British Airways and American Airlines appear on the verge of securing the long-awaited competition approval for their alliance from the European Commission (EC) with Brussels insiders set to give a mid-May date and a painful but probably realistic demand for slot surrender at London Heathrow.
With some irony, however, just as this piece of the deal falls into place, the EC is cutting up rough on the other necessary condition of the alliance - a US/UKbilateral open skies pact.
Without that, the alliance partners will not win immunity from the US anti-trust laws. Their grand global partnership would not then be able to extend to links on marketing and pricing, effectively amounting to nothing more than a codeshare.
In the real political world, the USA and UK will no doubt push ahead despite the EC threat to overrule the UK Government's power to negotiate an open skies pact with the USA. The EC, however, is insisting that such bilateral agreements are unlawful under the terms of the European single market and is preparing to take legal action to make sure any such accords are abrogated. The consequences of such action for the BA/American alliance would be severe.
All this begs the question whether or not it is such a nightmare scenario for Europe's transport minister Neil Kinnock to get his way and be given the right to negotiate transatlantic open skies on behalf of the whole of Europe. The fact that a further 10 states from Eastern Europe will be added to the existing 15 EU members in the single skies market adds poignancy to the debate.
Logically, there is no sense in having anything other than a single negotiating body for a single market. Europe itself has open skies in its own market; it is considered to be a single air transport market as an origin/destination for services to/from the rest of the world as well as inside that internal market. The EC should, therefore, become the negotiating body on bilaterals not just with the USA, but with the rest of the world.
Logic apart, a negotiating role for the EC would be no bad thing either. It would help in providing a balance in negotiations with the USA and, in theory, promote greater deregulation and competition. It should also act as a spur to the much-needed consolidation of the airline industry, especially in Europe - but only if the EC uses its power wisely. In other words, the EC agrees to drop its absurd approach to promoting "competition" for competition's sake and instead makes all future decisions on the basis of the economic, social and environmental good of the European community as a whole.
Its role should be to create and police the famous level playing field but not attempt to artificially ringfence certain areas of the market (slot rules are due soon while there is another risk that Kinnock will be tempted to ensure some are reserved for smaller players) or stop consolidation.
So, what should be done? First, that the European Council of Ministers decides now to make a declaration that all future open skies negotiations be conducted at the European level and not by individual countries. Second, that the EC joins any negotiations presently under way and applies a European stamp to them. Third, that all existing bilaterals are decreed to be de facto with Europe, and not with the individual member states, even if they still only apply to those countries with any changes in the future to be handled by the EC. Fourth, that the EC approves any future alliances with the condition that the governments concerned agree to the above.
In return for all of this, the EC must undertake to rid Europe of the barriers to a truly open market. Progress is already under way on harmonisation across Europe with the speeding up of the creation of European aviation bodies to match US counterparts like the Federal Aviation Administration. Taking a tougher line against continued national political interference in the sector is a must. Yet by assuming this power, the EC must resist the temptation to supersede national meddling with a new Euro-style meddling. A different approach is needed, starting with new rules. As one European carrier official said: "Let's set one rule first: only the financially-viable carriers should survive."
Source: Flight International
