Kevin O'Toole/LONDON
The tussle between the European Commission (EC) and the member states over who has the right to negotiate transatlantic air agreements has just become more interesting.
In the words of one Brussels insider, it is shaping up as one of Europe's "big political games". Legal threats are flying and the EC seems poised to apply pressure on the member states where it will hurt most - over the lucrative transatlantic alliance deals signed up by their national flag carriers. If legal opinion is correct, the stakes could rise, with the EC laying claim to rule on all bilaterals.
Europe's transport commissioner Neil Kinnock has never made any secret of his ambition to take over bilateral negotiations with the US Department of Transportation (DoT). The goal is a grand European-wide open skies deal to replace national agreements.
His position has its logic. Over the past five years, Europe has brought down the national barriers to create a single air market. He argues that it is therefore nonsense to allow individual nations to strike their own bargains with the USA. More frustrating still for the EC is that Europe appears to have thrown away the unique opportunity to act as a single bloc, able to negotiate with the USA as an equal.
Whatever the merits of Kinnock's argument, what he has lacked, at least until now, is the force to make anyone take it seriously. The member states of the European Union (EU) see little to gain from handing over their negotiating rights to Brussels.
In pursuit of its ambitions to take US deregulation around the world, the DoT has been prepared to grant anti-trust immunity for airline alliances in return for open skies bilaterals. It began picking off the smaller European countries six years ago when the Netherlands was signed up in return for blessing of the KLM-Northwest Airlines alliance. Since then, Austria, Belgium, Denmark, Finland, Luxembourg and the big prize of Germany have followed. Others, including the UKand France, are pending.
Kinnock's attempts to wrestle a mandate out of the member states have largely been rebuffed. He won a partial victory in mid-1996 when the transport ministers tentatively agreed to allow talks with the DoT, but limited to "soft rights" on areas such as safety and competition. Crucially, they excluded the real meat of access rights.
Those talks have predictably petered out. With European open skies virtually sown up, the only real interest left for the DoT is in securing access for its carriers to fly on internal services within or beyond the EU. With his limited mandate, Kinnock found it almost impossible to engage the DoT's interest.
Two things have begun to change. First, Kinnock is stepping up his legal challenge. Second, the issue of transatlantic alliances, already subject of investigations by fellow competition commissioner Karel van Miert, is being introduced into the debate. The threat is being taken seriously by European carriers, now faced with the prospect that their transatlantic alliances would revert to nothing more than codeshares if open skies are removed and US anti-trust restrictions re-applied.
On 11 March Kinnock wrote to eight EU states issuing an opinion that their new US bilaterals breached European law, asking them to be torn up and warning that the next step would be to take the issue to court. The UK, which had signed a mini deal on the way to full open skies but not a full deal, was a recipient of the letter, but not the Netherlands, whose bilateral beat European single skies.
The letter has upset transport ministers in Europe. The abrupt reaction from Germany's Matthias Wissman is typical. He rules out any EC mandate, describes the threat of tearing up the German bilateral as "unacceptable" and warns that it would "endanger European jobs". Lufthansa, with its eye on the future of its deal with United Airlines, supports him, accusing the EC of making a "counterproductive" link between "unconnected" issues.
Legally, the EC may be on firmer ground.Anthony Fitzsimmons, aviation head at London law firm Ince, points out that the aim of any single European market is to end discrimination between national players. The open skies deals would seem to offend, given that the member state is effectively arranging "exclusive" rights for its own carriers across the Atlantic which others cannot enjoy. Worse still, US airlines are being given rights in a European market of which the EC is guardian. "These member states create serious discrimination and distortions of competition, rendering EU rules ineffective," says Kinnock.
His ambition need not stop at US open skies. Once a single market is created, the EC gains "exclusive competence" to negotiate with third parties. If the UK's mini deal is offensive, then a deal with anybody else would be, too. A legal battle would take years, but the threat to alliances is more pressing. Kinnock has won the attention of his audience.
Source: Flight International
