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Don’t let US majors chip away at Open Skies

Don’t let US majors chip away at Open Skies

First published on eTurboNews:

The single largest benefit to airlines and consumers that has occurred in the history of commercial air transportation began as a concept that crystallized into the US model known as Open Skies.

Twenty-five years and more than 100 agreements since the signing of that first pact between the US and the Netherlands, Open Skies has become a model around the world for air service liberalization.

The positive impact that liberalization has on aviation markets is huge and measurable. A survey by InterVistas shows that liberalization spurred a 16% growth in traffic between nations in 2016. This percentage hike is consistent in aviation markets that are opened up, with traffic growth typically averaging 12% to 35%.

For a classic before-and-after example, look to the US-Japan market. An InterVistas case study shows that between 2000 and 2009, traffic in this market dropped 33%—by almost 5 million. After the 2010 Open Skies agreement, and despite slot constraints and a global recession, seven new nonstop routes were created, frequency increased by 60 flights per week, and traffic rebounded to its highest level in five years.

Air service liberalization stimulates markets and encourages new city pairs. It allows for innovation and new, low-cost entrants. Open Skies’ fifth and seventh freedoms allow cargo carriers to open new hubs, improve the supply chain and lower delivery costs. Liberalization allows the market to grow and creates millions of jobs.

The traveling public rarely recognizes the enormous good that the American-born Open Skies concept has yielded, but passengers would be truly shocked and outraged if the pre-liberalization restrictions—and inevitably, higher fares—were reinstated.

InterVistas estimates that if all markets globally were fully liberalized, there would be 500 million more passengers and 9.4 million jobs created, including those in the supply industry and aviation-dependent tourism.

So there remain huge opportunities and rewards to be harvested from further liberalization. But there is a very real danger that instead, the US’ next commercial aviation steps will mark a retreat.

Chipping away at parts of Open Skies agreements to pander to those who wish to further protect their highly dominant market positions would be bad for America and worse for the consumer. American, Delta and United sit at the very top of the world in terms of passengers carried, revenue, profitability and fleet size. They, as much as any airline, have gained enormously from Open Skies, especially in the all-important transatlantic market, where each US carrier has powerful antitrust partnerships with major European airlines. They must not be allowed to dictate new Open Skies terms that benefit only them, certainly not in the transatlantic market but also not with the UAE and Qatar.

The road that the US and its Open Skies partners around the world should instead pursue is not a backwards one, but towards an even bolder future. Lift antiquated and nonsensical airline ownership and control laws. Re-think cabotage rights. Such brave thinking—as the initial Open Skies concept indeed was—would enable the US to retain its mantle as world’s aviation leader.

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