‘open skies’ boost for investors

The new Open Skies deal between the US and Europe is great news for property investors…
 
The new deal ends limits on which airlines can fly between the US and EU, and it is expected to lead to a large rise in the number of carriers on the routes.  Analysts say the introduction of more competition will bring down prices, but that reductions will be limited unless the current high price of aviation fuel also goes down.

A key component of the new aviation agreement between the EU and the US is that any European airline will be able to fly to the US from anywhere in the EU - not just from its home nation. British Airways and Air France have already announced their intention to launch flights to the US from outside the UK and France respectively.

But European airlines also want access to domestic airline routes in the US, says the BBC's Europe business reporter Duncan Bartlett - flights, say, between New York and Washington.  

Problems brewing?

Another Change is that US airlines can now buy a stake of up to 49% in their European rivals; European airlines by contrast will still only be able to buy 25% in US carriers.

EU Transport Commissioner Jacques Barrot is, however, not happy with that arrangement: “We plan to improve that deal, and if we do not get parity, we will roll back some of the open skies agreements from 2010” 

For April 2008, scheduled flights from the EU to the US have jumped by 11% on the same month last year, according to the International Air Transport Association (IATA).  The highest rise in traffic is observed from London, where the number of scheduled flights has jumped by 25% to 640 from 511.

As competition begins for the cheapest airfare to America, investment property in the USA, particularly in coastal areas, could begin generating some outstanding returns to investors. 

Open Skies: What is it?

• It is the end of restrictions on air travel between the EU and the US
  
  
• It means any EU airline can fly from any EU destination - not just their home country - to anywhere in the US and vice versa
  
  
• Changes at key airports, including Heathrow, could be limited because of a shortage of landing slots, which are expensive to buy
  
  
• There is debate on whether increased competition on routes will lead to cheaper tickets because of the high cost of fuel