Effect of Open Skies Competition

Whatever the outcome of the US/EU negotiations are in terms of cabotage for EU carriers and the US rule on ownership and control of its carriers, it seems certain that the two parties could agree on free market access between points in the US and points in the EU along with beyond fifth freedom rights respectively. As a corollary, free market access along with no limitations on pricing and capacity would certainly open up competition between US and EU carriers. 

Competition in the air transport industry is a complex process, as there is no consensus among airline economists as to the exact nature of the industry. The demand for air services, particularly in the context of the airline passenger, is a contrived demand emerging from other demands based on activities such as business and leisure. This calls for a certain segmentation in travel where, in business travel, the passenger does not usually pay for the travel himself, whereas in leisure travel it comes out of his own pocket. Therefore, the leisure market calls for a different kind of competition, primarily based on the fare, whereas in business 

Deregulation and Airline Competition, Organization for Economic Cooperation and Development, OECD Paris, 1988 at pp. 20-21. 

The EC Treaty, also called the Treaty of Rome, was concluded in 1957 to forge an even closer union among the people of Europe . See Goh (1997). See supra, note 16. 

Matsushita Electric Industrial Co. Ltd., et al. v. Zenith Radio Corp. et al., 475 U.S. 574 (1986). Brooke, supra, note 80at 224. 

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