Swissair appears to want to have its cake and eat it, all at once: US open skies followed by access to the European aviation market, either directly or through a stake in Belgium flag carrier Sabena.
But the contrast could not be greater. While the Swiss carrier is trumpeting the tentative open skies agreement reached in Washington in mid-February, it is keeping tight lipped about its talks with Sabena.
And for good reason. Swissair has complained for over a year about its isolation from Europe, which it acknowledges is its 'core' market. But now the Swiss government, backed by the carrier, may have committed a serious faux pas. With Switzerland hovering for access to the European Union's single aviation market, the open skies agreement with the US will not find favour with the larger member states. They are already trying to prevent six of the smaller EU member states independently reaching similar accords with Washington, following the US' offer to nine European nations - dubbed the G9 talks.
The proposed deal to take up to 49 per cent of Sabena (assuming Air France sells its stake, which now looks inevitable) is Swissair's gateway to the European market. Moreover, the Council of the European Union is set to consider a mandate to the European Commission to re-open talks on a transport agreement with Switzer land at its mid-March meeting, but negotiations could drag on.
Sources in Brussels warn that the fallout of the Swiss-US open skies deal could have strong political repercussions. The ultimate visible sanction would be the Council's rejection of a further negotiating mandate with Switzerland.
This would still leave Swissair with the Sabena option. Swissair's president Otto Loepfe has made it clear in the past, however, that the carrier would need a certain amount of control over an investment that could cost it up to BFr10 billion ($320 million), including a BFr6 billion injection of fresh equity. In any deal with Sabena, Swissair, as a non-EU carrier, would need to meet ownership and control regulations, which were specified for European air transport in the third package.
Lawyers and Commission officials acknowledge that as no case law exists, it is hard to judge what corporate structure the two companies would need to create to adhere to the untested legislation. It is here, in the hot bed of Brussels, that politics could distort any Commission attempts to rule on a Sabena-Swissair deal impartially. The Air France state aid case bears witness.
But Swiss attempts to gain access to the single European air transport market with US open skies in place, is not the only concern for the EU's larger member states. A source in Washington close to the G9 talks is confident all nine nations will have signed up to the US offer by mid-April.
But Swiss attempts to gain access to the single European air transport market with US open skies in place, is not the only concern for the EU's larger member states. A source in Washington close to the G9 talks is confident all nine nations will have signed up to the US offer by mid-April.
Source: Airline Business
