EU deal to open trans-Atlantic market could hinder A380 sales

Published 9:00 pm Sunday, March 4, 2007

The European Union looks as if it will support a deal that will increase competition for routes between Europe and the United States. Carriers such as British Airways, Virgin Atlantic, American and United Airlines dominate the trans-Atlantic market. If both the EU and U.S. Congress approve the agreement, any American or European airline could fly routes between any city in Europe and any city in the United States. (http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aDGBtkNjU1iw)

It’s a little early to tell how this deal will impact aircraft manufacturers Airbus and Boeing. Both American Airlines and British Airways depend more heavily on Boeing for jets while Virgin leans on Airbus. United favors Airbus only in single aisle jets.

It’s difficult to predict which airlines will enter the market and successfully challenge established carriers. How that trickles down to Boeing and Airbus is anyone’s guess.

However, one impact seems fairly clear: the deal won’t help Airbus’s A380 sales. The strategy behind the A380 depends heavily on travel between major cities with passengers connecting to smaller cities. The EU-U.S. arrangement would expand the number of cities from which passengers could take nonstop trans-Atlantic flights.

“Anything that deregulates or liberalizes air traffic hurts the A380,” said Richard Aboulafia, an industry analyst.