The European Union-United States Open Skies Agreement

The EU-US Open Skies Agreement

The EU-US Open Skies Agreement is an agreement that made it possible for the first time in history for airlines to freely fly from anywhere in the United States to anywhere in the European Union without any restricting laws (Morandi, Malighetti, Paleari & Redondi, 2014). Signed on 30th

The agreement entails many steps aimed at positively impacting airway travel, but there are three notable points in the agreement. First, all airline companies in Europe are treated and classified equally despite the country they come from. Second, like stated above, the agreement made it possible for flights from anywhere in the United States to anywhere in the European Union. Finally, it was made possible for flights to go beyond the United States by using the United States as a stopover. Other aspects that were included in the agreement include matters related to the environment, safety and security.

Why the agreement?

There are many reasons why the European Union and the United States signed the open skies agreement. Featuring importantly in the reasons is the benefits that both the EU and the US would get economically. It had been predicted that if the two opened up their aviation industries, that there would be a massive increase in the number of travelers between the US and the EU – an extra twenty five million passengers. In addition to this, it was estimated to, in the first five years, lead to the creation of eighty thousand jobs in the United States and European Union as well as lead to the generation of benefits worth more than fifteen million pounds. The United States, as well as countries in the European Union, would also have their manufacturing companies benefit as their products would be easily flown out.

The second major reason that resulted in the agreement being signed concerns legal issues (Taylor, 2015). The United States had bilateral agreements with sixteen countries from the European Union which were actually different from each other. These agreements clashed with the law in Europe and were the reason the European Council vouched for the negotiations. The aim of the negotiations was to review some aspects in the agreements that were not in line with the law of the European Union and also get rid of the discrimination that airlines faced due to their country of origin.

Impact of the EU US Open Skies Agreement

The agreement has had a massive impact on consumers, the local economies and the airlines (de Wit & Burghouwt, 2009). Consumers have been one of the major beneficiaries of the EU US open skies agreement. It has resulted in a rapid increase in trade and international travel between the United States and the European Union (Pitfield, 2011). Today, cities in the United States have flights that are nonstop to various destinations in the European Union. The same is also true for cities in the European Union. The net result of this increased traveling is a booming tourism industry. Looking at it from the consumer point of view, Europe has been made much more accessible by the Americans and vice versa. Also, the agreement has resulted in new routes between points that had no connection. The direct flights have reduced the time that was initially required making consumers save time and money. In addition to this, airfares have decreased significantly as a result of the Open Skies agreement. International airfares between the EU and the US have become cheaper as there has been increased competition among airlines caused by lack of previous regulations. Monopolies in the air travel market have found it tough to compete as there has been enormous pressure on their operations. To give figures, the agreement has resulted in approximately thirty two percent decrease in fares; a fairly large amount. The competition has also resulted in alliances developing as it has been seen in Oneworld, Sky Team and Star alliance. Companies, since the agreement, tend to focus more on mergers and this has even affected the outlook of air traffic in Europe; it is now leaning towards integration (Zhang, Derudder, Fuellhart & Witlox, 2018). Of importance to note is that the companies have focused more on what they can do to complement each other rather than on the similarities they have. Furthermore, the ease of access to airports that has been made possible by the agreement will lead to creation of even more mergers.

The local economies in both the European Union and the United States have also significantly benefited since the agreement in 2007. Thousands of jobs have been created both in the US and the European Union. The jobs result in increased tax, state and federal revenues. Additionally, taking the United States is taken as an example, an average international visitor spends approximately four thousand four hundred dollars when they visit. This definitely benefits the local economy as well as the community; it is not only the participants of the travel industry that benefit.

The manufacturing industries in the US and EU have seen increased sales that have immensely benefited the economies of the respective countries. For instance, American products, such as Boeing aircrafts, have seen increased sales in Europe. Orders made on products such as these lead to the creation of thousands of jobs in the US. Statistics show that for every aircraft order worth a billion dollars, the approximate number of jobs created is six thousand (Button, Neiva & Yuan, 2014). A country like the United States wouldn’t have experienced this job creation without the Open Skies agreement. The same has also been witnessed in the European Union; jobs have been created in the manufacturing industry as a result of the products being bought much more in the US as a result of the agreement.

The agreement has also been beneficial to matters regarding the environment, safety, and security. For the environment, the agreement outlined that the United States, with regards to routes that are signatories of the agreement, could be liable to aviation fuel taxation(Mayor & Tol, 2009). Safety measures have also been enhanced as both the EU and the United States have combined efforts to ensure that everything is at its best security wise. Additionally, security has become even better as both the US and the EU have come up with standards that are compatible and which have made air travel feel much safer.

Conclusion

Signed on 3oth April 2007, the EU-US Open Skies agreement did away with existing regulations and made it possible to fly from anywhere in the United States to anywhere in the European Union without any restricting laws. The deal was necessitated by various factors; the many economic benefits that both the EU and the US would experience, legal hurdles that the two blocks had been facing as well as other issues such as the environment, safety, and security. Consumers, the local economies and the airlines have since felt the impact of the agreement. Increased competition has been witnessed among airlines, airfares have been reduced, and economies have been strengthened. It is clear that the EU US Open Skies Agreement has been of great benefit to both the European Union and the United States.

References

Button, K., Neiva, R., & Yuan, J. (2014). Economic development and the impact of the EU–US Transatlantic Open Skies Air Transport Agreement. Applied Economics Letters, 21(11), 767-770. http://dx.doi.org/10.1080/13504851.2014.889794

de Wit, J., & Burghouwt, G. (2009). Airneth Conference 2008 special issue: the impact of EU–US Open Skies. Journal Of Air Transport Management, 15(2), 57-58. http://dx.doi.org/10.1016/j.jairtraman.2008.10.001

Mayor, K., & Tol, R. (2009). Aviation and the environment in the context of the EU–US Open Skies agreement. Journal Of Air Transport Management, 15(2), 90-95. http://dx.doi.org/10.1016/j.jairtraman.2008.09.018

Morandi, Malighetti, Paleari, & Redondi. (2014). EU-US Open Skies Agreement: What Is Changed in the North Transatlantic Skies?. Transportation Journal, 53(3), 305. http://dx.doi.org/10.5325/transportationj.53.3.0305

Pitfield, D. (2011). The Impact of the EU–US Open Skies Agreement and the Resulting British Airway’s Open Skies Initiative: Passenger Numbers in London, Amsterdam and Paris. Spatial Economic Analysis, 6(2), 185-197. http://dx.doi.org/10.1080/17421772.2011.557776

Taylor, M. (2015). FLYING FROM THE EU TO THE US: NECESSARY EXTRATERRITORIAL LEGAL DIFFUSION IN THE US-EU PASSENGER NAME RECORD AGREEMENT. Spanish Yearbook Of International Law, 19, 221-234. http://dx.doi.org/10.17103/sybil.19.14

Zhang, S., Derudder, B., Fuellhart, K., & Witlox, F. (2018). Carriers’ entry patterns under EU-US open skies agreement. Transportation Research Part E: Logistics And Transportation Review, 111, 101-112. http://dx.doi.org/10.1016/j.tre.2018.01.011