Rez O. Lewshun
Save the Profession
- Joined
- Jan 19, 2004
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As Open Skies negotiations continue to progress, the liberalisation of the global airline industry continues.
Jetblue may or may not be prime for a buyout, but as the article states... what did LH buy jetblue?
Why the New EU-U.S. Open Skies Accord Leaves Europeans Grimacing
Posted by: Justin Bachman on March 25, 2010
The United States and European Union on Thursday announced an accord for the second phase of the 2007 Open Skies treaty that opened the EU to U.S. airlines. The deal was greeted with praise from the Air Transport Association, the trade group for U.S. carriers, and disappointment from the International Air Transport Association, the Geneva-based group representing 230 international airlines. “It is disappointing that, at this critical time, we did not make significant progress on the issue of ownership,” Giovanni Bisignani (right), IATA’s CEO and Director General, said in a Mar. 25 statement. “The agreement was not a step backwards, but it did not move us forward.” A day earlier, in a speech in Chile, Bisignani again sounded the horn for more liberalization: “If short-sighted politics does not impede long-term good sense we could see a breakthrough.”
Why this divergence? To be blunt, big European airlines feel they got very little in this agreement. The Open Skies goal for Europe ’s large international airlines – as I noted in February 2009 – has always been the ability to do business in the world’s largest air travel market unfettered by ownership restrictions. The agreement calls for the U.S. to work toward loosening the 25% foreign ownership restrictions on U.S. airlines but no one in the entire debate believes Congress will change that law. It is true that Open Skies, part two, allows for EU carriers to begin new service from the U.S. to non-EU countries but it’s difficult to envision a compelling commercial case for such flights. U.S. airlines can legally do this in the EU now but how many are flying around the Continent with new standalone businesses? Zero. The new ability for Lufthansa or Air France to launch flights from, say, New York to Buenos Aires doesn’t mean a lot financially. Far better, in the IATA view, would be an industry consolidation in which a European airline acquires a United or Continental as a North American subsidiary. (Lufthansa didn’t buy 19% of JetBlue merely as a financial investment.) Indeed, many airline executives believe the U.S. and EU should be considered one market for air travel, just as the EU nations are now.
For all the airlines, the big threat was that the whole Open Skies accord could dissolve, which for U.S. carriers would have meant restricted access to Europe. That did not happen in the new deal, hence the positive comments from the ATA, Continental, and United on Thursday. Moreover, there will be new cooperation on security and environmental issues, two subjects that bedevil airlines on both sides of the Atlantic. But as for the prospect of non-Americans controlling U.S. airlines, well, don’t expect that to happen any time soon.
http://www.businessweek.com/lifestyle/travelers_check/archives/2010/03/why_the_new_us-.html
Jetblue may or may not be prime for a buyout, but as the article states... what did LH buy jetblue?
Far better, in the IATA view, would be an industry consolidation in which a European airline acquires a United or Continental as a North American subsidiary. (Lufthansa didn’t buy 19% of JetBlue merely as a financial investment.) Indeed, many airline executives believe the U.S. and EU should be considered one market for air travel, just as the EU nations are now.
So what happens to the pilot group if jetblue gets bought? Does the PVC have legal standing to represent the pilots.
Why the New EU-U.S. Open Skies Accord Leaves Europeans Grimacing
Posted by: Justin Bachman on March 25, 2010
The United States and European Union on Thursday announced an accord for the second phase of the 2007 Open Skies treaty that opened the EU to U.S. airlines. The deal was greeted with praise from the Air Transport Association, the trade group for U.S. carriers, and disappointment from the International Air Transport Association, the Geneva-based group representing 230 international airlines. “It is disappointing that, at this critical time, we did not make significant progress on the issue of ownership,” Giovanni Bisignani (right), IATA’s CEO and Director General, said in a Mar. 25 statement. “The agreement was not a step backwards, but it did not move us forward.” A day earlier, in a speech in Chile, Bisignani again sounded the horn for more liberalization: “If short-sighted politics does not impede long-term good sense we could see a breakthrough.”
Why this divergence? To be blunt, big European airlines feel they got very little in this agreement. The Open Skies goal for Europe ’s large international airlines – as I noted in February 2009 – has always been the ability to do business in the world’s largest air travel market unfettered by ownership restrictions. The agreement calls for the U.S. to work toward loosening the 25% foreign ownership restrictions on U.S. airlines but no one in the entire debate believes Congress will change that law. It is true that Open Skies, part two, allows for EU carriers to begin new service from the U.S. to non-EU countries but it’s difficult to envision a compelling commercial case for such flights. U.S. airlines can legally do this in the EU now but how many are flying around the Continent with new standalone businesses? Zero. The new ability for Lufthansa or Air France to launch flights from, say, New York to Buenos Aires doesn’t mean a lot financially. Far better, in the IATA view, would be an industry consolidation in which a European airline acquires a United or Continental as a North American subsidiary. (Lufthansa didn’t buy 19% of JetBlue merely as a financial investment.) Indeed, many airline executives believe the U.S. and EU should be considered one market for air travel, just as the EU nations are now.
For all the airlines, the big threat was that the whole Open Skies accord could dissolve, which for U.S. carriers would have meant restricted access to Europe. That did not happen in the new deal, hence the positive comments from the ATA, Continental, and United on Thursday. Moreover, there will be new cooperation on security and environmental issues, two subjects that bedevil airlines on both sides of the Atlantic. But as for the prospect of non-Americans controlling U.S. airlines, well, don’t expect that to happen any time soon.
http://www.businessweek.com/lifestyle/travelers_check/archives/2010/03/why_the_new_us-.html