddenly the US, pioneer of deregulation, the world's foremost champion of aviation liberalisation everywhere was being characterised as a protectionist holdout.”

The US remains under fire for maintaining rules that restrict foreign owners from having a voting stake of more than 25 per cent in a US airline. Mr Shane suggested that reforming ownership rules should not be made a condition of a US-EU aviation deal.

That worries Andrew Cahn, director of industry and government affairs at British Airways, who wonders what, otherwise, “would be the impetus for getting the ownership and control issues on the agenda”.

Will Ris, head of government affairs at American Airlines, backed keeping the two issues separate. “One hundred years from today we will have complete freedom of investment. But . . . [there is no] driving desire by US carriers to get this thing done.”

That was echoed by John Owen, finance director of JetBlue, who argued: “Congress won't change the rules so we are wasting a lot of time talking about it.”

Nevertheless, some US executives want change. Glenn Tilton, chief executive of United, has called for repeal of the 1938 law, calling it “one of the most significant barriers” to becoming more global.

He expressed concern that US carriers would fall behind in the race to create global “supercarriers”. But he conceded that only more political leadership could break the inertia. “I have been spending a lot of time in Washington looking for champions and I am still looking.”

The lack of political sponsors is not surprising. As Mr Ris put it: “We are looking at survival and it is very difficult to focus on big picture issues: the yields on US-EU [routes] are so lousy we don't need extra capacity there. As a practical matter, there is not enough juice in the US-EU negotiations to get it done.”

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