Open Skies Agreements Helps Lower Prices for Travel Consumer

Booked airline tickets recently? Even if it has been a while, nothing much has changed. Fares are high, route choices often constrained, and additional airline fees seem to keep increasing with no end in sight. You do your best to compare prices online and try to buy tickets for non-peak times. But the experience remains costly and often inconvenient. There is a way to help lower prices and make more routes available: allow more competition for your money and keep America’s skies open.

Open skies agreements are international accords that help deregulate aviation. The non-partisan Congressional Research Service (CRS) explains that over 20 years ago, the United States started pushing for open skies with an 11 point plan that would let the United States sign agreements with other countries to let airlines have access to each other’s air routes, ease restrictions on ticket prices, and make cargo and charter deals easier, among other improvements. The United States has open skies agreements with dozens of countries, from the United Kingdom to Italy, Japan to Trinidad and Tobago.

Our government had found that open skies agreements create “a pro-competitive operating environment for U.S. airline services between the United States and foreign countries.” The Obama Administration has negotiated almost 20 open skies agreements, is negotiating more, and states that the agreements “provide U.S. air carriers with opportunities to offer new and innovative service to travelers and shippers.” Open Skies has bipartisan support, having been supported by Republican and Democratic administrations.

According to a study published in the American Economic Journal cited by the Brookings Institute, open skies agreements “generated at least $4 billion in passenger savings by stimulating competition that has reduced fares 15 percent and increased flight frequency.” Open skies, according to experts, saves money and helps make air travel more affordable.

Who could oppose such improvements to air travel? The big three American airlines, American, Delta, and United – known as legacy carriers – have an economic interest in keeping you shackled to their mediocre flying experiences and keeping competition at bay. They argue that airlines from the United Arab Emirates (UAE) and Qatar shouldn’t be participating in open skies agreements with the United States because these countries subsidize their airlines.

The legacy carriers and their union allies that have formed the protectionist Partnership for Fair & Open Skies, claim that competition with these airlines and American carriers isn’t fair because the foreign airline subsidies mean the playing field isn’t level. American, Delta, and United claim that “Gulf carriers have received more than $40 billion in unfair subsidies.”

However, “a congressional report has surfaced that says the U.S. airline industry benefited from $155 billion in support from the U.S. government from 1918 to 1999.” The United States also provided a major bailout to the American airline industry after the terrorist attacks of September 11, 2001.

According to the independent CRS, the UAE and Qatar contend that their airlines are not subsidized, and that they are flying to airports around the world that that the American airlines will not service. Support for allowing open skies competition from these countries come from American sources such as, “Airports Council International-North America, the U.S. Travel Association, the U.S. Business Travel Coalition, and some domestic passenger and cargo carriers,” not to mention Fedex. JetBlue has pointed out that:

“’Just as the three U.S. legacy carriers currently alleging unfair subsidies have exhibited anti-consumer behavior domestically, they have relied upon their immunization from antitrust laws, granted by DOT, to thwart competition internationally,’ JetBlue said. The three ‘have a history of overcharging consumers whenever the opportunity arises.’”

America’s air travelers would be the losers if we renegotiate open skies agreements with countries that support their airlines and are providing a service American flyers want at a price that works for them. For years, the big three old American airlines have gotten by in part by being the largest players in town with a virtual monopoly on serving the American market. With competition increasing, the creaky carriers are getting cranky.

In its complaint against the U.S. Airways and American Airlines merger, the Department of Justice explained that “[i]n recent years, however, the major airlines have, in tandem, raised fares, imposed new and higher fees, and reduced service. Competition has diminished and consumers have paid a heavy price.” Anyone who flies on the three major American carriers can attest to these facts. Competition can help improve the situation and give American consumers the options they deserve to make sound economic and logistical decisions when booking flights.

Open skies can allow overseas carriers to fill the gaps in service and price that American legacy carriers simply won’t meet, allowing American consumers to save money and fly to more destinations. The Economist had it right when it wrote, “[i]nstead of using its carriers’ complaints as justification for more protection, America would do more for its citizens by ending its restrictions on foreign ownership of airlines and offering complete freedom to operate internal flights.”

That approach would provide truly open skies and brighter days for America’s air travelers.

Neil Siefring is president of Hilltop Advocacy, LLC, and a former Republican House staffer. Follow him on Twitter @NeilSiefring