ANALYSIS: Mr Obama, Europe and Aviation

ABTN editor Stanley Slaughter on the implications of the US presidential election

Barack Obama's historic victory in the US presidential election has been warmly welcomed around the world.

But there is least one part of Mr Obama's views which the European aviation industry would do well to clarify as soon as possible.  Just how much of a "protectionist" is he and what affect is this likely to have on the talks for the second stage of the US-EU Open Skies deal?

Throughout his successful campaign, Mr Obama regularly referred to the need for protection.  There are more than 350 links on Google between the president-elect and protectionism. But while his party, the Democrats are far keener on protectionism than their rivals the republicans, there is some doubt about Mr Obama's commitment to the cause.

One American newspaper highlights a leak during his campaign to Canadian officials that his protectionist speeches were "more reflective of political manoeuvring than policy."

The same newspaper quotes Marco Simoni, a research fellow at the London School of Economics' European Institute, as saying: "I would not expect an overall rise in protectionism.

"Because Obama's advisers are among the top economists in America and they know how damaging this would be. But maybe some limit to international free trade, and also perhaps a more prudent approach to international movement of capital."

But there are also pointers in the other direction. The new EC Commissioner for Trade Lady Ashton said on BBC radio last week that she hoped to get the latest currently stalled World Trade Organisation treaty - the Doha Round - signed before President George Bush left office as she thought it might be tougher to get it through President Obama.

There are also fears that a planned US bi-lateral trade agreement with South Korea would flounder while Mr Obama has also indicated he might impose restrictions on Chinese textile imports.

So if his stance is genuinely protectionist, just what are the chances of a successful second stage agreement on Open Skies.

Not very high. The problem is that this is the US's turn to make concessions. For the first stage, Europe opened up London Heathrow Airport allowing any US or European carrier to run transatlantic services from London and also allowed US airlines to run intra-European services.

The first concession has seen new airlines, Delta, Air France and Continental Airlines run services from Heathrow with Lufthansa likely to join them next year.  

What the Europeans want from the US to balance the agreement is a relaxation of America's strict rules on foreign ownership of US-based carriers and the right to fly internal service within the US. 

US presidents, senators and congressmen have in the past been reluctant to grant such concessions. The arguments run that ownership of airlines is somehow linked to national security and that foreign ownership would cause a loss of American jobs.

Both stances have been strengthened by the success of the Democrats in the two elections, which ran parallel to the presidential poll, for the Senate and House of Representatives. In each, the Democrats increased their majority.

The second argument has also taken on substantially more importance as the States battles with a recession and possible high unemployment.

It all leaves the Europeans in a quandary. If their talks and any potential agreement run up against the barrier of Capitol Hill, what to do then? Do they cut their losses and postpone stage two to a later date...  but what if Mr Obama is in power for eight years? Or do they say stage one is rescinded and wreak considerable damage on both Heathrow and some American carriers. Neither has a practical appeal.

However there is perhaps one way round. This is if the pressure for change comes not from the Europeans but from the US carriers themselves. These could quote both their profitable operations at Heathrow compared with their overall losses and their increasing closeness to major European carriers like Delta to Air France KLM, American Airlines to BA and United to Lufthansa .

With protectionism in the air, this may be Europe's only way.