Open Skies
The US-EU Open Skies Treaty comes into effect at the end of March. It opens the doors for low fare airlines to go international. Why? Because protectionist US regulations currently allow national carriers to fly between the US and their home country only. For instance, British Airways can only fly to and from the UK to US. Air France can only fly to and from France. Meanwhile, US carriers such as United, American, and Continental have been able to fly virtually anywhere in Europe. American carriers love this setup because it caps the amount of competition they face. With Open Skies, that game is over:
The agreement allows any airline of the European Union and any airline of the United States to fly between any point in the European Union and any point in the United States. Airlines of the United States are also allowed to fly between points in the European Union. Airlines of the European Union are also allowed to fly between the United States and non-EU countries like Switzerland.
The reason the US airlines were amenable to Open Skies was that is allowed them to fly between all points in the EU, giving them thousands of new routes. For example, London to Rome. Open Skies does not allow EU carriers to do the same in the US. They cannot land at Washington Dulles and connect to Houston Bush. However, this is just a footnote in comparison to the other developments Open Skies provides.
Essentially, Open Skies unlocks trans-Atlantic routes to all carriers, meaning more competition and presumably lower fares. The latter seems almost certain as low fare airlines are prepared to enter the fray. Low cost airlines look to do to trans-Atlantic air travel what Southwest Airlines did to air travel in in the Western US: undercut big carriers fares, significantly. Ryanair, Europe’s most ridiculously low priced airline, is developing Ryanatlantic, which has promised to bring EU to New York airfare down to €10 or $15.
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