Open Skies The Open Aviation Area Donal Lamont

Open Skies - The Open Aviation Area Donal Lamont

Current Status n n All Aer Lingus pilots are represented by IALPA; and Aer Lingus is Ireland’s only designated airline under the current Ireland/U. S. Bi-lateral. IALPA was instrumental in effecting the policy change that, in 1994, allowed an equal number of non-stop flights from Dublin and Shannon. The new policy saved Aer Lingus from failure – and ensured the continuation of direct services between Ireland & the United States. IALPA supports Open Skies and looks forward to its members benefiting from the opportunities that the new policy shall bring for Irish airlines.

Open Skies – Talks to Date n n n October 1& 2 – Opening Positions Focus – Prompt exploration by each side of possibility of Reaching Agreement Deregulation ensures growth

Progress n n n Aer Lingus operates to JFK/BOS/ORD/LAX & BWI – the latter under the “Cities Programme” Aer Lingus had indicated that it intended to open a number of new routes to the U. S. - if any improvement in access were to be negotiated under the existing bi-lateral. No negotiations occurred – then the direct E. U. /U. S. negotiations started.

Background & Context n n n “Transportation activities increasingly competitive due to technology; demographics & other structural changes; Competition makes Government Regulation increasingly cumbersome and outdated so the regulation impedes rational allocation of resources” (Harvard analysis – 1959!) “Historic opportunity to build on framework of existing agreements with the goal of opening access to markets and maximizing the benefits to consumers, airline and communities on both sides of the Atlantic” (Opening comments – US) “. . never underestimate protectionism, among governments and airlines who oppose change and wish to maintain privileged positions. . ”

Potential Outcomes n n n n New “Air Services Agreement” – not a set of new Bi-Laterals Full access to markets of other side – including right of establishment Conflicts – needing resolution “CRAF” & “Fly America (Europe)” Policies Socio-economic issues – (Labour Issues) – Competitiveness? Security – a “deal-breaker? ? ” Cabotage & Wet Leasing

Principal Issues n 1. 2. 3. Issues to be Resolved – Scope of an E. U. /U. S. Agreement (Geography, Scheduled/Charter, EEA/Switzerland & Implementation) Commercial Issues (Ownership/Control, Market Access, Ops Flexibility, Pricing, Code-sharing, Leasing, User Charges, Ground Handling, CRS, Intermodal Ops & Government Procurement) Framework Issues (Licencing & Designation, Safety, Security, Competition, State Aids, Environment, Social Implications, Dispute Resolution, Consumer Protection, Customs Duties, Statistics & Consolidated Text).

Threats & Risks n n n Assumption of Open Aviation Area As U. K. & Ireland are major markets, Alliance focus inevitable STAR & Skyteam enter main markets (JFK/ORD) Low-cost U. S. airlines (Southwest, jet. Blue, Song, American Transair) Aer Lingus greatly disadvantaged by current Bi-Lateral Agreement Shannon – a Special Case?

The “Low-Cost” Industry n n n n Domestic Deregulation (1978) – the impetus for Southwest et al Extension of U. S. “Low-cost” operations to coast-to-coast routes Southwest (BWI-LAX) & jet. Blue (JFK-LGB) B 737 -700; A 320 & B 757 – Capable A/C Cruising speed – 4% slower than A 330 – 10 minutes on JFK-Cork flight OAA would open transatlantic markets to all U. S. Airlines Market also opens to easy. Jet & Ryanair

OAA Opportunities n n n IALPA depends on successful airline strategies in OAA Environment Pilots are efficient, productive & flexible Aer Lingus brand very strong in U. S. – limited by current Bi-Lateral New markets in Florida, California, South, North-west & North-east US Access to Broader EU/US Markets

Key Goals n n OAA – Essential if Ireland/US Business is to grow Tourism & Industry to Benefit Cabotage – Essential for EU Airlines to balance US Opportunities in Europe Win/Win– IALPA & Aer Lingus & Ireland Inc.