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Posts Tagged ‘open skies’

The U.S. and Australian governments will “conclude a comprehensive open-skies aviation agreement” early next year, according to The Age, opening up competition on U.S.-Australia nonstops. Qantas currently controls 75 percent of that market, and the only U.S. airline to fly nonstop to Australia is United. The article claims that the route is one of the world’s least competitive. Current rules virtually guarantee that new entrants fail: “The current Australia-US air services agreement restricts airlines on the route to four flights a week in their first year of operation — a level of frequency deemed uneconomic for airlines wanting to grab a slice of the high-yielding corporate market.” The Age‘s realistically jaundiced eye also notes that incumbent carriers are looking to throw whatever self-protecting measures they can into the mix. In the meantime, hooray for more open skies.

US air pact ups Virgin Blue hopes [The Age]

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Travel Weekly reports that after four years of talks, the U.S.-Japanese bilateral aviation agreement has been amended for the first time in ten years, with minimal changes: a minor codeshare rule change, more flexibility in setting fares (“While that provides more fare freedom in theory, the U.S. government never blocked fares, and it was not clear how often the Japanese government did so, if at all. It is possible, however, that airlines avoided offering fares they believed might be rejected.”), fifth freedom rights for some cargo operators, and more charter flights. Progress, sure, but wow, not very much.

U.S. and Japan revamp aviation deal [Travel Weekly; registration required]

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The Department of Transportation has awarded new China route authority (see my earlier post on this), and all the major airline applicants took home a prize. Delta goes first, with immediate approval for Atlanta-Shanghai. The 2008 route is for Guangzhou only, and only United submitted a bid, for service from San Francisco. Finally, in 2009, US Airways will begin serving Philadelphia-Beijing, Northwest will fly Detroit-Shanghai, American will add Chicago-Beijing, and Continental will launch Newark-Shanghai service.

What’s too bad about this is that there is so much pent-up demand for China flights stymied by trade restrictions and tight control. Chinese airlines won’t even use all their allocated routes, but U.S. carriers can’t step in and take them over. Hopefully, recognition of this demand will stimulate movement toward an open skies agreement with China.

What’s great about this is the increased connectivity. By 2009, virtually every U.S. airport with commercial service will have one-stop access to China. This is an impressive gain since deregulation, when Pan Am and Northwest Orient dominated Asia routes (and often flew through intermediate gateways like Honolulu, Anchorage, and Seattle), and especially with respect to service to nonstop service to China itself, which was very limited and did not begin until the 1980s. The remarkable expansion of accessible China service to almost everywhere in the United States is something to applaud.

Delta, United get first crack at new China routes [USA Today via Today in the Sky]

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Adrian Schofield over at Things with Wings reports that Michael Levine is now under consideration to replace outgoing FAA administrator Marion Blakey. His record is great, dating back to to when he was an administrator at the Civil Aeronautics Board overseeing deregulation. He wrote a great op-ed decrying U.S. protectionist policies on foreign ownership in the Wall Street Journal this spring. I don’t know how effective he could be at fixing the outdated in-some-places-overwhelmed* air traffic control system–one would he would be no worse than Blakey–but his sensible, pro-competition viewpoint should be welcome at the FAA.

Levine a contender for FAA Administrator? [Things with Wings]

*See me get called on the carpet in the comments.

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Talks with Beijing in May secured thirteen more nonstop round-trip passenger flights between the United States and China. U.S. carriers salivated at the possibility, eagerly promoting their prospective services with splashy websites and campaigns worthy of an Olympic bid. (It totally slipped by me, I suppose, that the 2014 Winter Olympics were announced for Russia last month.) A few U.S. majors have no China rights at all, and since the Chinese market is growing faster than routes are becoming available, demand is increasing, and airlines can charge fare premiums.

But Chinese airlines are not so excited about the new rights, according to ATW Online. The agreement with China allows Chinese carriers a number of these rights, but none of the big three there–Air China, China Eastern, and China Southern–applied for them. Chinese airlines have faced competitive disadvantages on transpacific routes in service and fares. They have not even used all their available slots. Therefore, four little-known, less-networked airlines have received the Chinese slots.

There is strong demand for nonstops between China and the United States. If Chinese carriers are not interested in flying them, U.S. airlines are more than willing and ready. They are chomping at the bit. They have the planes, passengers, and route networks to make them work. Sound public policy would allow the best airline to fill a space, regardless of nationality. Although this provision of the agreement is likely intended to create connection options on both sides of the Pacific, it only works if ambitions are created equal. This latest development illustrates why open skies agreements make more sense: they allow the market to assign routes, not bureaucrats in Washington and Beijing.

China’s big three pass on new transpacific services; four smaller carriers apply [ATW Online]

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