EU Approves Open Skies, US Has 2 Yrs To Open Domestic Routes

[Matt Molnar]

Times of London:

Transatlantic fares set to tumble after 'Open Skies' air deal (http://business.timesonline.co.uk/tol/business/industry_sectors/transport/article1553555.ece)
But agreement will be scrapped if the US does not open its domestic routes within two years.

David Byers, Robert Lindsay and David Charter

European Union transport ministers today unanimously agreed an "open skies" deal which will let continental European airlines use British airports to fly to the United States for the first time.

The agreement in Brussels, which looks certain to drive down prices and increase choice for air travellers, was signed despite major reservations from the UK, which was worried that the transatlantic supremacy of British Airways and Virgin Atlantic from Heathrow would be threatened.

Under the new deal, both carriers - which are the only European airlines to operate the lucrative business route between Heathrow and JFK New York - will have to fight to keep their landing and take-off slots against wide open competition from other European carriers. More... (http://business.timesonline.co.uk/tol/business/industry_sectors/transport/article1553555.ece)

[Nonstop2AUH]

I don't know all the details or political dealings behind this, but if carried to its logical conclusion (i.e. "anybody can fly anywhere"), does anyone else here think it's bad news for the US majors?

They are already under fire at home from the LCCs, which is what drove them to reallocate capacity onto more profitable international routes in recent years, but almost every major foreign carrier I can think of has a quality and/or cost advantage over the US majors on longhaul, so where exactly will they be competitive in the future, given their somewhat aging fleets, poor inflight service (by global standards) and high labor costs?

I badly want to believe our industry can compete globally, but the economic realities may sadly suggest otherwise!

[hiss srq]

I think this will spell the end of many airlines unless we beef up service quality. I think B6, WN, DL, AA, and CO will live on but the vas majority will become memories if the airlines of the USA keep it up.

[Matt Molnar]

I don't know all the details or political dealings behind this, but if carried to its logical conclusion (i.e. "anybody can fly anywhere"), does anyone else here think it's bad news for the US majors?

Investors seemed to think so today. Continental dropped 4%, AMR dropped 4.5%, UAL dropped 4.3%. Oddly, BA dropped only 0.4% even though they're screwed too, but I suppose not as badly as the US carriers will be once they're forced compete on domestic routes with foreigners who have less overhead.

Here's a good opinion piece on the protectionism involved on both sides:
The 'Open Skies' Deal Is Hindered by Protectionism (http://www.smartmoney.com/invisiblehand/index.cfm?story=20070322) (SmartMoney)

[Nonstop2AUH]

It pains me to say it, because I love the history and I have immense respect for the men and women that have kept the US majors going (especially after the external shock of 9/11), but the only competitive advantages they will have once things are opened up to global competition are whatever big corporate contracts they have in place and a large number of FF program members, who are loyal not because they like the airline but because they have the credit card etc. and have accumulated enough of a balance to stick around for the upgrades and other goodies. To attract new customers who aren't loyal to a points program, they will have to either upgrade service (which costs money), or cut fares (which will result in less service).

[JetBlueAirwaysFan]

Would this clear DL to fly USA-LHR?