Open Skies became the official policy of the United States thirty years ago. On March 31, 1992, then-Transportation Secretary Andrew Card announced that the U.S. would pursue agreements with Europen countries that would, in turn, allow free access to their aviation markets.
Since then the U.S. has entered into agreements with 120 countries to allow airlines based in those countries to fly here, and giving U.S. airlines the opportunity to operate to each foreign country. This was visionary, it was great policy, and it was politically risky because protectionism almost always polls better.
This eliminates the need for bilateral agreements like the U.S. has with countries like China and South Africa, allowing for a limited number of weekly flights that must be distributed by the federal government to airlines on the basis of the Department of Transportation’s much-lobbied belief about whose flights from which cities are best for consumers. And each agreement gets mired for years, while interest groups try to extract both related and unrelated concessions as a condition of approval.
And it prevents countries from imposing conditions on foreign airlines that aren’t imposed on domestic ones, such as unfavorable landing rights or requirements that they charge higher fares. They mean more flights and lower prices.
Under Open Skies agreements airlines decide where to fly, when to fly, and how much to charge. U.S. consumers benefit by over $4 billion per year and U.S. businesses see huge gains, too. FedEx, for instance, is able to operate a hub out of Dubai for global shipping as a result of the U.S. Open Skies agreement with the U.A.E.
The first Open Skies agreement was with The Netherlands. Arguably KLM needed access to the whole of the U.S. more than individual airlines needed unfettered access to Amsterdam. On the other hand Open Skies facilitated KLM’s relationship with Northwest.
What Andrew Card and others at Transportation and State understood is that a regime of open air access around the world – not bilateral agreements, no cronyist deals, and not industrial policy – was best for both U.S. consumers and industry but also for world development.
That’s why I was so sanguine about attempts by American Airlines, Delta, and United to undercut Open Skies treaties with the U.A.E. and Qatar for nearly five years – attempting to get the Obama and then Trump administrations to place limits on flying by Emirates, Etihad, and Qatar Airways in order to limit consumer choice and raise prices – if successful it would have represented a shift away from a global order on trade that is already taking enough of a beating from the coronavirus pandemic and world sanctions on Russia after its invasion of Ukraine.
Perhaps I’m wrong, but it seems to me that Canada hasn’t taken the same approach that the USA has regarding Open Skies. Why does Canada continue to pursue such protectionism. Is it primarily to benefit Air Canada instead of Canadian consumers?
another good article, Gary.
Open Skies and joint ventures (since the two go hand in hand) have allowed global mergers on the basis of revenue while encouraging the development of air service.
As for the big US3 against the Middle East 3 pre-covid, the issue was government subsidy since it was no secret that the ME3 were developed and subsidized to grow air transportation in the ME3’s home countries.
The reality is that covid has been the great reset in decimating global air travel, US airlines received massive subsidies – far more than any other country’s airlines, and legacy airlines around the globe will make sure during the recovery that they don’t arrogantly walk away from revenue that the ME3 can carry – the mistake they previously made.
By virtue of the massive size of the US local market, US airlines should be well-positioned in global aviation and Open Skies ties the well-being of US airlines to the well-being of foreign airlines.
While there are plenty of public policy decisions that have not worked out well, Open Skies have indeed been a clear success.
Cronyism bad!
Unfortunately, open sky for the world will die in foreseeable future, so do other globalization results. Some kind of open sky may survive, but will be much limited and between allies only. Geopolitical and ideological conflict will sadly return and escalate in the next decade.
Were you sanguine or did it make your blood boil?
Thanks for this article.
Period sex makes me sanguine.