US-EU open skies agreement rolls out in a depressed global environment: IATA

The US-European Union agreement on open skies comes into effect against the backdrop of a slowing US economy, IATA said. However, consumers would benefit from greater choice and lower fares due to intensified competition, a statement from Giovanni Bisignani, the International Air Transport Association (IATA) director-general and CEO said.

A weak US dollar and strong Asian and European economies are boosting US exports and outbound business travel, said Bisignani. ''US carriers are growing trans-Atlantic traffic in double-digit figures,'' he said. ''By contrast, the competitiveness of Europe's carriers is negatively impacted by the strong Euro which is also dampening European exports.''

According to Bisignani, trans-Atlantic competition would increase in April with the new route opportunities, but a full set of commercial freedoms was still required for airlines to make use of the new opportunities.

''The stage two talks must address the liberalisation of ownership rules so that airlines can merge or consolidate where it makes business sense. Every other industry has the opportunity to go global. Why not the airlines?'' Bisignani asked.

Though US airlines are permitted to invest in their European counterparts, ownership rules prevent foreign investment in American carriers.

''US-EU open skies will be yet another variable in a very complicated equation,'' said Bisignani. ''Out of Europe's busiest international hub-Heathrow-there are 25 per cent more weekly flights scheduled to serve the US market.

''Consumers will benefit from greater choice and lower fares due to intensified competition. We expect a counter-cyclical boost in April traffic as result. The question will be how much and for how long.''

Meanwhile, as a sign of worsening times, IATA has reported a sluggish freight growth of two to three per cent in February.