The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.
“U.S. INTERNATIONAL AVIATION POLICY” mentioning the U.S. Dept of State was published in the Senate section on pages S19237-S19239 on Dec. 22, 1995.
The publication is reproduced in full below:
U.S. INTERNATIONAL AVIATION POLICY
Mr. PRESSLER. Mr. President, I rise today to discuss a very important development in U.S. international aviation policy that occurred over the past year. I do not refer to any particular bilateral aviation agreement, although the number of new international air service opportunities created in 1995 was impressive and unprecedented. Instead, I wish to highlight the critical lesson we learned during the year and, hopefully, will continue to apply.
Simply put, the best way for the United States to secure the strongest possible international aviation agreements is for our negotiators to make decisions based on economic analysis with the goal of maximizing benefits for the U.S. economy. In other words, international aviation decisions should turn on what is best for our country, not which carriers can generate the most political support. In 1995, Transportation Secretary Pena did an excellent job in this regard and the results speak for themselves. U.S. passenger and cargo carriers are capitalizing on a plethora of new international opportunities, while the increased competition brings consumers lower air fares, reduced shipping costs, and greater choices.
This new focus on economic analysis, which I have advocated and enthusiastically support, is beneficial in several other regards. First, it has the practical effect of elevating U.S. international aviation policy to the status of a national trade issue. Second, it clearly defines the criteria the United States applies in assessing international aviation agreements and, by doing so, gives foreign nations a clearer understanding of what will and will not be acceptable to our negotiators. Finally, it prevents foreign nations from exploiting parochial disagreements between our carriers.
Looking ahead to 1996, it is imperative that sound economic analysis continues to be the guiding principle in our international aviation negotiations. We face a number of significant challenges, most notably aviation policy with Japan and the United Kingdom. Also, we have a golden opportunity to obtain an open skies agreement with Germany which would be a catalyst for further liberalization of air service opportunities throughout Europe. Next year is shaping up to be a very important year for U.S. international aviation policy.
Mr. President, let me emphasize that I believe the best bilateral aviation agreement for all parties involved is one which is open and permits market forces to determine what air service is provided in particular markets. Open skies agreements ensure consumers pay a competitive air fare, maximize consumer choice, and promote greater efficiencies for all carriers. Having made that important point, let me briefly turn to our relations with our three most important aviation trading partners overseas: Japan, the United Kingdom, and Germany.
As I have said in this body before, the major impediment to liberalizing aviation relations with the Government of Japan is the high operating costs of Japanese carriers. Due in large part to Japan's tightly regulated airline industry, Japanese carriers have operating costs significantly higher than United States competitors. Until the Government of Japan permits its carriers to become more competitive, there will be enormous pressure within Japan to continue to protect the Japanese air service market.
The Government of Japan, along with other Asia-Pacific Economic Cooperation [APEC] members including the United States, recently committed to work toward the goal of free and open trade between all member nations. The so-called Bogor Declaration has the potential to have a major impact on United States-Japan aviation relations. Time will tell.
One thing, however, is certain in United States-Japan aviation relations. The continued refusal of the Government of Japan to abide by the terms of United States-Japan bilateral aviation agreement concerning beyond rights guaranteed to several of our carriers will undoubtedly complicate aviation relations between our two countries.
Currently, the Government of Japan is refusing to honor United Airlines' right to provide service between Osaka and Seoul, Korea. Also, Federal Express Corporation is being wrongfully denied the right to provide service between Japan and China. In August, this body unanimously passed a resolution I sponsored calling on the Government of Japan to respect the beyond rights of our so-called 1952 carriers. Apparently that message has not yet been heard.
Why have beyond rights become such a point of contention between the United States and Japan? From a long-term perspective, I suspect it has something to do with the fact that passenger and cargo service opportunities in the Asia-Pacific market beyond Japan are booming. For example, the International Air Transport Association [IATA] estimates by the year 2010 there will be around 288 million international passengers traveling within the intra-Asian air service market alone. Beyond rights from Japan are absolutely essential if U.S. carriers are to fully participate in the booming Asia-Pacific market.
Turning to aviation relations with the United Kingdom, I continue to be very concerned about the extremely restrictive United States-United Kingdom bilateral aviation agreement. Of all our international aviation agreements, I believe the most restrictive agreement--and therefore our most anticonsumer bilateral--is the so-called Bermuda II agreement with the United Kingdom. Ironically, in areas other than aviation, our trade relations with the British are generally based on free market principles.
