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EU and the US seem to have a different understanding of what
they mean by free trade. Trying to bring those positions and
realities together has been a large part of both sides’ focus on
external relations in recent years.” The AEA’s Henderson
agrees: “When the US talks of open skies they are talking
largely about market access. In the EU we are talking about
the harmonisation of various regulatory and legislative issues,
of which market access is just one aspect.”
Many of the challenges facing the US and Europe around
airline ownership, liberalisation and market access coalesce
“At present, US airline
carriers have much
greater access to the
European Union market
than EU carriers have to
the US market”
ATM: THE CHALLENGE OF GROWTH
86
around discussions on the Notice of Proposed Rule Making
(NPRM) initiative, which determines the investment and
ownership climate in the US airline industry. European
airlines believe this initiative underpins the imbalance in
investment opportunities between the two regional blocks.
After many months of detailed, and some might say
tortuous, discussions, in November 2005 the US and the EU
agreed a tentative draft air transport agreement, which many
argued addressed issues of market access and regulatory
convergence in a way that sets the prospect of a more level
playing field between the EU and the US regarding airline
ownership and control. Although the 75 per cent voting stock
requirement was not changed, the modification of the US
Department of Transport’s (DoT’s) interpretation rules on
actual control of US air carriers, suggested that foreign
investors would be allowed to manage US airlines’ commercial
decisions with a maximum 49 per cent of non-voting shares.
The November agreement was viewed as offering real progress
in significantly improved relations between the two sides.
From today’s perspective it is hard to imagine the surge of
optimism on both sides of Atlantic when the DoT published
its new Notice of Proposed Rule Making (NPRM) provisions in
November 2005. A Member State politician addressing the
Council of Europe Transport Committee in December of
2005 welcomed the draft air transport agreement, noting
the improvement in regulatory framework covering issues as
diverse as competition, arbitration procedures and security.
It was argued that the new interpretations would increase
the level of capital flow from Europe to US airlines. At the
same time EU airlines or individuals would have more power
to make commercial decisions influencing areas such as
airline marketing and route networking.
The AEA warmly welcomed what it saw as a “breakthrough
in EU-US aviation talks”. Commenting on the tentative
agreement, AEA Secretary General Ulrich Schulte-Strathaus
stated: “The progress achieved so far can only be termed as
historic. Such a consensus is a prerequisite for an international
level playing field, and could therefore very well become a
template for future negotiations.” According to one industry
expert: “The November rule proposal brought the best
possibility of a meaningful open sky agreement in 20 years.”
However, when EU and US representatives met in the spring
of 2006, the US delegation announced a delay to its acceptance
of the NPRM. It also introduced a Supplemental NPRM which, to
many, moved the US further away from a commitment to an
open aviation area by introducing revocation clauses, which
effectively mean US owners could remove foreign influence over
commercial decisions. However, the AEA believes an EU-US
agreement is “still within reach”. Further consultations are
planned but, according to the AEA, progress can only be made
if “the US is serious about treating global aviation like a mature
industry and facilitating foreign investment into ownership”.
Another area of contention between the EU and the US is
the issue of the provision of passenger data transfer for
transatlantic flights. Following the terrorist attacks on the US
on 11 September 2001, the US has insisted that European
airlines provide 34 different information datasets on
passengers travelling across the Atlantic. However, in May
2006, the European Court of Justice ruled that the current
regulations have no legal basis and will be invalidated from
the first of October. An interim agreement has, however,
been achieved, which enables Passenger Name Records
(PNR) data, held in air carrier reservation systems, to be
transferred to the US authorities in the same way as under
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Partnership for Performance and Growth.(31)
