While the start date of the air transport agreement has not been finalized, most observers believe it will become effective as of March 20, 2008. At that time, every U.S. and EU airline will be permitted to fly between every city in the United States and every city in the European Union. This agreement also removes any barriers from setting fares, and airlines can operate without restrictions on the number of flights, the aircraft type used and the routes chosen.

It's all good news. Travelers will find more flights, probably at lower fares, after the open-skies policy takes effect. And corporations with heavy international travel will be able to negotiate far-ranging agreements with individual carriers or, more likely, carrier alliances.

Looking to Heathrow
Without a doubt, more carriers will begin serving London's Heathrow Airport, which traditionally has restricted the number of U.S. and U.K. flag carriers that can provide service to the facility as part of the existing bilateral agreement.

Both Continental Airlines and Delta Air Lines are expected to launch service between their major hubs and Heathrow sometime before the summer of 2008.

Antitrust and Alliances

The various alliances between U.S. and foreign carriers are likely to file for antitrust immunity with the U.S. Department of Transportation in order to offer pricing structures for corporate travelers through all of the members of the alliance. If these antitrust applications, some of which have been filed and others that are in the process of being filed are approved by the Department of Transportation, competition in the transatlantic market essentially will be alliance to alliance, as opposed to carrier to carrier.

And the DOT is quite likely to approve that antitrust immunity. Historically, the DOT has resisted granting such immunity for alliance pricing agreements due to antitrust concerns. However, the agency has indicated in some public comments that the new open-skies treaty between the EU and the U.S. has satisfied many of these concerns from an antitrust standpoint, and, therefore, is more likely to approve such pricing arrangements.

Branching Out

Expect some of the smaller European carriers to begin nonstop service to cities such as San Francisco, Orlando and Las Vegas once the barriers have been removed through the open-skies agreement. The new bilateral agreement is likely to spur more low-cost competition in European/U.S. markets, particularly if some of Europe's no-frills carriers decide to add the transatlantic service to U.S. markets.

Easier Rules

Under the new agreement, travel departments of companies that have U.S. government contracts will be allowed to send their travelers on an EU airline between two foreign points and on all U.S./EU routes not covered by a city-pair contract established by the General Services Administrative. This will provide more flexibility for the corporate traveler, particularly with the availability of intra-EU flights.

To Your Door

For now, the marketplace is quiet. But that won't last long. For competitive reasons, carriers or alliances won't be publicizing new routes for at least a few more months. But then, corporations with major transatlantic business will be the targets of significant marketing efforts by both EU and U.S. flag carriers.

And those efforts should be welcomed by travel managers. This historic agreement will benefit the traveling public, but the primary beneficiary will be the corporate traveler.