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Tuesday, 8 May, 2001, 15:32 GMT 16:32 UK
EU fights for 'open skies'
Air France and Delta tail fins
Trans-Atlantic alliances are threatened by the case
Eight European countries have been taken to court by the European Commission over trans-Atlantic air traffic agreements they have reached with the US.

The Commission alleges that the agreements breach fair competition laws governing the European single market.

The court case will have a major impact on present and future so-called "open skies" agreements, which give foreign airlines free access to other countries' airports.

The Commission has been trying for years to negotiate such a deal with the US on behalf of all 15 EU countries.

The European Court of Justice in Luxembourg will hear the case and is not expected to give a ruling for several months.

Commission snubbed

The Commission argues that the best deal for EU member states can only be struck by pooling their negotiating strength.

But eight national governments snubbed the Commission and signed individual deals with the US during the 1990s.

The countries which have agreements are Austria, Belgium, Denmark, Finland, Germany, Luxembourg, Sweden and the United Kingdom.

Airlines from those countries who struck trans-Atlantic alliances, like those between KLM and Northwest and Lufthansa and United Airlines, have been exempted from anti-trust rules by the US competition authorities.

The Commission claims this breaks EU law because it commercially disadvantages airlines from countries with no open skies deal who fly on US routes.

The Commission has said it does not want to void the current agreements but build on them.

Case implications

If there is a ruling in the Commission's favour, it believes it will have a mandate to negotiate an EU-wide agreement with the US.

As well as liberalising the sector the Commission believes such a deal would lead to more consolidation in the EU airline sector.

Airlines currently fear that they could lose the commercial rights granted to them by the US if they were bought by a carrier from a EU country that did not have the same arrangement.

European airlines are dwarfed by their US counterparts because they have not merged.

On the other hand, if the court finds in favour of national governments, the current deals would stay in place and the Commission's ambition to lead fresh talks with the US would be dashed.

A Commission spokesman has indicated that if they are not successful, they will end attempts to negotiate a single deal.

Many of the countries facing the Commission in court are in favour of an EU-wide open skies deal with the United States along the lines of the "Transatlantic Common Aviation Area" proposed by the Commission.

US position

The United States is unenthusiastic about a pan-European open skies deal and sees the national agreements it has with EU countries and some 40 others around the world as beneficial to all sides.

"This is an internal matter. It's for the court to decide," a US official said.

"The obligations under our bilateral aviation agreements would remain unaffected in our view," he added.

The US government operates a "Fly America" policy under which all employees must use US carriers on European routes.

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See also:

15 Jan 01 | Business
Government 'obstructing open skies'
21 Sep 00 | Business
Airlines end merger plans
13 Sep 00 | Business
British Midland goes transatlantic
15 Aug 00 | UK Politics
MPs criticise US air 'intransigence'
25 Jul 00 | Business
Hopes on 'open skies' talks
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