U.S., EU in tentative carriers agreement


WASHINGTON, AP

European companies would be allowed larger stakes in U.S. airlines under a tentative agreement reached between the U.S. and European Union. It also would give carriers more freedom to choose trans-Atlantic routes and potentially lead to lower fares.

The agreement, announced Friday by the Transportation Department, would allow European airlines to fly from anywhere in the EU to any point in the U.S., and vice versa. For example, it would end restrictions on the number of airlines allowed to fly between the U.S. and London’s Heathrow Airport, one of the world’s busiest. Only four carriers — United Airlines, American Airlines, British Airways and Virgin Atlantic — now serve that market.

Transportation Secretary Mary E. Peters said the agreement “will offer more choice and convenience to American consumers.”

Another key aspect of the deal, described to The Associated Press by a U.S. government official who spoke on condition of anonymity, enables European companies to own up to 49.9 percent — and in some circumstances, more than 50 percent — of U.S. airlines, up from the current 25 percent limit. Yet another provision could help Richard Branson’s Virgin Group Ltd. gain regulatory approval needed to launch a U.S. subsidiary, Virgin America Inc.

EU Transport Commissioner Jacques Barrot said he would ask EU nations to back the deal when EU transport ministers meet March 22. There is a U.S.-EU summit in May at which the deal would then likely be considered. The U.S. Congress must also back the deal before the new rules would kick in Oct. 28.

“We have an opportunity to unlock major benefits on both sides of the Atlantic,” Barrot said in a statement. “In economic terms, this unprecedented agreement would represent a step change.”

Air travel in Europe and the United States accounts for 60 percent of global air traffic, and an ambitious EU-U.S. open skies deal could allow more airlines to fly the lucrative trans-Atlantic routes, possibly offering cheaper tickets.

The EU forecasts that within five years the deal could put an extra 26 million people on trans-Atlantic flights. Just under 50 million travelers now make that trip every year.