Remarks at the Open Skies Anniversaries Ceremony

Remarks
Patricia M. Haslach
Acting Assistant Secretary, Bureau of Economic and Business Affairs
U.S. Department of State
Washington, DC
July 10, 2017


As Prepared

Thank you, Paul for your kind introduction. And as the Bureau of Economic and Business Affairs is the host of today’s event, let me welcome everyone to the Department of State. Thank you for coming.

I appreciate being joined this afternoon by the European Commission’s Director General for Mobility and Transport, Henrik Hololei and Jeff Shane, General Counsel of the International Air Transport Association. I also want to recognize the Ambassador of the Netherlands to the United States Henne Schuwer, who will be giving closing remarks later. Thanks to all of you and the other panelists for helping us celebrate today.

We are especially honored to be joined today by so many partners, stakeholders, and friends of aviation to celebrate two significant milestones in international civil aviation.

The first is the twenty-fifth anniversary of the U.S. Open Skies policy. The second is the tenth anniversary of the U.S.-European Union Open Skies Agreement. This is why we call today’s event the Open Skies 25/10 celebration.

The flags that you see on the stage today – the flags of the United States, European Union, and the Netherlands, our first Open Skies partner in 1992, reaffirm the importance and strength of the transatlantic relationship in shaping the international aviation sector to better serve passengers, commerce, and deepen people-to-people ties around the world.

At the outset, let me give a special thanks to our colleagues in the Departments of Transportation and Commerce. DOT and Commerce have worked closely with the State Department over the last twenty-five years in advancing U.S. Open Skies policy through concluding and enforcing Open Skies Agreements – and in particular the U.S.-EU Open Skies Agreement.

The accomplishments of Open Skies 25/10 have provided great benefits for our respective travelers, traders, airplane manufacturers, and the overall economy, but they also have set trends for greater liberalization of the international civil aviation sector through Open Skies agreements and similar types of modern, liberal international aviation agreements around the world.

The benefits of Open Skies agreements have been extensively documented. For example, a 2015 academic study published by the Brookings Institution found that U.S. Open Skies Agreements have generated at least four billion dollars in annual gains to travelers, including approximately a 15 percent reduction in fares.

A 2015 study by InterVistas concluded that air service liberalization has led to a 16 percent increase in air traffic, in turn supporting approximately nine million additional jobs in aviation and aviation-related industries. We’re pleased to have Steve Martin of InterVistas here today to elaborate on their findings.

Open Skies agreements support the movement of both passengers and goods by air. According to the International Air Transportation Association, an estimated 35 percent of global trade by value is now carried by air. IATA estimates that in 2015 airlines worldwide transported 52.2 million metric tons of goods valued at 5.6 trillion dollars.

The International Civil Aviation Organization has stated that increased access to the international market for air service providers is a key component for allowing the air transport sector to maximize its contribution to the global economy.

ICAO also states the rise and prominence of low-cost carriers are helping to drive global growth as sector passenger numbers passed the one billion milestone in 2016. ICAO said this growth, which is particularly strong in emerging countries, was also instrumental in driving a six percent increase in passengers carried on scheduled services to 3.7 billion in 2016.

As we celebrate Open Skies 25/10 today, we should take a moment to reflect on how we arrived at this important occasion. In 1978, Congress passed the Airline Deregulation Act, a law that changed forever the airline industry in the United States and set the stage for greater competition, more choices for consumers, and new innovations to the industry with limited government interference. In the late 1980s, the United States began negotiating civil aviation agreements based on these principles.

In 1992, the George H.W. Bush administration defined and established our current Open Skies policy, taking deregulation forward to a new level. On March 31, 1992, then Secretary of Transportation Andrew Card, Jr., launched a new initiative initially “designed to liberalize, to the maximum extent possible, the aviation markets between the U.S. and Europe, and would offer to negotiate open skies agreements with all European countries willing to permit U.S. carriers essentially free access to markets.” It was also noted that open skies relationships could be established with other regions of the world.

DOT then issued Final Order 92-8-13 on August 5, 1992, establishing a definition of “Open Skies” and outlining the basic elements that should be encompassed in an Open Skies regime.

