EU Hopes for Aviation Pact With U.S.

The European Union hopes to get a preliminary "open skies" air services agreement with the United States in the first half of the year, its top transportation official said Monday.

Such an agreement covering the world's two largest aviation markets would allow EU and U.S. airlines to fly to wherever they want and charge whatever they want on trans-Atlantic flights, a move that could lead to lower ticket prices for passengers.

The talks are currently on hold until Washington provides details on how it will lift foreign airline ownership restrictions and allow foreign investors more say over the management of U.S. carriers.

"We would hope to get a first-stage agreement before the summer," said EU Transport Commissioner Jacques Barrot. "We are still waiting for confirmation from the United States about the easing of their control and ownership rules for American airlines."

The U.S. administration said last November it was considering giving foreign investors a say in marketing, flight routes and types of aircraft operated, which might attract foreign capital to U.S. airlines.

A new agreement would replace the current series of restrictive treaties between individual countries.

Under the present bilateral pacts, European airlines can fly to any U.S. airport only from airports located in their home country. For example, Germany's Lufthansa AG can only fly to the U.S. from airports based in Germany. Because of this so-called nationality clause, European airlines risk losing U.S. landing rights if they merge - which has led to fragmentation and inefficiency in the European industry.

EU governments rejected a deal proposed by Washington in June 2004 because it didn't grant access to the U.S. domestic travel market. Britain felt this was too high a price to pay in return for granting airlines greater access to Heathrow.

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