The negotiations are over. The treaty has been signed. The skies across the Atlantic are now open for free movement of flights between European and U.S. cities. Now the battle commences between airlines as they prepare for their new-found commercial freedom when the Open Skies agreement comes into action in March 2008.The main beneficiaries of increased competition between airlines are likely to be business travelers. And while they may not see a dramatic reduction in ticket prices, they can look forward to a greater choice of flights from a greater number of airlines as well as an increase in business-only services.
Airlines with the strongest brands and best quality products are likely to lure passengers away from European rivals by launching flights from other major European cities.
British Airways has confirmed it will launch its first transatlantic flights from continental European cities once the agreement comes into place next year. And while it is not ready to confirm branding, types of aircraft, or even final routes, a BA spokesperson said likely contenders for new transatlantic routes will be from business destinations such as Paris, Frankfurt, Brussels and Milan.
She also confirmed that, contrary to expectations, these flights would not be exclusively business class. Though they will offer premium cabins for business customers.
Virgin Atlantic is expecting to place a greater focus on its business customers and has established a team to work towards the launch of business-only flights in 2009. These will fly from airports such as Paris, Frankfurt, Milan and Zurich and the airline is currently in discussion with Airbus and Boeing to place orders for between 10 and 15 aircraft.
Virgin and BA are both confident they can entice customers away from European national carriers due to the strength of their brands and service offering. As Paul Charles, director of corporate communications at Virgin Atlantic says, "we are seen as a truly global brand and well-placed to compete with the quality of business services currently coming out of cities such as Paris and Milan."
Open Skies will put an end to the exclusive arrangement granted to British Airways, Virgin Atlantic, United Airlines and American Airlines to fly transatlantic out of Heathrow.
As a result, airlines including BMI, Continental Airlines and Northwest Airlines are all lined up to launch direct transatlantic flights from Heathrow from next year. But with the airport currently operating at almost-maximum capacity, it is likely that new flights will be limited.
Airlines operating from other airports, in particular the new business-only players such as Eos, Silverjet and Maxje, will, however, see an opportunity to expand their own services across the Atlantic.
Joshua Marks, executive vice president for planning and development at U.S. business-class airline, Maxjet, says it expects to "strengthen its position at Stansted" as a result of the Open Skies agreement. "With more flights moving from Gatwick to Heathrow, three major airports will become two in London." As such, he adds, Stansted could become the default airport for travelers coming from and to the east of the city.
Now that the U.S. Department of Transport has given approval for Maxjet to launch flights from Stansted to other countries with open skies agreements with the U.S., business travelers in London should also be able to pick up Maxjet flights to destinations such as India.
Maxjet has confirmed that it will not fight for slots at Heathrow, which Marks says has become an "operational nightmare."
Yet, other premium-only services are not ruling out the move. Silverjet, currently operating out of Luton, has been in discussion with (un-named) airlines interested in striking deals to launch flights out of Heathrow.
Opportunities have been offered for flights to U.S. cities such as Los Angeles, says Lawrence Hunt, Silverjet's chief executive. "This is an ongoing dialogue," he says.
But before they make the move, they would need to see major changes to facilities at Heathrow in order for it to offer the "personalized, discreet and carefree" travel experience Silverjet offers customers from Luton. "Heathrow has become a zoo and the customer experience has become appalling," he says.
Airline executives agree that growth in transatlantic flights as a result of the Open Skies agreement will be aimed at business customers. As Hunt says, airlines have little else to offer, or gain, in terms of economy long-haul seats.
And as Charles at Virgin points out, given the success of the new business-only entrants and the simultaneous ongoing demand for its business class seats, "there's clearly a market out there for business-only flights."
While there may be some softening of prices from Heathrow as airlines fight for slots, few expect prices for business travelers to drop dramatically as a result of the Open Skies agreement. As BA's spokesperson says, UK to North America is already a very competitive market. "It is not as if we are moving from a monopoly," she says.
Despite this, there is still a great deal to offer business customers and those that will make the most of the opportunity, says Anthony Concil, spokesperson from IATA, will be the most innovative.
"We have created a new playing field and it is up to players to make the most of that and for governments to take the agreement forward towards further liberalization."
Deregulating US-EU Air Traffic
Battle will soon be joined in the Atlantic crossing between the United States and European Union as the Open Skies deregulation initiative comes into effect early next year. Although other carriers are not expected to make much inroads into flights coming into and out of London Heathrow--Europe's busiest airport--since the currently authorized US-EU carriers American Airlines, United Airlines, British Airways, and Virgin Atlantic have the route filled to capacity, other regional airports are bound to see more competition, hence lower fares. (The Heathrow situation may be subject to change as the controversial third runway nears fruition.) In the meantime, it's game on for carriers at other airports. From the Chicken Noodle Network (CNN):