Gordon Bethune has been chairman and CEO of Continental Airlines since 1984 rescuing an insolvent carrier, taking it forward and turning it into an award-wining airline. He retires at the end of 2004 but not before making some interesting comments to ABTN for our monthly industry leader discourse.
”The USA and the European Union have now had several rounds of formal negotiations about liberalizing the transatlantic aviation regime and seem to be as far away as ever from any agreement.
Press reports tell us the main barrier to a deal is American intransigence on issues such as cabotage (rights for carriers to carry traffic on US domestic routes), foreign ownership and control of US airlines and the ”Fly America” policy, whereby US government officials fly only on US carriers” or their codeshare partners” flights.
The US negotiators have pointed out ” rightly ” that granting these rights will require fundamental changes to US law which will not happen anytime soon. They offered an alternative liberalization deal which expands rights for carriers on both sides, while meeting the requirements of the European Court of Justice”s 2002 ruling that certain aspects of current US bilateral ”open skies” agreements with EU member states violate EU laws. The EU has seemingly rejected the idea of such a deal and has threatened that, if the talks remain deadlocked, European governments may be forced to cancel their own bilateral aviation deals with the US.
All this may make for good political theatre and entertaining press coverage. But we shouldn”t let the posturing make us lose sight of the key issue that needs to be resolved before there can be any US ” EU aviation agreement ” genuine access for US carriers at Heathrow.
In fact, the negotiations are meaningless unless the Heathrow issue is resolved in a way acceptable to the US carriers like Continental, and the passengers and communities they represent, currently excluded from London”s main airport, which is also one of the most important airports in the world.
The Bermuda II deal that dictates that only four airlines ” British Airways, Virgin, American and United ” can fly between Heathrow and the USA is one of the world”s most anti-competitive trade agreements. Look at the facts. New York ” London is the world's number one intercontinental route. Continental is the leading airline in the New York market, carrying some 18.6m passengers a year, and the only major carrier with a New York hub. As of this summer, Continental will fly from New York to 19 cities in Europe and the Middle East. Yet we are not allowed to serve Heathrow, which is London's ” and Europe's ” most popular gateway for US travellers. And we”re by no means the only ones barred from competing there.
But it isn”t Continental and airlines like us who are the biggest losers from the Heathrow shut-out ” its consumers. Because of the lack of competition, passengers between the US and Heathrow pay higher fares and get poorer service and less choice. That”s why it”s vital that any US ” EU deal opens Heathrow”s gates to genuine competition.
An agreement that merely gives more US carriers permission to fly to Heathrow is not enough. The right to fly there is meaningless without the right to actually land. Severe congestion means that it is effectively impossible for new entrants to obtain take-off and landing slots at Heathrow in sufficient numbers and at economically viable times. Such slots must be allocated to Continental and other new entrants free of charge ” just as slots are provided to foreign airlines at US airports ” and competitive facilities, such as ticketing and check in desks, lounges and so on, must be made available at reasonable rates.
The theory that slots are readily available at Heathrow is fantasy. The few slots that have become available have been systematically gobbled up by BA, Virgin and other carriers. The walls of Fortress Heathrow are higher than ever.
The Heathrow slot and facility issue, therefore, should be the US government”s top priority in its talks with the EU about a transatlantic deal, and no agreement should be concluded that does not provide an appropriate mechanism for obtaining such slots and facilities. There”s a danger that in their eagerness to clinch a deal the two sides may fail properly to address the Heathrow problem ” in other words, we”ll get ”open skies” but the airport will remain closed to competition on US routes. Neither side should allow this to happen.
I”m eager for a deal too. I”m retiring from Continental at the end of this year, and I can”t imagine a better way of bowing out than to fly into Heathrow Airport on a Continental 777, showing the long-suffering travellers there what they”ve been missing. But if it”s going to take longer than that to achieve a deal that brings real competition to the world”s busiest international airport, I say ”let”s wait” ” I”ll willingly forgo that dream”.
Gordon Bethune, Chairman and CEO, Continental Airlines, Inc