Open Skies Agreements and U.S. Aviation Policy

Open Skies agreements remove most government control over routes, capacity, and fares between partner countries, letting airlines decide where and how often to fly.

The idea

Under traditional bilateral agreements, governments decided which airlines could fly which routes, how often, and sometimes at what price. An Open Skies agreement removes most of those restrictions between the partners. Airlines may serve any point in either country, set their own capacity and frequencies, and price according to the market.

The U.S. program

The United States began pursuing Open Skies agreements in the early 1990s. The first was with the Netherlands in 1992. The policy expanded steadily, partner by partner, across Europe, Asia, Africa, Latin America, and the Middle East. The Department of State maintains the official list of Open Skies partners.

What an Open Skies agreement typically includes

• Open entry on all routes between the two countries.
• Unrestricted capacity and frequency.
• Pricing determined by the market, with limited government intervention.
• Fifth freedom rights beyond each country.
• Rights for cooperative marketing arrangements such as codesharing.
• Open charter and all-cargo rights.

Effects

Open Skies agreements are generally associated with more routes, more competition, and lower fares. They also enabled the global airline alliances, whose members coordinate schedules and share codes across partner markets.

Limits

Open Skies agreements do not, in general, grant cabotage within the United States, and U.S. law continues to limit foreign ownership and control of U.S. airlines. Those limits have been a recurring point of contention with partners, especially the European Union.