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Friday July 25, 2008
Reuters
EU, US Begin New 'Open Skies' Aviation Talks

The European Union and the United States launched talks on Thursday on liberalizing transatlantic aviation, with Britain pushing for greater freedoms but US politicians likely to oppose further movement.

"The European Union has one clear political goal, we want to establish an open aviation area between the United States of America and the European Union," said Zoltan Kazatsay from the European Commission's Directorate for Energy and Transport.

The second round of "Open Skies" discussions builds on an agreement that allows airlines to access any US city from any point in the EU and vice versa and which entered force in March.

The move promises to increase competition between carriers, could cut ticket prices and may eventually pave the way for transatlantic mergers to create the first global airlines.

Britain has led critics of the earlier agreement and is calling for the abolition of US federal laws that cap foreign control of US airlines at 25 percent of their voting stock.

But the US Congress will not easily be persuaded to approve any such deal amid fears that US airlines would be the main takeover targets, said C. Boyden Gray, the US envoy to the European Commission.

US airlines are generally seen as more vulnerable than their European rivals, especially during the current economic turmoil.

"It's going to take a lot of work to persuade our Congress that this is something that should be allowed," said Gray.

"I don't think it's impossible to do at all, but it will take generating public support in the United States, and that is doable but is not easy," he added.

British Airways sees relaxation of US ownership rules as the most crucial issue, allowing airlines on either side of the Atlantic to increase efficiency through mergers, said a BA spokeswoman.

"The agreement should act as a catalyst for the economic consolidation that the aviation industry so desperately needs," she added.

European airlines also want greater access to the US domestic market -- with the right to sell tickets for flights between US cities.

Britain has warned it will exercise its right to terminate the Open Skies agreement if US barriers are not lowered during the current talks.

"The EU has agreed a process whereby that right will be exercised automatically, unless all member states agree unanimously not to do so, so the threat remains a very real one," said a spokeswoman for the UK transport ministry.

The United States surprised EU negotiators on Tuesday by saying it would seek a wider deal by pledging to drop access restrictions for airlines from more than 60 nations.

But Kazatsay said the EU would like to concentrate on the deepening of the existing agreement.

"We think that a broader multilateral initiative cannot replace the bilateral removal of this type of restrictions," he added.

British Airways has been among the first to capitalize on the existing agreement, with plans for flights to the United States from Paris Charles de Gaulle in addition to its traditional hub at London's Heathrow Airport.

Meanwhile, rivals Air France and Delta Air Lines are planning to move on Heathrow in a joint venture they expect to generate USD$8 billion a year.

(Reuters)

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