AIR CARGO QUARTERLY 2008 -The ins and outs of the US-EU Open Skies agreement

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By Karen E. Thuermer, AJOT

Perhaps if it had happened at a different time the Open Skies agreement between the United States and the European Union might have had a bigger bang for its buck for air cargo carriers. But given the state of the air cargo industry these days, the pact that went into effect March 31 has been basically a blow out—at least for now.
Most airlines currently report Open Skies having little impact on their transatlantic business. As Lufthansa Cargo’s Nils Haupt reports: “Theoretically, the Open Skies agreement between the United States and EU should have an impact on air cargo business. But as a carrier needs a lot of feeding and de-feeding into its hub, it is very difficult to build up regular freighter services in foreign hubs. So we currently do not see very much new business due to the new US-EU agreement.” This summer Lufthansa did replace small jets with larger aircraft on trans-Atlantic routes and launched Frankfurt (FRA)-Seattle (SEA) service, the result of Open Skies.
The biggest change to come about, so far, are the number of airlines that have shifted flights from London’s Gatwick Airport (LGW) to London Heathrow (LHR). British Airways, for one, moved its flights on the Houston-London route to Heathrow instead of Gatwick as of March 30. Much of the rush is the result of British Airways grand opening of its £4.3 billion Terminal 5 on March 27. Similarly, American Airlines shifted its Dallas/Fort Worth and Raleigh-Durham flights from London/Gatwick.
Previously, only American, United, British Airways and Virgin Atlantic could fly between Heathrow and the United States.
Aer Lingus commenced new routes to Washington Dulles (IAD), San Francisco (SFO) and Orlando (MCO) under the agreement, an offering it could not previously provide. In time, further route expansions might include the US East Coast and the Midwest.
On June 19, British Airways’ US-EU subsidiary airline Open Skies began daily Boeing 757 flights from New York’s John F. Kennedy Airport (JFK) to Paris Orly (ORY), with BAWC selling cargo capacity on the flights; service is out of JFK and Orly airports. Plans call for a second aircraft to be added to the fleet later this year that would fly from JFK to Brussels (BRU).
If all goes well, the carrier plans to operate six Boeing 757s by the end of 2009, all of which will be sourced from the current British Airways’ fleet. According to Steve Gunning, British Airways World Cargo (BAWC) managing director, BAWC anticipates this being a key route for the carrier’s Prioritise and Courier products.
“We are confident that our customers will benefit from the extra capacity,” he says.
As for overall freight volumes, however, David Shepherd, BAWC’s senior vice president for Europe and the Americas, observes: “The global economic slowdown coupled with the current weakness of the US dollar is having a negative impact on US import demand. Consequently, we have seen a drop in airfreight volumes into the United States. However, we have seen demand out of the Americas and into Europe continue to grow. Our customers exporting from the United States have really benefited from the strength of our short haul European freighter program.”
Industry observers contend, however, that the US-EU Open Skies pact would have a greater impact if the industry were not in such dire straits right now. Nevertheless, Tony Randgaard, manager of Cargo Marketing with Continental Airlines, expounds enthusiasm for the pact.
“We are very excited about Open Skies,” he says. “We jumped at the opportunity to acquire slots for Heathrow and now offer double daily service between Houston (IAH) and Heathrow and Newark Liberty (EWR) and Heathrow, since March. (We maintain service to Gatwick as well.) Our cargo business has been solid and above expectations for those routes. Overnight we increased our pallet capability to London by 28%.”
While Open Skies may not have an immediate effect on air cargo volumes, carriers have geared up for increased business. United C

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American Journal of Transportation