Open Skies The Open Aviation Area

1
Open Skies - The Open Aviation Area

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• Donal Lamont

2
Current Status

• All Aer Lingus pilots are represented by IALPA
  and Aer Lingus is Irelands 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.

3
Open Skies Talks to Date

• October 1 2 Opening Positions
• Focus Prompt exploration by each side of
  possibility of Reaching Agreement
• Deregulation ensures growth

4
Progress

• 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.

5
Background Context

• 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  outdated so the regulation impedes rational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..

6
Potential Outcomes

• 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

7
Principal Issues

• 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).

8
Threats Risks

• 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, jetBlue,
  Song, American Transair)
• Aer Lingus greatly disadvantaged by current
  Bi-Lateral Agreement
• Shannon a Special Case?

9
The Low-Cost Industry

• Domestic Deregulation (1978) the impetus for
  Southwest et al
• Extension of U.S. Low-cost operations to
  coast-to-coast routes
• Southwest (BWI-LAX) jetBlue (JFK-LGB)
• B737-700 A320 B757 Capable A/C
• Cruising speed 4 slower than A330 10 minutes
  on JFK-Cork flight
• OAA would open transatlantic markets to all U.S.
  Airlines
• Market also opens to easyJet Ryanair

10
OAA Opportunities

• 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

11
Key Goals

• 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/Win IALPA Aer Lingus Ireland Inc.