How lopsided is the United States-United Kingdom bilateral aviation agreement? For starters, recent statistics indicate approximately 58 percent of the passenger traffic between the United States and the United Kingdom is carried on British carriers. Due to capacity controls and other restrictions, our carriers are forced to settle for 42 percent of that traffic.
Moreover, according to a recent report prepared by the Commission of European Communities [EC], between 1984 and 1994 British carriers improved their market share vis-a-vis United States carriers by 21 percent. During the same period, a majority of carriers from other European Community countries lost market share. These statistics are particularly remarkable when one considers the fact that operating costs of European carriers generally are higher than those of U.S. carriers. Clearly, market factors are not controlling the distribution of air service opportunities between the United States and Britain.
Mr. President, the principal problem in United States-United Kingdom international aviation relations continues to be access for our passenger carriers to London's Heathrow Airport. Access to Heathrow is particularly important since it is arguably the most important gateway airport in the world. It offers connecting service opportunities worldwide. In fact, approximately one-third of all passengers traveling to Heathrow connect to flights elsewhere.
So why is access to Heathrow such a sticking point? The British argue the sole explanation is airport congestion. This may be part of the problem but, as I explained to this body several months ago, the British could create significant new take-off and landing opportunities at Heathrow simply by switching their runway operations to a more efficient operating mode. Perhaps another factor is yields on flights to Heathrow are generally 15 percent higher than those to London Gatwick Airport. Heathrow is the hub of British Airways, the most profitable airline in the world.
Since October, phase 2 negotiations with the British have been suspended. I believe, however, we owe it to consumers on both sides of the Atlantic to continue to press for further liberalization of the United States-United Kingdom bilateral aviation agreement. In that regard, I recently wrote Sir Colin Marshall, the chairman of British Airways, in response to his call for a ``bigger, bolder and braver approach'' to liberalizing air service opportunities between our two countries. I hope his enthusiasm is shared by the British Government.
I ask unanimous consent that a copy of my correspondence to Sir Colin Marshall to which I have referred be printed in the Record at the conclusion of my remarks.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 2.)
Mr. PRESSLER. Mr. President, in contrast to the reluctance of the British to liberalize air service opportunities between our countries, a very important opportunity has presented itself in Germany. Based on a recent meeting with German Transport Minister Matthias Wissmann, I believe the German Government is enthusiastic about promptly securing an open skies agreement with the United States. For this reason, I recently wrote Secretary Pena and Secretary Christopher urging them to intensify our negotiating efforts with Germany. I ask unanimous consent that a copy of that correspondence be printed in the Record at the conclusion of my remarks.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 2.)
Mr. PRESSLER. What would an open skies agreement with Germany mean for United States carriers? Such an agreement would produce significant direct and indirect benefits for our carriers. Let me explain.
In terms of direct benefits, an open skies agreement with Germany would immediately produce new air service opportunities for our carriers between the United States and Germany. Equally important, German airports would provide well-situated gateway opportunities for our carriers to serve points beyond Germany such as the Middle East and the booming Asia-Pacific market. In that regard, the Germans recently have expanded airport capacity in Frankfurt and Munich, and a new international airport is planned in Berlin-Brandenburg.
The potential of Germany as a gateway to the Asia-Pacific market is particularly intriguing. IATA estimates that by the year 2010, 10 percent of all international passengers traveling to the Asia-Pacific region annually will originate in Europe. Significantly, that is the same percentage of Asia-Pacific passengers IATA estimates will originate in North America.
With respect to indirect benefits, an open skies agreement with Germany would be an important catalyst for further liberalization of air service opportunities throughout Europe. To put this point in perspective, an open skies agreement with Germany--in combination with liberalized air service agreements we already secured with the Netherlands in 1992 and with nine other European countries earlier this year--would mean nearly half of all passengers traveling between the United States and Europe would be flying to or from European countries with open skies regimes.
Under such a scenario, tremendous competitive pressure would be brought to bear on European countries with whom we do not have liberalized aviation relations. The recent European Commission report on EC/U.S. aviation relations supports my assessment of the competitive impact of an open skies agreement with Germany. In its report, the EC astutely concluded that as a result of our successful initiatives to secure open skies agreements with some European countries, other European countries which resist liberalization ``will either have to follow the open skies policy, or risk being left behind in the competition and in market share.''
