The Economic Impact of an EU-US Open Aviation Area
Prepared for the European Commission
Despite the success of airline deregulation in their domestic markets, and the benefits from partial liberalisation of the transatlantic market, the United States and Europe still maintain substantial controls on transatlantic competition and investment in aviation. Bilateral “Open Skies” agreements, which govern competition between the United States (US) and eleven European Union (EU) Member States, stop short of complete liberalisation. Most important, they deny foreign entities the ability to own and control an existing domestic air carrier, or establish a new one (“right of establishment”); restrict important traffic rights, such as a foreign carrier’s right to provide domestic service (“cabotage”); limit opportunities for leasing foreign aircraft and crew; and impose domestic content (“Fly America”) requirements. Transatlantic competition between the United States and the four remaining EU Member States (Greece, Ireland, Spain, and the United Kingdom) is governed by bilateral agreements that are even more restrictive.
