EU, U.S. sign agreement to further "open skies"

08:26, June 25, 2010      

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The European Union (EU) and the United States signed a second-stage agreement Thursday to further open up the transatlantic aviation market by paving the way for majority control of each other's airlines.

"This is a significant step forward in our mutually beneficial aviation relationship with the U.S." Siim Kallas, European Commission vice president responsible for transport, said after signing the agreement in Luxembourg.

"It is extremely good news for passengers, cargo shippers, airports and airlines, who will all benefit from the additional commercial opportunities and strengthened regulatory framework provided by this agreement," he said.

The agreement builds on the benefits of the groundbreaking aviation agreement signed by the EU and the U.S. in 2007, which allowed EU airlines to fly from any city in the 27-nation bloc to any city in the U.S. and vice versa. Previously, an EU airline could only fly from its home country to any U.S. airport.

The negotiations on the second-stage agreement started in May 2008 with a view of further regulatory cooperation and additional market opportunities.

An essential element of the new agreement is reciprocal liberalization of airline ownership and control. Currently, foreign ownership in U.S. airlines is limited to 25 percent of voting rights. Upon legislative change in the U.S., the EU will reciprocally allow majority ownership of EU airlines by U.S. nationals.

EU airlines will gain additional rights to fly between the U.S. and a number of non-European countries. Furthermore, a number of obstacles for EU investment in third country airlines will be removed. Similar rights will be available for U.S. airlines when the U.S. laws allow EU majority ownership of U.S. airlines.

The agreement will also strengthen cooperation on environmental matters by promoting greater transparency for noise-based airport measures and by enhancing green technologies, fuels and air traffic management.

For the first time in aviation history, the agreement includes a dedicated article on the social dimension of EU-US aviation relations, which will ensure that the implementation of the agreement will contribute to high labor standards.

The agreement will raise the already high level of cooperation on security to better allocate resources for threats to the aviation system by promoting maximum mutual reliance on each other's security measures as well as swift and coordinated responses to new threats.

It further extends the role of the EU-US Joint Committee, the body that monitors the implementation of the Agreement and coordinates the various work streams of regulatory cooperation.

The EU and U.S. markets are the largest aviation markets in the world. Together, they represent approximately 60 percent of global aviation.

It was estimated full implementation of the first and second-stage agreements would provide a 12-billion-euro (14.7-billion-dollar) economic boost and create up to 80,000 new jobs, with the benefits to be equally shared by the EU and the U.S.

It would create the possibility of an additional 26 million extra passengers on transatlantic flights over a period of five years. This compares with current annual traffic of just under 50 million.

The cargo market would see growth of between 1 and 2 percent.

Meanwhile, the economic benefits associated with the implementation of the second stage agreement have been independently estimated to be equivalent to the transatlantic benefits to be expected from a successful conclusion of the Doha Round of global trade talks.

Following signing of the agreement, the consent of the European Parliament and ratification by all EU member states will be necessary for its formal entry into force.

Source: Xinhua


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