Air Treaty with EU a Boost for Delta

London --- Delta Air Lines and other proponents hailed a deal approved Thursday to liberalize the trans-Atlantic airline market, saying it will both boost airlines' bottom lines and drive down prices for consumers.

European Union transport ministers unanimously approved the long-sought "open skies" agreement with the United States at a meeting in Brussels, Belgium, but delayed the pact's effective date from this Oct. 28 until March 28, 2008.

The agreement will allow EU airlines to fly from any city in the 27-nation bloc to the United States and vice versa, replacing extremely limiting air treaties that date back 60 years.

U.S. airlines will also be able to continue flights within the EU after arriving from the States, while European carriers will still be barred from flying domestic U.S. routes.

Most important for Atlanta-based Delta is that the agreement will give the airline access to London's Heathrow airport, the busiest trans-Atlantic gateway, and will allow flights between Atlanta and Heathrow.

"Delta has supported a liberalized U.S.-EU agreement from its inception because it ultimately benefits the millions of trans-Atlantic customers who travel between the United States and Europe annually," said Gerald Grinstein, chief executive at Delta, which carried more than 5 million passengers between the United States and Europe last year.

Under the current treaty, only two U.S. carriers --- American and United --- can use Heathrow. British Airways and Virgin Atlantic are the only two British carriers allowed to fly to the United States from Heathrow.

Delta currently is allowed to use Gatwick Airport, which is at least an hour's drive from London. Lack of Heathrow access has hindered Delta's efforts over the years to market its trans-Atlantic service, especially to corporate travel managers who prefer the closer-in airport.

Daniel Hamilton, director of the Center for Transatlantic Relations at Johns Hopkins University in Baltimore, said the agreement will likely create an economic boost of about $15 billion with the creation of some 80,000 jobs.

He said liberalization of the airline market could increase annual passenger traffic by up to 11 million passengers on trans-Atlantic routes and by up to 35 million passengers on routes between EU countries.

"It could also create about $5.2 billion a year in consumer benefits through lower fares and increased travel, with more than half of those benefits going to trans-Atlantic passengers," he said.

Transportation Secretary Mary Peters praised the agreement, which must be approved by Congress.

EU government officials also touted its economic benefits, saying the deal will cut the cost of tickets while putting an extra 25 million people on trans-Atlantic flights within five years. Just fewer than 50 million passengers now travel on those routes.

The European officials also expect the creation of up to 80,000 jobs, spread equally between Europe and the United States.

Henry Harteveldt, a travel specialist at Forrester Research in San Francisco, agreed that lower prices could be expected on both pleasure and business fares. He said the biggest challenge is that airlines don't have the extra aircraft to add more flights.

"They've pared down their fleets, which was smart, but that means if they choose to increase trans-Atlantic service they will likely have to curtail it elsewhere," Harteveldt said.

Paul Charles, a spokesman for Virgin Atlantic, also welcomed the deal but warned that "Heathrow is already pretty full." That may make it difficult for airlines such as Delta to obtain takeoff and landing slots at the extremely busy hub, he said.

However, some slots are expected to become available when a fifth terminal is opened at Heathrow next March.

Despite its predicted benefits, approval of the open skies deal did not come easily.

For years, talks have been bogged down over the various demands made by both sides. In the end, the United States refused to concede on the major sticking point of ownership, maintaining its 25 percent ceiling on foreign voting rights in U.S. airlines. The EU has a higher ceiling, 49 percent.

But EU officials said they will push for progress on this matter at second-stage talks due to start next year. And they pointed out that under the new agreement, EU governments would be allowed to suspend parts of the deal that benefit U.S. airlines if new talks fail to win additional concessions in the future.

EU governments also plan to push for permission for European carriers to operate internal flights within the United States.

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