EU Complains of US Aviation Proposal
Roger Wilkison
VOA, Brussels
31 May 2004, 17:50 UTC

The European Union is complaining that a U.S. proposal falls far short of its desire to establish an open trans-Atlantic aviation area. The U.S. offer was an attempt to break the deadlock in negotiations aimed at liberalizing air transportation between the United States and Europe. U.S. officials say the EU wants too much, and that even the European airline industry is divided over the issue.

The European Union wants to rescind the web of bilateral agreements that govern trans-Atlantic air traffic, and replace them with an overall accord between the United States and the European Union. Flights across the Atlantic account for more than one half of the world's total air traffic.

EU Transportation Commissioner Loyola de Palacio says the Union's goal in the on-again, off-again negotiations is to redesign the relations between Europe and the United States in the aviation field.

"What we must be capable to build is a common trans-Atlantic aviation area, with a totally integrated aviation market, with common standards and security and safety," she said.

The European Union wants the United States to allow Europeans to buy a majority share in U.S. airlines. U.S. law currently mandates that foreigners can only own up to 25 percent of an American carrier. The Europeans also want the right for their airlines to carry cargo and passengers between U.S. cities, a practice that is not allowed in current agreements.

The Bush administration's proposal would allow foreigners to own up to 49 percent of an American airline, subject to approval from the U.S. Congress. But the administration is not willing to raise the limit further.

U.S. officials say the issue of carrying passengers and cargo inside the United States should be resolved in the future. One U.S. diplomat says, such a move would be too politically sensitive in an election year, because it would upset the U.S. airline industry and its influential labor unions. He also argues that it would require changes to U.S. law.

Commissioner de Palacio says more competition between U.S. and European airlines on both domestic and international routes would reduce prices for travelers.

"We in Europe, we are ready to open our market to competition, to integrate it into the American one," said Mr. Palacio. "And I think that America, which has always been leading in competitiveness, free market and the best for consumers, in this case, I can't understand why they don't follow us."

The U.S. proposal would also allow European airlines to set themselves up as tour operators and freight forwarders in the U.S. market, using American planes to provide their services. But the Europeans say that is not much different from the way they operate now.

Ms. Palacio has to recommend to EU transportation ministers in 10 days whether to accept the U.S. offer as it stands. Some European airlines, like Spain's Iberia and Ireland's Aer Lingus argue for acceptance of the offer, because it would give them the right to fly to more U.S. cities. Others, like British Airways, Air France and Lufthansa, Europe's 'Big Three,' say the U.S. offer has little commercial value, and they are calling for its rejection.