Fliers Could See Lower Fares with Open Skies Deal

LONDON -- Europe's transportation ministers agreed Thursday to scrap most restrictions on trans-Atlantic flights, holding out the prospect of cheaper fares and a bigger choice of airlines for passengers.

The European Union ministers, meeting in Brussels on Thursday, unanimously approved a long-sought agreement dubbed open skies that already had been approved by the United States. It's designed to enhance competition among airlines by letting them fly from anywhere in the USA to anywhere in Europe and vice versa.

The ministers delayed the effective date for five months at Great Britain's request, putting it in effect on March 30, 2008, instead of Oct. 28, 2007. The delay allows London Heathrow, the busiest airport in Europe, to open a fifth terminal. The open-skies agreement is expected to be signed as soon as possible, perhaps at a U.S.-EU summit on April 30 in Washington, D.C.

The deal replaces a patchwork of bilateral agreements between European nations and Washington and some protective arrangements that date to the end of World WarII. The agreements have limited competition by restricting the overseas destinations of airlines on both sides of the Atlantic.

The net result for passengers will be $15.9 billion in savings in five years, the European Commission estimates, as 25 million more people fly between U.S. and European cities. The commission also estimates that the growth in air travel will create 80,000 jobs.

Persuading British authorities to open Heathrow to any European or U.S. carrier was the biggest obstacle to the agreement. Now, only two U.S. airlines, American and United, can fly into Heathrow. Only two British carriers, British Airways and Virgin Atlantic, can fly out.

Although the full agreement doesn't take effect until next year, some airlines will begin taking advantage of it sooner. Aer Lingus, the Irish carrier, said Thursday that it will use existing authority to begin serving Washington Dulles and Orlando by November.

U.K.-based Virgin Atlantic Airways, which hailed Thursday as "a good day for the traveler," plans to start non-stop flights between New York and Paris, Frankfurt, Amsterdam and Madrid within two years. No. 3 U.S. carrier Delta Air Lines will immediately seek a foothold at Heathrow for a New York route and an Atlanta route, COO James Whitehurst said.

Many business travelers prefer using Heathrow over London's two other area airports for its convenience to downtown and its connections to other points in Europe, Africa and Asia.

But opening up Heathrow to more airlines will not come quickly or cheaply. Heathrow is a so-called slot-controlled airport, and it's heavily congested. Airlines must purchase the right to take off and land at specific times.

A pair of takeoff and landing slots, needed for one flight daily, can run $20 million and must be purchased from an airline willing to sell.

British Airways, which would lose its partial monopoly at Heathrow under the new agreement, complained that the lucrative Heathrow rights were negotiated away without European airlines being allowed to buy controlling interests in U.S. airlines or fly domestic routes in the USA. British Prime Minister Tony Blair had appealed earlier this week to President Bush to ease ownership restrictions.

The Bush administration had been willing to loosen foreign ownership restrictions on U.S. carriers. But Congress in December rejected the idea after U.S. labor unions and airlines complained.

On Tuesday, however, the U.S. government gave tentative approval for an airline started by Britain's Richard Branson to offer service inside the USA. The Department of Transportation gave the airline, Virgin America, the go-ahead on the condition that the airline be insulated from Branson's control.


Marilyn Adams reported from McLean, Va.