US airlines head to Heathrow

'Open Skies' treaty expands options

A plane approaches London Heathrow last week. US carriers Delta, Continental, and Northwest began flights to Heathrow yesterday. (Luke Macgregor/Reuters)

Delta Air Lines Inc., Continental Airlines Inc., and Northwest Airlines Corp. began flights into London Heathrow airport yesterday as a new "Open Skies" treaty expands trans-Atlantic air travel.

The European Union-United States accord ends a lock on flights between the United States and Heathrow for British Airways Plc, Virgin Atlantic Airways Ltd., United Air Lines Inc., and American Airlines under a 1977 agreement. The airport is Europe's busiest and attractive to other carriers as the continent's key hub for premium travel.

"The main battleground is the corporate traveler using the business-class cabin," said Chris Tarry, an independent airline analyst in London. "US airlines which are new entrants to Heathrow can now offer their corporate clients a greater range of opportunities."

Delta, Continental, and Northwest are the third-, fourth-, and fifth-largest US airlines, respectively, and their Heathrow arrivals will be joined by a flight from US Airways Group Inc., the No. 7 carrier. Today, Air France-KLM Group will fly from the United Kingdom to Los Angeles.

The influx of flights means seating capacity between Heathrow and the United States for the summer season is up 21 percent from a year earlier, according to Aviation Economics, a London-based consulting company. Total capacity is up 3.1 percent.

The European Union and United States agreed to Open Skies last year, after four years of negotiations, amid hopes it would encourage competition and reduce ticket prices. It replaces a series of pacts between individual European countries and the United States.

The European Union's regulatory arm estimated last March the agreement will increase annual EU-US traffic by 26 million passengers to about 73 million in five years. It will also bring consumer savings of as much as $19 billion, the European Commission said.

"If anyone's looking for a price reduction overnight, that's not going to happen," said Patrick Murphy, a Washington consultant and deputy assistant to transportation secretary under Presidents Bill Clinton and George H.W. Bush. "The fuel cost increase will overwhelm the benefits of more competition."

US airlines have lifted fares or surcharges 10 times since Jan. 1 as jet-fuel prices rose 80 percent in the past year. EU carriers including British Airways and Aer Lingus Group Plc have also increased fees this year.

Open Skies also gives European Union carriers the right to fly to the United States from any of the bloc's countries instead of just their home nations. Air France will take advantage of that by operating nonstop from Heathrow to Los Angeles.

EU governments say they may suspend traffic rights for US airlines in the future if a second-stage Open Skies agreement allowing greater access to North America is not reached. Discussions on the second stage, which would allow European carriers to fly domestic US routes and acquire more than 50 percent of a US airline, begin May 15.