Today's Barron's cover article is Opening the Skies by Jay Palmer (December 3, 2007). You may need a WSJ subscription to read this.
From the article: "A NEW BATTLE OF THE ATLANTIC is about to begin -- one that in its own way will be every bit as fierce as the one between Allied convoys and German U-boats in World War II. Only this time the battle will be waged 35,000 feet above the ocean, by the giant airlines flying the lucrative trans-Atlantic routes between Europe and the U.S. - This once-tightly-controlled market is about to be deregulated, opening the industry to a storm of change."
A new international aviation pact ("Open Skies") was signed by the US and the EU changing which airlines can fly into Heathrow. Currently only 4 airlines use Heathrow - American, United, British Airways, Virgin. All other airlines use other London airports - Gatwick, Stansted, Luton. European carriers were barred from flying to the US from anywhere except airports in their country - e.g. Lufthansa can only fly to the US from German airports.
The article says that trans-Atlantic fares should fall by 10%. More US airlines will be able to fly into Heathrow.
Heathrow is the biggest trans-Atlantic hub (70 million passangers per year).
This new agreement will allow US airlines to fly into Europe and then fly onto other European countries. E.g. Delta could fly to London and then on to Paris. European airlines will be able to fly to the US from other European countries. E.g. British Airways could fly from Germany.
Things will not change immediately because Heathrow is almost at capacity - there are no "slots" available for the other airlines. But once Heathrow expands, or they change how they use their runways, more airlines will be using the airport.
Pauline, I think you need a subscription to Barrons to read the story, since I have a subscription to the WSJ, and can't log in. I will bet that a similar story will show up in the WSJ, though, since they are part of the same company.
How to explain 'digg'? It is a social bookmarking site for news and technology. I think Wikipedia has a good description.
They recently partnered with WSJ to allow you to see their articles for free. Check out the Digg website. I don't use it but I read several articles recently how they had partnered with WSJ to provide their articles for free.
I thought Barron's came free with the WSJ subscription
I don't think Barron's comes free with WSJ. I don't believe that they are owned by the same company. I get the WSJ at home. Barron's is much more irreverant than WSJ. I read it at the Borders and can't help but laugh at some of the things they say about the economy, banks, and the current government especially in the editorial in the front of the magazine.
maybe Lufthansa will be able to fly direct from Rome to the US without going to their two hubs in Germany when the dust clears. I often see good prices for flying to Rome with Lufthansa, but for MSP that requires a flight with 2 stops becasue I have to go to ORD, then to Munich or Frankfurt, then to Rome. The more stops you make the greater the chance is that you will not connect at one of them.
Posts: 4608 | Location: St Paul, MN | Registered: 10 February 2006
I just read this somewhat related issue that seems to have a much dimmer view on future flights based on a sinking economy and higher fuel costs.
It will be interesting to see how it unfolds. I think a lot depends on how far the dollar falls and how high oil rises. I think both are at the very beginning of these trends.
It looks like the US is not letting European airlines fly within the US. US airlines can fly within Europe because they are flying between countries, but since they cannot do domestic flights in a country, they are not allowing European airlines to fly domestically in the US.
From the article: "BUT AS MATTERS NOW STAND, that can't happen. Though the original intention was that Open Skies would, as one of its provisions, liberalize trans-continental ownership, in the end Washington balked and refused to lift laws limiting foreign voting control of U.S. carriers to 25%. As a result, the rules that exist in some European countries restricting the level of foreign control also remain in place.
Washington also refused to allow European airlines the right to fly U.S. domestic routes, even though it demanded and won much the same rights for U.S. carriers within Europe, by arguing that intra-European flights should be considered international.
The federal government has committed itself to revisit the restrictions in 2010, and officially the EU has the right to abrogate the Open Skies treaty if the U.S. rules aren't relaxed then.
Yet, any change is now considered highly improbable, mainly because of intense opposition to the idea of foreign ownership of U.S. carriers from American unions and Rep. James Oberstar, the head of the House transportation committee. Still, those barriers will fall if the U.S. carriers begin to see the danger in remaining U.S.-centric amid global consolidation.
In the end, Open Skies, the Battle of the Atlantic and the struggle over Heathrow may prove to change the face of the airline business -- and dramatically reshape the future for carriers, passengers and investors."
From the article: " Ryanair, Europe's leading low-cost airline, has said it wants to establish an ultra-low-fare trans-Atlantic coach service, most likely between secondary airports like Stansted and Baltimore-Washington International. America's own top discounter, Southwest (LUV), may not be able to resist doing something similar, though its existing route structure and jet fleet aren't geared for trans-Atlantic service."
I will look for some other links to articles about this. Sorry about linking to Barrons - I did not realize you can't read it with a WSJ subscription. Steve got it as an addon to his WSJ subscription.
"The deal says that instead of being restricted about where they can operate, most airlines in the US and Europe will be free to fly from any European city to any American one and back again, though not within countries."
Slow Travel Talk 
