With more than 100 liberalized air services agreements in place, the US State Department touts Open Skies policy on its website fact sheet as “promoting increased travel and trade and spurring high-quality job opportunity and economic growth.”

In reality, some in the US are questioning whether Open Skies policy should be “revisited”; an idea that concerns those who fear a regression in the hard-won aviation liberalization steps achieved since 1992 and the history-making deal with The Netherlands.

Fast forward to May 2016 and moves were afoot by those US major carriers—that have been seeking government-to-government consultations on the Open Skies agreements with Qatar and the UAE—to get language inserted into a House Appropriations transportation subcommittee bill that would require such consultations if an Open Skies country was found to have delivered $5 billion or more in subsidies to its home airline.

Whether the move succeeds, or what it would achieve, remained unclear. But the Open Skies advocates are worried after last year’s heated debate on the Gulf carriers and this year’s protests against Norwegian Air International (NAI) getting a foreign air permit to fly low-cost service between Ireland and the US.

During a media briefing on NAI in May, US Business Travel Coalition founder Kevin Mitchell said Open Skies helped to create millions of jobs for pilots, cabin crews, cargo shippers, airplane manufacturers and their suppliers, and in travel and tourism.

“If Open Skies was a bridge that, as soon as they’ve crossed the Atlantic, [the US major carriers] they now want burned, that seems to be their game plan,” Mitchell said. “I do believe that now the US carriers have secured their antitrust immunities they are demonstrating behaviors that are quite anti-competitive.”

A changed debate

At the Phoenix Sky Harbor International Aviation Symposium in May, several airline leaders expressed concerns that protectionism was rising and could threaten further liberalization in the global airline industry.

The tenor of the airline industry has changed,
International Airlines Group CEO Willie Walsh said. “It is disappointing,” he said. “[The Gulf carrier] issue has changed the global debate about liberalization.”

“We are seeing a major reversal of the liberal approach,” Walsh said of the US airlines’ and labor groups’ opposition to the Gulf carriers.

The cargo industry was among the biggest beneficiaries of Open Skies, FedEx general counsel Rush O’Keefe pointed out during a panel discussion. “The cargo industry would be adversely affected by any dialing back of Open Skies,” he said. “The greater concern is that there will be a sense from our trading partners that the US is not committed to Open Skies.” This could cause other countries to either water down their agreements with the US or could impair negotiations for new Open Skies agreements, O’Keefe said.

The concern is reverberating globally. Although All Nippon Airways (ANA) has not changed its strategy due to any perceived concern over Open Skies with the US, the carrier’s leadership is “worried that [this issue] could affect global trends,” ANA VP-strategic planning for the Americas Tadashi Matsushita said.

Organized labor has been among the fiercest critics of the Gulf carriers, but David Semanchik, senior attorney for the Air Line Pilots Association, said the union was committed to the policy—with some caveats. “It’s time to look at some of these agreements to see if there are some improvements that need to be made and rights that need to be enforced,” he said.

Retired American Airlines SVP Will Ris, another panelist, endorsed the view that some changes may be necessary. “I think we are learning that we made some mistakes along the way, particularly with respect to Open Skies, and I think on the passenger side we made a mistake when we insisted that we always, always have fifth-freedom authority in these agreements,” he said.

Many believe the tipping point for US airlines was when Dubai-based Emirates Airline launched its Dubai-Malpensa-New York service, valid under the Open Skies rules and fifth-freedom authority, but putting a Gulf carrier into the transatlantic market.

NAI, meanwhile, represents a potential game-changer in the transatlantic market that could spur other long-haul, low-cost entrants. But for Walsh, whose company owns three transatlantic airlines—British Airways, Aer Lingus and Iberia—that’s okay. 

“It’s very well known that the Atlantic market is very competitive and I support NAI; I think they operate by all the rules,” Walsh said in Phoenix. “My view is fine, we will compete against them and we know we can win. Aer Lingus is the largest low-cost, long-haul transatlantic carrier. Norwegian is still trying to prove it can do it and their bank balance is stressed. But they are doing some very smart things and I admire them for it; this provides the opportunity to do new things. Innovation is not necessarily what you do yourself; it can be what you copy.” 

 

America’s Aviation Technology Gap

Some fear that us commercial aviation is falling behind its global competitors not just in liberalization but also in technology.

US NextGen air traffic control technology is a decade old even as it’s introduced and the nation is rapidly falling behind other countries with more advanced air traffic management systems, it was pointed out by a panel of US airlines and the head of the US National Air Traffic Controllers Association (NATCA) at the Phoenix Sky Harbor International Aviation Symposium in May. They warned of the consequences of not having a dependable, steady revenue stream to support national airspace growth through technology advances.

NATCA president Paul Rinaldi said FAA was doing better at implementing some satellite-based NextGen technology, but the problem was that this technology was already 10-11 years old. “It may be that we are moving up to an iPhone 1 level, but some of our competitors are on iPhone 6 or 7. Our system is very big, but that’s not an excuse for why we can’t streamline our processes and give our stakeholders what they need to be more efficient,” Rinaldi said.

JetBlue Airways EVP-operations Jeff Martin said US NextGen roll-out progress was “a horse race” with airlines leading sometimes and the government leading other times.

Rinaldi warned that neighboring airspace management organizations, such as NAV Canada, had the stable revenue streams that enabled them to modernize, adapt and be more dynamic.

As an example, Rinaldi said NAV Canada was “running full steam ahead” to adopt a space-based Automatic Dependent Surveillance-Broadcast (ADS-B) air traffic surveillance system, while the US was stuck with an “archaic system.”

NAV Canada is an independent, non-profit organization set up in 1996 to manage ATC. It is being held up by some in the US as a model it could emulate. But there has been congressional resistance to separating ATC management from FAA and placing that role under an independent corporate structure.

JetBlue’s Martin and FedEx Express SVP-flight operations Jim Bowman said most US airlines favored pursuing a space-based ADS-B course, which they believe will also increase safety and enable continuous tracking of individual airliners, and it had been proposed to FAA as an alternative option.

“Now is the time to be adaptive,” Rinaldi said. “We should build our own system. It should be an American system. It should not be a Republican or a Democrat or a union thing. It’s a United States thing and it should be about what’s best for this country.”—Karen Walker