'Open skies' has airlines set for brand battle

By freeing up transatlantic travel, the pact heightens competition among both US and European carriers

By freeing up transatlantic travel, the pact heightens competition among both US and European carriers

US-based airlines wanting to better compete in the lucrative transatlantic route were ecstatic when a few weeks ago the US and the European Union signed an "open skies" agreement.

The historic pact will scrap legal restrictions on which airline can fly to which airport between Europe and the US. During intense negotiations, several US-based airlines with transatlantic routes united as one, with a representative from the Air Transport Association (ATA) working on behalf of their interests.

With an agreement endorsed by the ATA and considered favorable to US-based airlines, "now the issue becomes a competitive one among the individual airlines as to how they will take advantage of it," explains David Castelveter, VP of communications at ATA.

"Our big push has been about being international," says Anthony Black, senior manager of corporate communications at Delta Air Lines, which is just coming out of bankruptcy protection. "We're the largest US carrier into Europe, and this will only increase our flexibility and expansion into Europe. The big access for us will be [London's] Heathrow."

Heathrow, the world's busiest international airport, is considered the key airport in the transatlantic route because it is a shorter-haul European destination that serves as a gateway to so many other places. Yet only four airlines under the current rules are allowed to fly between the US and Heathrow: US-based carriers American Airlines and United Airlines, and UK-based airlines British Airways and Virgin Atlantic.

For foreign-owned airlines, the opening of the transatlantic market means a likely repositioning of their brands to US passengers. Germany's Lufthansa is also gunning for "slots" - the right to take off and land -at Heathrow, as well as other major hubs previously closed to the airline because of various bilateral agreements. Open skies allows any European-based airline to fly to any US city, and not just from its origin city.

"A lot of customers see us as the German airline," says Jennifer Urbaniak, Lufthansa's communications manager for North America, in part because the airline can't compete with US rivals that travel direct to destinations like London and Rome.

"With new hubs all over the place, we'd be talking about an overwhelming position of our network," says Urbaniak. "It would allow us to compete on a more level playing field with US carriers."

But communications campaigns pushing expanded transatlantic routes are a ways off. Open skies doesn't come into effect until March 30, 2008, and in the meantime, the airlines will have to negotiate for those coveted "slot" times, particularly at Heathrow. The airlines will announce their summer 2008 schedules in the fall, and that is likely the earliest they'd come out with any significant communications push.

Once that happens, many experts believe the increased competition will lead to cheaper fares. And some of the airlines that might help to drive a price-driven transatlantic route battle will be US carriers that fly, ironically, mostly domestically - not least, JetBlue.

JetBlue doesn't own aircrafts that can support flying transatlantic. So the airline plans to exploit the deregulated market by forging revenue-sharing alliances with like-minded (i.e., affordable, yet high-frills) European airlines looking to expand their reach in the US.

JetBlue will first work with Ireland's Aer Lingus, which recently announced plans to add flights to San Francisco, Washington, and Orlando, FL. Through such alliances, says Jenny Dervin, JetBlue's director of corporate communications, US passengers could buy a single ticket to Ireland and other European cities.

"That is where we see the real value," says Dervin. With more choice on the horizon, she believes passengers will base their transatlantic ticket decisions on price, "rather than loyalty or because of the frequent flyer program." Once these partnerships are formalized and new routes go up for sale, she says, Jet Blue will "blow that service sky high. Every dial on the communications box will be turned on."

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