EU Effect on the US Aviation

The impact of the European Union on the aviation industry of the United States began with the signing the Air Transport Agreement. This event took place on 30 March 2008. The Agreement is about the international aviation and its normalization. It explains the way and certain steps. With the help of the Agreement, European Union wanted to create a transatlantic Open Aviation Area. There should have been a single transport market, free flows of investments, and no limitations on any kind of air services.

There are two stages of the Air Transport Agreement. According to the First Stage Agreement, the EU airlines had no more limits, and could land in any point of the United States. It caused the increase of services even where previously there used to be restrictions. Although, the competition between the both sides of the Agreement extremely increased, the United States and the European Union began to work together in the cases of the safeties in the aviation industry and, what is very important, its influence on the environment. In addition, they cooperated in order to improve the conditions and comfort for the passengers. Furthermore, the First Stage Agreement contains the plan of the next Second Stage Agreement.

The First Stage Agreement was the beginning point for the Second Stage Agreement because it contained also with the perspective points of the next step. In May 2008, they sides began the debates which continued until the 25 March 2010 and consisted of the seven meetings. The Second Stage Agreement is based on the main innovative and beneficial pints of the First Stage Agreement, but with the further development steps. It opens the new opportunities of the market access and investment possibilities. Moreover, the points considering safety, environment, and comfort are more specific this time. The Unites States and European Union agreed in the Joint Statement on the Environment.

The Air Transport Agreement had certain benefits for the US aviation industry in general. First of all, it is about the economic side. The Agreement costs approximately 12 billion dollars benefit for the transatlantic airline. Moreover, it was the push for the creation of round 80,000 new jobs for people. The air transport system became more productive because the distances between suppliers, manufactures, and customers reduced. The supply chain became more efficient. It is beneficial for the US businesses, which are tightly connected with the air system. According to the studies of the industry, 25 percent of the sales depend on the airlines. Furthermore, in the sector of the information technology, this amount reaches 40 percent. It became easier to lead the international trade. In addition, the productivity increases because of the higher competition. As a result, the customers have a wider choice.

There are more direct investments. It causes the liberalization of the international market. Thus, there is closer cooperation not only among the airlines, but also among the countries. In the United States, many of the manufacturers, labor, service providers, and the economy in general benefit. In addition, hotels, restaurants, car rentals and other tourism services have more clients and better satisfy their needs. The prices lowered because of the competitions. It means that there are benefits not also for the industry, but also for the consumers.

However, there are also negative moments. For instance, the United States had a trade deficit in passenger fares because there were more travelers from the US to Europe on the European planes, comparing with the European travelers who fly to the United States using US airlines. It caused the deficit of overall travel and tourism trade with European Union. On the other hand, in the Second Stage Agreement, there were certain limits, which improved the situation. To conclude, there always are opportunities for new great commercial possibilities in the future.

The other factor of the influence of the European Union on the aviation industry of the United States is the European Union Emissions Trading Scheme. Even though the Scheme has a small impact on US airlines and emissions, the aviation operations continue to grow. First of all, it concerns fuel prices. Now, the fuel price is the reference fuel price plus the cost of CO2 emissions. That caused the increase of the CO2 costs comparing with the other sectors. Therefore, it is beneficially to purchase it from the other sectors. The problem is that airlines are not able to pay these additional costs. One of the reasons is the imperfect competition. The determinative factors consist of the implementation and rapid expansion of the aviation industry. The costs for traffic and CO2 emissions rise continuously. “Increasing the market share of US carriers increases emissions from US airlines in the reference and policy scenarios, but has no impact on profit margins in policy scenarios relative to the reference case” .

That is why, the President of the United States Barack Obama made a decision of a bill which will shield the US airlines from this Emissions Trading Scheme. It was signed recently, on 5th December 2012. On one side, this Scheme is pretty good for the environment, but is not beneficial foe economy.

To sum up, the United States and the European Union has tight relationships in the case of the aviation. The Air Transport Agreement, which was signed in 2008, has mostly positive influence on the aviation industry of the United States. Moreover, it effects the consumers’ services, tourism and business sectors. There is plenty of improvement which makes it easier to cooperate for the United States with the countries of the European Union. There is also a negative effect on the fuel prices, according to the Emissions Trading Scheme. Recently, the President of the United States declined to follow this Scheme. However, there are plenty of further opportunities of the cooperation. More than likely, there will be find another way how to protect the environment without any harm for the economy, it is just the question of time.