'Open Skies' Deal Approved

European Union transport ministers have unanimously backed an "open skies" deal with the US expected to drive down ticket prices and create jobs.

Agreement on the deal, which has been criticized by some UK airlines, only became possible after ministers overcame British reservations about competition out of London's Heathrow airport by pushing back the date it will come into effect until the end of March 2008.

Welcoming the agreement, EU transport commissioner Jacques Barrot predicted that the number of passengers on transatlantic flights would surge 50 percent over the first five years from 50 million to 75 million.

"To have such an increase it means that there will probably be far cheaper, more attractive fares being offered to Europeans and Americans," he told journalists.

Good for consumers

The European Commission, which negotiated the deal on the EU's behalf, says consumers will see up to 12 billion euros ($16 billion) in benefits, as increased competition brings down ticket prices and creates 80,000 new jobs in the aviation sector in the EU and United States combined.

It is set to be signed in Washington on April 30 but will now only come into effect next March, instead of October this year, as originally planned, to take into account British objections.

Britain had reservations about the deal because it would lift restrictions on the number of airlines which can operate profitable transatlantic flights from Heathrow airport outside

London.

Currently, only British Airways, Virgin Atlantic of Britain and US carriers United Airlines and American Airlines are allowed to fly from Heathrow to the United States.

Second round

Barrot said the fact that all member states had backed the agreement would strengthen the EU's hand for a second round of negotiations with the United States, that are supposed to remove remaining barriers.

"This confidence and unity means that the European side enters the next phase of negotiations with the United States in a strong position," Barrot said.

The deal stipulates that any EU carrier would be able to fly from anywhere in the EU to any point in the United States and vice versa.

It is expected to dramatically increase competition because EU carriers are currently allowed to fly to the United States only from their home country.

However, while US carriers would be able to fly intra-EU routes, their European rivals would not be able to fly between two cities within the United States.

The agreement would also lift restrictions on EU carriers buying big stakes in US airlines, although their voting rights in a US carrier would remain capped at 25 percent.

The ministers also agreed to a clause that could see some of the benefits of the deal suspended if there were no progress on further liberalisation after the first two and a half years.

An open-skies deal is supposed to replace the patchwork of existing bilateral air transport agreements between EU members and the United States, eight of which the European Court of Justice has ruled are illegal.

The European Commission has not enforced the court decision because it has a mandate to negotiate an EU-US deal.