France close to US 'open skies' deal

The deal should enable Air France to further its alliance with Delta

US and French officials are hoping to seal an 'open skies' agreement by the end of this week.

The deal would give US airlines unlimited access to French airports and French airlines unlimited access to US airports.

Crucially, Air France and Delta are then likely to win clearance to deepen their alliance.

US regulators had set an 'open skies' agreement as a pre-condition for granting the deal anti-trust immunity.

Pressure is also set to grow on the US to secure an "open skies" deal with the UK, so that British Airways and American Airlines can win consent for their own tie-up.

Anti-trust immunity would effectively allow the two companies to operate as one.

UK talks

Part of the reason France and the US may be keen to reach agreement quickly is fear that the European Court of Justice may rules that such bilateral deals don't have a legal basis.

Talks between France and the US have been far less acrimonious than those between the US and the UK.

The UK and the US are expected to press ahead with their own negotiations next week, where the key sticking point is thought to be access to Heathrow Airport.

Under an agreement reached in 1991, only BA, American Airlines, United Airlines and Virgin Atlantic are allowed to operate direct scheduled flights between Heathrow and the US.

"The UK talks are at a much earlier stage and a less advanced stage than the French talks," a spokesman for the US Department of Transportation said.

Consolidation?

Some argue that these 'open skies' deals may hasten mergers between US and European airlines, but do little to aid European consolidation.

For that to truly happen, then air transport nationality and ownership rules need to change, argues Professor Rigas Doganis, former chief executive of Olympics Airways.

"If airline collapses, you can't substitute a foreign carrier to operate services from your country. Governments have built-in incentives to go on giving state aid," he told the BBC's World Business Report.

"This is the key issue, to get rid of nationality and ownership rules for air transport...then we would end up with four or five European carriers," he added.