EU backs open skies agreement -- Plan 2008 Europe trip

March 28, 2007

The EU approved an agreement with the U.S. to allow airlines from both continents to fly any route between any city in the U.S. and Europe starting March 2008. By allowing greater competition, the deal should encourage lower fares and more choice of carriers. However, this same competition could ultimately put smaller airlines out of business and encourage consolidatin, thus limiting choices in the long run, just as it has done in the U.S.

What the EU U.S. open skies agreement means:
Congress does not have to approve the deal, which is expected to be signed at an EU-U.S. summit on April 30th. The agreement also allows European airlines up to 25% ownership of U.S. airline companies, and vice versa.

Virgin Atlantic has already gotten approval from the U.S. Transportation Department to start up Virgin America, which will offer low cost fares between New York and San Francisco this summer.This is in addition to increased flights via Virgin Atlantic from Europe to the U.S. starting next March.

This could also be the first step of a free trade zone between the U.S. and Europe, as discussed by German Chancellor Angela Merkel when she visited President Bush in January 2007. (See “Merkel visits Bush -- EU leadership stable)

Action steps:
If you are planning to visit Europe, wait until next summer, when fares should be lower.

Source: International Herald Tribune, " EU backs deal on open air route", March 22, 2007; " Virgin America gets nod to start U.S. service", March 21, 2007.

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