Europe, U.S. plan to reshape air agreement By Noelle Knox, USA TODAY BRUSSELS =97 In a decision that could reshape the European airline industry,= =20 the European Union said Thursday that it will negotiate a sweeping new=20 trans-Atlantic air agreement with the United States. The 15 countries in=20 the European Union, including Britain, France, Germany and Italy, will=20 hammer out new agreements with the U.S. on fares, routes, frequency and=20 market access. The pact, which could be two to four years in the making,=20 could increase competition and consolidation in the airline industry.=20 "Carriers on both sides of the Atlantic will probably offer more direct=20 service into some of the smaller cities," says Barbara Beyer, president of= =20 Avmark, an aviation consulting firm in Washington. The EU said it was a "historic decision," while the U.S. said it looked=20 forward to negotiations, which could start in a month. If the EU negotiates= =20 a single agreement on behalf of all of its member countries, for example,=20 European airlines would be free to fly from any city in Europe to the USA.= =20 Under current rules, national airlines must fly into or out of their home=20 country. Changing that could let Germany's Lufthansa, for example, fly=20 between Madrid and New York. The restriction was the death knell for the=20 proposed merger between British Airways and KLM in 2000. The combined=20 airline would have been allowed to fly from either Britain or the=20 Netherlands to the USA, but not both. But last year, a European court ruled= =20 that such country-to-country restrictions are illegal, forcing EU countries= =20 to scrap many of their current agreements with the U.S. The court said that= =20 the EU's principle of a single market could not give benefits to airlines=20 from one country while excluding others. The new agreement also may end the EU restrictions on foreign ownership of= =20 all airlines based in EU countries, which also have choked off=20 consolidation in the industry. U.S. lawmakers are considering a bill that=20 would allow foreign investors to own up to 49% of the voting stock in a=20 U.S. carrier, up from 25% now. Jon Ash, managing director of Global=20 Aviation Associates, said this is no quick fix for the industry, which has= =20 taken repeated blows since the Sept. 11 terrorist attacks, including the=20 Iraq war and the SARS outbreak. United is in bankruptcy reorganization, and= =20 US Airways has just emerged from bankruptcy protection, while the entire=20 industry continues to struggle. In Europe, the picture is equally bleak.=20 The Concorde will stop flying this year, and Swiss and Greece's Olympic=20 Airways are in dire straits. "Frankly, the industry had best be recovered=20 before this agreement gets done," Ash says. "You could get this done=20 tomorrow, but I don't think it would make a difference in terms of the=20 economic health of the industry." Contributing: Wire reports *************************************************** The owner of Roger's Trinbago Site/TnTisland.com Roj (Roger James) escape email mailto:ejames@xxxxxxxxx Trinbago site: www.tntisland.com Carib Brass Ctn site www.tntisland.com/caribbeanbrassconnection/ Steel Expressions www.mts.net/~ejames/se/ Mas Site: www.tntisland.com/tntrecords/mas2003/ Site of the Week: http://www.natalielaughlin.com/ TnT Webdirectory: http://search.co.tt *********************************************************