Will the Open Skies agreement drive down the cost of transatlantic travel?

This year's Open Skies agreement, the deregulating measure slated to open up competition in the transatlantic market, is set to unfurl at the end of next month.

Airlines from the left and right side of the pond are already preparing for the demand. Traditional airports like London's Heathrow will now be opened up to all bidders (depending on available slots), which in turn will open the door for smaller carriers to break into a formerly tight market.

On the surface, this looks good for passengers. Any increase in supply should result in a lower overall price, right? That's what we're hoping for. What we don't want to happen is for the recent spike in oil prices to counteract the new supply, which is unfortunately what many industry analysts are predicting. There is still hope, however. If we could get some major Low Cost Carriers (LCCs) involved in the fray, supply would go through the roof and the legacy carriers would be forced to compete in a fair market.

It's kind of like the Southwest Airlines effect in the US. Whever SWA starts service to a hub, a miniature fare war starts among the carriers and prices to that destination equalize. Now all we need is a transatlantic discount carrier to do the same thing. Any volunteers?

Read more at a related BBC article here.

Filed under: Airlines, Transportation, Airports, Budget Travel