FOR IMMEDIATE RELEASE
Friday, December 3, 1999
Contact: Bill Mosley
Tel.: (202) 366-5580
DOT 201-99
DOT Report on Eve of Aviation Conference:
Open Skies Agreements Have Resulted in
Major Benefits for Consumers
On the eve of a major international aviation conference, the U.S. Department of Transportation has released a report finding that Open Skies bilateral aviation agreements have resulted in major benefits for consumers.
The report, International Aviation Developments: Global Deregulation Takes Off, shows that multinational alliances are providing improved and more competitive services in literally thousands of markets. As a consequence, they are stimulating demand and are leading to procompetitive changes in the industry structure. The report comes as a three-day conference is set to take place in Chicago from December 5-7 that will seek to go beyond the bilateral aviation system created as a result of the 1944 international aviation conference also in Chicago. The 1999 conference will seek, among other things, to broaden future aviation relationships worldwide.
"Since President Clinton assumed office, the United States has signed 37 new Open Skies agreements that are effectively deregulating these markets," said U.S. Secretary of Transportation Rodney E. Secretary Slater. "These agreements are good for the United States and the rest of the world. They create jobs, they strengthen commerce and they promote free markets and democracy."
The department found that in markets governed by Open Skies agreements, average fares declined dramatically compared to markets without Open Skies. The greatest decrease in fares occurred in services connecting interior U.S. and foreign points with transfers in gateway cities in both countries.
In these markets, fares dropped 17.5 percent between 1996 and 1998 where an Open Skies agreement was in effect, compared to a drop of 3.5 percent in non-Open Skies markets.
In gateway-to-gateway markets, fares increased slightly in non-Open Skies markets, but dropped 11.1 percent in Open Skies markets. Fares also dropped at a significantly greater rate where an Open Skies agreement was in effect in markets involving services between a U.S. gateway city and a beyond-gateway point in the foreign country, and between a foreign gateway and a behind-gateway point in the United States.
Open Skies agreements permit unrestricted service by the airlines of each side to, from and beyond the other’s territory, without restrictions on how often carriers fly, the kind of aircraft they use and the prices they charge.
The conference that begins next week, Aviation in the 21st Century -- Beyond Open Skies, is being hosted by the U.S. Department of Transportation, the City of Chicago and the Chicagoland Chamber of Commerce. Those attending will include transport ministers and director generals of civil aviation invited from more than 100 countries; representatives of the major U.S. and international airlines and airports; labor, aviation related organizations, trade associations, manufacturers and others from the public and private sectors. Attendance is expected to exceed 500 people.
The Air Transport Action Group estimated the global economic impact of air transport at over $1 trillion in 1994, accounting for 24 million jobs -- 3.3 million employed by the industry, 7.4 million by related industries, and 13.3 million induced in the other sectors of the economy. This organization forecast that by 2010, the economic impact would approach $2 trillion, accounting for over 30 million jobs.
International Aviation Developments: Global Deregulation Takes Off is the first in a series of reports from the U.S. Department of Transportation that examines the effects of international air transportation developments. Future reports will explore developments in other broad market sectors and examine continuing evolutionary changes. To assist the department’s efforts in understanding international aviation developments, it welcomes comments on the report and suggestions for areas to be analyzed in future reports. The department requests that such comments be filed electronically at Alliance.Comments@ost.dot.gov. Such comments may be made public.
A copy of the report is available at ostpxweb.dot.gov/aviation/.
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