WHAT DOES THE OPEN SKIES AGREEMENT MEAN FOR AIRLINES?

WHAT DOES THE OPEN SKIES AGREEMENT MEAN FOR AIRLINES?

What is Open Skies?

The Open Skies agreement seeks minimization of government control of cargo, passenger, and passenger-cargo air transportation and creation of a true free-market for the air travel industry. The open skies policy can also apply to the air transport of military personnel. To make the policy effective, an agreement must be made between two or more nations. The US started negotiating for Open Skies policies in 1979 and began finalizing agreements in 1982.
Many people don’t realize that governing bodies can influence various parts of airline operations. Areas influenced can involve pricing, route planning, or capacity regulations. The goal of Open Skies policies are to increase international passenger travel, provide competitive prices between airlines, establish more efficient airline procedures, create more jobs, and offer a better overall flight experience.

US – EU Open Skies Agreement

An agreement for open air transport from any point between the US and the EU. The agreement was signed in April 2007 and was effected March 2008. This agreement is deemed “game-changing” as the agreement involves 2/3 of the world’s largest commercial aviation markets.

 Perceptions of Open Skies

Following the disclosure of election results, the aviation industry is looking to the president-elect for insight into future plans for this agreement, as well as NAFTA. Some believe that the Open Skies Agreement is a key factor in maintaining fairness in commercial aviation, decreases fuel consumption, and provides better options for consumers. Others argue that the playing field won’t be level and will hurt companies that aren’t receiving government dollars. A new Open Skies Agreement may soon come to fruition between the US and the UK.

Proponents for Open Skies cite that the policy has already provided startling evidence of economic growth. Clifford Winston and Jia Yan of the Brookings Institute have found that “the agreements have generated at least $4 billion in annual gains to travelers and that travelers would gain an additional $4 billion if the US negotiated agreements with other countries that have a significant amount of international passenger traffic.” Another observable advantage is an increase in direct international flights. Expanding Open skies agreements can also result in the creation of more jobs in aviation.

Concerns about Open Skies center on an inability to compete in the market due to unfair advantages by other airlines. One example of this is the subsidization of air carries by government bodies. Shifting aviation jobs from the US to international entities is a key concern. The Partnership for Open & Fair Skies states that engaging in an Open Skies Agreement should stimulate new demands.

Future of Open Skies

Currently, consumers are sharing the benefits of Open Skies flights. Many are citing that they are experiencing deep price discounts and added convenience. Many organizations in the airline industry have been expressing concern over job loss due to the policies and specific country agreements. The jury is still out on whether or not Open Skies policies will be fully embraced, eliminated, or amended for each agreement.

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