US-EU Open Skies Phase II Talks Begin

US-EU Open Skies Phase I was the easy part. All it did was allow any airline from the US to fly between the US and anywhere in the EU and vice versa. Its ultimate success, however, was dependent on Phase II, and those talks are just getting started.

In practicer, all Phase I really did was open up Heathrow to more airlines. We’ve seen Continental, Delta, and US Airways move in to the airport for the first time thanks to Phase I. But other open skies-enabled efforts have struggled. Air France quickly killed its effort to fly LAX to London and I believe its next effort from JFK to London has met the same fate. BA’s OpenSkies subsidiary has really struggled and rumors have been flying that its days are numbered. So there hasn’t been anything groundbreaking with this so far, but the next phase is the big prize.

Phase II negotiations center around cabotage in the US. This would allow foreign owned carriers to fly between two points in the US, something that has been off limits historically. This should also, of course, allow for foreign ownership of carriers flying domestically - Sir Richard Branson could finally stop worrying about whether Virgin America is US-owned or not.

So what’s the chance this happens? I think it’s slim to none, though the EU seems to be optimistic, at least publicly. If the two parties can’t come to an agreement within the next couple years, then Phase I could be repealed. Considering that the impact hasn’t been that dramatic so far, I wouldn’t expect to see that happen. All that would achieve is to help protect BA and Virgin Atlantic in London and make it harder for every other carrier.