This policy has enjoyed strong bipartisan support, first underscored by the United States’ International Air Transportation Policy statement released by then Secretary of Transportation Federico Peña in 1995.

For the past 25 years our goal has been to negotiate Open Skies Agreements that set reciprocal, unrestrictive ground rules for aviation markets, minimize government intervention, and maximize choice for travelers. Our Open Skies agreements provisions apply to passenger and all-cargo air transportation and encompass both scheduled and chartered services.

Key provisions include:

  • Free market competition – no restrictions on the exercise of international route rights, the number of designated airlines, capacity and frequencies, or types of aircraft;
  • pricing is determined by market forces;
  • a fair and equal opportunity to compete;
  • cooperative marketing arrangements, including code sharing with airlines from Open Skies partner countries and third-countries;
  • liberal charter arrangements;
  • seventh freedom opportunities for cargo carriers;
  • high safety and security standards observed by Open Skies partners; and,
  • consultation and dispute settlement procedures to address issues that arise under the agreement.

In essence, Open Skies opens new markets and allows carriers to provide more affordable, convenient, and efficient air services to travelers, traders, and shippers; it enhances increased connectivity; and it facilitates economic growth.

Air services bring substantial economic benefits through facilitating the increase of international travel destinations through direct flights, connecting flights, and codesharing arrangements for all types of travel. Importantly, increased international air services can add significantly to a locality’s economy, creating new jobs.

The experience of the United States over the past twenty-five years, as well as that of other countries, clearly demonstrates that the best way to develop aviation to its fullest potential is to allow operating decisions to be made in an open marketplace rather than by government regulators.

Since 1992, the United States has concluded Open Skies Agreements with over 120 partners in Africa, Europe, the Middle East, Asia and the Pacific, and Latin America and the Caribbean. Our partners include countries at all levels of economic development. According to ICAO, the United States has been the global leader in concluding Open Skies Agreements.

But it all started with our first Open Skies agreement, with the Kingdom of the Netherlands, then with bilateral agreements with other European countries, culminating in the conclusion ten years ago of an Open Skies Agreement between the United States and the European Union and its Member States.

I strongly believe that the 2007 U.S-EU Open Skies Agreement is one of the most important aviation agreements not only for the transatlantic market, but also for the international civil aviation industry. Our agreement has made liberal, market-based competition the norm for international aviation.

We’re pleased to have as a panelist today John Byerly, whose prior State Department service included leading the U.S. delegation in the negotiations that concluded this landmark agreement.

Thanks to the U.S.-EU Open Skies Agreement, the strategic alliances, codeshares and other commercial arrangements that U.S. and EU carriers have entered allow them to better respond to market demands and provide greater flexibility and choice for travelers and businesses.

As we all know, an efficient and vibrant transatlantic aviation market is vital to the broader economic growth and prosperity of the region. For example:

  • The United States and the European Union have the largest trade and investment relationship in the world.
  • We trade about $3 billion in goods and services every single day. We have invested more than $4 trillion in each other’s economies.
  • The Department of Commerce reports that about 12 million U.S. citizens travelled to Europe in 2016, the largest overseas destination for U.S. travel behind Mexico and Canada.

In summary, the U.S.-EU Open Skies Agreement and our continuing strong cooperation with the European Union in civil aviation have contributed significant benefits to U.S. and European travelers and commerce, and the broader global economy.

Twenty-five years on, it’s fair to say that the Open Skies policy has stood the test of time. Looking forward, we continue to recognize the policy’s great importance to a diverse set of stakeholders, including airports, airlines, the hundreds of thousands of employees at U.S. passenger and cargo airlines, the travel and aircraft manufacturing industries, and members of the traveling and shipping public.

The fundamental principles that underlie our Open Skies policy, including reliance on market forces rather than government regulation and empowering our airlines to compete throughout the world, will continue to serve as core tenets of the U.S. government’s future aviation policies and priorities.

In conclusion, as we commence our celebration and reflection on Open Skies 25/10, let me also thank our other Open Skies partners, U.S. and European industry colleagues, academicians, experts, and interlocutors for your respective contributions to these historic achievements.

Today’s 25/10 celebration of the successes of the U.S. Open Skies policy and the U.S.-EU Open Skies Agreement would not have been possible without your contributions.

Thank you.