Open Skies Effects

The runway at Heathrow Airport.

Image: Getty Images

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Dust off your passports, fellow travelers, because anything and everything innovative in the skies is happening overseas.

Thanks to a confluence of factors—new airport terminals, new service concepts, new airlines, and especially new aviation treaties—by the end of the spring, the international skyscape is going to look very different than it does today. At least in the giddy early days, service should improve, and there will be more flight options. Whether that good news will last, however, is anybody's guess.

It all starts with something called Open Skies, a prosaic name for a radical restructuring of the untidy travel treaties between the U.S. and the European Union. Stripped of the jargon and the caveats, the new deal essentially allows U.S. and E.U. airlines to fly anywhere they want across the pond, instead of laboriously negotiating route by route, country by country, and, sometimes, airport by airport.

At the moment, they all want to fly to Heathrow, London's overcrowded, unloved, and ultracompetitive major airport. Not coincidentally, Heathrow's 20-years-in-the-making Terminal 5 opens on March 27, just two days before Open Skies officially kicks in. Over the course of a month, British Airways, Heathrow's major tenant, will consolidate almost all its flights in Terminal 5—and a squadron of other carriers will immediately fly right into the space that B.A. is vacating.

Four U.S. carriers previously locked out of Heathrow will begin offering new flights there. Delta Air Lines will operate from Atlanta and New York's John F. Kennedy Airport. Continental Airlines will add flights from its hubs in Houston and Newark, New Jersey. U.S. Airways will take flight from Philadelphia. And Northwest Airlines will launch operations to Heathrow from Detroit, Minneapolis, and Seattle.

The two U.S. carriers that were already permitted to fly into Heathrow are bulking up too. American Airlines, which had been flying to London's Gatwick Airport from Dallas/Fort Worth and Raleigh-Durham, will shift those routes to Heathrow. And United Airlines is adding flights from Denver to Heathrow to augment its other London routes. Even Air France is getting into the act: It will cooperate with Delta on new flights to Heathrow from Los Angeles.

Don't think the Heathrow hustle comes cheap. Even with its new terminal building, Heathrow won't have any new runway space—and that means takeoff and landing slots are commanding insanely high resale rates. One example: In a filing with the Securities and Exchange Commission in March, Continental revealed that it paid other carriers a total of at least $209 million to acquire its Heathrow operating rights. The airport's high cost of entry probably means that fares won't decline much even with all of its added capacity.
 
British Airways has reacted to the new competition by creating an entirely new airline called—get ready—OpenSkies. It won't fly to Heathrow, though. OpenSkies' job will be to connect J.F.K. nonstop with continental capitals such as Paris, Brussels, and Amsterdam. Pending government certification (and a strike threat from disgruntled B.A. pilots), OpenSkies expects to launch late in the spring. Its cozy planes will feature just 82 seats: 24 beds in business class, 30 chairs in coach, and 28 in a revolutionary "premium economy" cabin that will offer big, comfortable recliners and a price somewhere between coach and business class.

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