Mr. President, I believe the competitive impact of an open skies agreement with Germany would be particularly acute in the United Kingdom and France. As a result, such an agreement would have the significant collateral benefit of strengthening our hand in negotiations with both the British and the French. Let there be no mistake, both British and French airports are today competing with other European airports for international travelers and statistics clearly show the trend favors countries with an open skies policy.
For instance, between 1992 and 1994, total passenger traffic between the United States and the Netherlands grew an astounding 56 percent. During the same period, total passenger traffic between the United States and the United Kingdom grew just 7.5 percent. What does this illustrate? It demonstrates that Amsterdam's Schiphol Airport is drawing passenger traffic originating in the United States away from United Kingdom airports, particularly Heathrow. The significance of this point is not fully appreciated until it is understood that currently passengers connecting onto British carriers at Heathrow alone account for more than 1 billion pounds a year in export earnings for the United Kingdom.
Since this is such a critical point, let me share another example of market forces driving passengers to European countries that have an open skies agreement with the United States. Between 1992 and 1994, the number of passengers traveling from Germany to the United States was more or less stable. During that same period, the number of German passengers choosing to travel to the United States via Amsterdam's Schiphol Airport increased approximately 80 percent.
The potential direct and indirect benefits of an open skies agreement with Germany are tremendous. As I have said, I believe Secretary Pena and Secretary Christopher should aggressively pursue this opportunity.
Mr. President, let me conclude by saying that the international aviation challenges we face in 1996 make it imperative that our negotiators continue to make decisions based on economic analysis with the goal of maximizing benefits for the United States economy. This was a successful formula in our 1995 international aviation negotiations. In 1996, it is critical we build on the lesson we learned over the past year.
Exhibit 1
U.S. Senate, Committee on Commerce, Science, and
Transportation,
Washington, DC, November 21, 1995.Sir. Colin Marshall,Chairman, British Airways, Berkeley Square House, 6th Floor,
London, England.
Dear Sir Colin: With great interest I read your speech on United States/United Kingdom aviation relations delivered to the Wings Club in New York last week. Your call for a
``bigger, bolder and braver approach'' to liberalizing air service opportunities between our countries peaked the interest of many on this side of the Atlantic.
I agree with you that no two nations are better suited to have a fully liberalized transatlantic air service market than the United States and the United Kingdom. To the extent nations worldwide have embraced the Bermuda I and Bermuda II agreements as a model for restricting air service opportunities in their markets, such an initiative would undoubtedly serve as a shining example for open aviation markets globally. As you correctly observed, consumers benefit most when markets are open and competition is robust.
I hope we can continue the dialogue we started in London in July on how this vision can come to pass. In the meantime, please contact me or Michael Korens of my staff if I can be of assistance.
Sincerely,
Larry Pressler,
Chairman.
Exhibit 2
U.S. Senate, Committee on Commerce, Science, and
Transportation,
Washington, DC, December 1, 1995.Hon. Federico Pena,Secretary, Department of Transportation, 400 Seventh Street,
SW, Washington, DC.
Dear Secretary Pena: As Chairman of the Senate Committee on Commerce, Science, and Transportation, I am writing to urge you to intensify your efforts to obtain an open skies aviation agreement with the Federal Republic of Germany. I am aware that some progress has been made in this regard. I believe, however, the importance of this initiative calls for renewed vigor on the part of both the Department of Transportation and the Department of State.
In addition to immediately creating additional new opportunities for our carriers in Germany, such an agreement would be enormously beneficial to our national interest in liberalizing air service markets throughout Europe. Simply put, an open skies agreement with Germany would bring considerable competitive pressure to bear on all European countries which currently restrict air service opportunities to our carriers.
For instance, I believe an open skies agreement with Germany would contribute significantly to our efforts to liberalize our air service relationship with the United Kingdom. Moreover, such an agreement would provide invaluable leverage in securing a bilateral aviation agreement with France.
Mr. Secretary, I am aware that you share my vision of an open skies agreement with Germany. As your efforts in that regard intensify, please contact me if I can be of assistance.
Sincerely,
Larry Pressler,Chairman.
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