EU widens airline deal with US

European Union governments have dropped a threat to scale back flight rights for US airlines in Europe in return for an American pledge to work towards allowing foreign ownership of carriers. EU transport ministers approved the expansion of a 2008 agreement with the US that deregulated trans-Atlantic air travel. As a condition for the ‘open-skies' accord two years ago, the EU demanded future access to the domestic American market and reserved the right to suspend US flight rights in Europe should no broader deal be reached by end-November.

Under the expanded accord that negotiators struck in March, President Barack Obama's administration agreed to ‘engage in a process' to let European investors become majority owners of US airlines, and the EU vowed to grant reciprocal rights once that is done. US carriers have the right to control as much as 49 per cent of European airlines, while EU operators face a 25 per cent limit on voting equity in US airlines. “We hope there will be more progress,” Dutch Transport Minister Camiel Eurlings, told. “It was extremely important that we reached a second-phase agreement in order not to jeopardize everything that we had established till now.” The threat to suspend flight rights was the EU's price, which the UK insisted on, for spurring trans-Atlantic competition two years ago by letting European airlines fly to the US from anywhere in the bloc instead of from just their home country. The broader agreement “points the way towards further liberalization of investment rules in particular in the coming years,” the UK government said in a statement. Mr. Eurlings said the US airline industry “would be in a much better position” without limits on foreign ownership, while also predicting it would take years for American legislation on the matter to change. “For a well-functioning international aviation industry, it is important that you can have cross-ownership,” he said. “We keep on pushing. It is, of course, a very sensitive issue.”

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