Open skies agreements boost competition and airport services worldwide, while benefiting passengers with lower fares. But they are also the cause of many protests and quarrels.
It’s not often in business that something benefits both the business and its customers, but it seems that open skies agreements are definitely one of them. We had the opportunity to talk about this in the context of the worries caused by the Netherlands’ desire to limit the number of flights at Schiphol, and this is an opportunity to dig a little deeper into the subject.
What is an open skies agreement?
An open skies agreement allows airlines from signatory countries to fly to and from the countries concerned.
These agreements are logically the result of bilateral negotiations between two countries or groups of countries, such as Europe.
What are the benefits of an open skies agreement?
For airlines, this means being able to fly freely between the countries concerned, but not only. They can also authorize cabotage, i.e. the right for a European airline to carry out cabotage in the United States, i.e. a connection between two American airports as an extension of a flight from Europe.
For destinations, it’s a way of improving their connectivity by facilitating access to numerous foreign airlines.
For the customer, the benefits are equally substantial, with increased offering and more competition, which means more choice and lower fares. The entry into force of the open skies agreement between Europe and the United States led to an 11% drop in prices.
But sometimes their existence or application raises problems. While these agreements are numerous, we’re going to take a closer look at two in particular.
Open skies agreement between Europe and the United States
It was signed in Washington in 2007, putting an end to a myriad of bilateral treaties between the USA and each European country, and was amended in 2010.
Initially, it gave airlines from signatory countries the right to fly freely between any airport in the countries concerned, as well as 3rd, 4th, 5th and 7th freedom rights. If you’re not familiar with air transport freedoms, please refer to our article on the subject, but in general, this allows American and European airlines to stop over in the other country and fly to domestic or third-party destinations.
Since 2010, European airlines have also had the right to cabotage in the USA, i.e. to carry passengers between two American cities, something that American carriers already had the right to do in Europe under the first version of the agreement.
The fact that Europe is a signatory and not each country individually has also had another consequence for European airlines: they can serve the United States from any European city, and therefore from any country.
Air France and KLM, as part of the Air France-KLM partnership with SAS, could operate flights to the United States from Copenhagen to compensate for a possible reduction in flights from Amsterdam.
At the time of the Brexit, the UK had to negotiate a bilateral open skies agreement with the USA, as it lost the benefit of the agreement signed by Europe.
Finally, it was in the name of this agreement that the USA put pressure on Europe when the Netherlands wanted to limit the number of flights at Schiphol. This would have forced some American airlines to cancel flights or even routes, and the United States was considering retaliatory measures in retaliation for what it saw as a violation of the agreement.
Open skies agreement between Europe and Qatar
In general, an open skies agreement is signed between two powers of equivalent size, so as to benefit both equally. With this in mind, the agreement signed between Europe and Qatar caused a real outcry on the old continent.
Indeed, since the size of the two markets was in no way comparable, giving Qatar Airways full access to European airports didn’t seem at all fair, while the potential of the Qatari market for Europeans was infinitely smaller.
Some saw this agreement as a bargaining chip to get Qatar Airways to buy Airbus.
The Treaty on Open Skies
You’ll be hearing a lot about this one, against a backdrop of political tensions. But it has nothing to do with commercial aviation: it’s a military agreement.
The “Treaty on Open Skies” sets up a program of unarmed surveillance flights over the entire territory of the signatory states. It aims to strengthen mutual understanding and trust by giving participants a direct role in gathering information about military forces and activities.
In short, it enables states to monitor what others are doing in military terms, in a kind of self-control.
Each State Party must agree to receive a certain number of observation flights, and may carry out a maximum of as many observation flights as it has received. The observed state must be given at least 72 hours’ notice of an observation flight.
Signed in Helsinki in 1992, it was ratified by the United States in 1993 and Russia in 2001, and covers 35 states.
But the United States left in 2020 and Russia in 2021, making it useless.
Bottom line
Open skies agreements improve countries’ connectivity and bring down prices, but they are also political tools that are sometimes contested or questionable when they are unbalanced.
