Open Skies Agreements & International Route Authority | DWU Consulting

The Sovereignty Framework

Every nation holds sovereignty over the airspace above its territory. The Convention on International Civil Aviation, signed December 7, 1944 in Chicago by 52 states and entered into force April 4, 1947, established this principle as the foundation of international aviation law and created the International Civil Aviation Organization (ICAO). As of December 2024, 193 nations — all United Nations members except Liechtenstein — are signatories.

Because each state controls its own airspace, airlines have no inherent right to fly internationally. Commercial air service between two countries requires a treaty — a bilateral air service agreement (BASA) — granting specific traffic rights. Over 3,000 bilateral agreements have been signed and registered with ICAO since the first, the Bermuda Agreement of 1946 between the United States and the United Kingdom.

The Freedoms of the Air

Traffic rights under bilateral agreements are structured around the "freedoms of the air," a framework that originated from the Chicago Convention. The first five freedoms are formally enumerated; four additional freedoms are recognized in practice but not codified in the convention.

Third and fourth freedom rights are the baseline of bilateral aviation agreements. Fifth freedom rights are granted selectively and have been a source of contention — notably in the US–Gulf carrier dispute.

The US Open Skies Policy

The DOT has pursued an "open-skies" policy since 1992, designed to "eliminate government involvement in airline decision-making about routes, capacity, and pricing in international markets". Under Open Skies agreements, airlines from signatory countries can fly any route between the two countries, at any frequency, using any aircraft, and set fares without government approval.

As of March 2026, the DOT's published list of Open Skies agreements in force includes approximately 130 aviation partners. The list includes all 27 EU member states (plus Iceland and Norway under the US-EU agreement), the United Kingdom, Canada, Japan, Australia, India, Brazil, and the UAE, among others.

On May 1, 2001, the United States, Brunei, Chile, New Zealand, and Singapore signed the Multilateral Agreement on the Liberalization of International Air Transportation (MALIAT), a multilateral Open Skies framework that the DOT continues to promote as an accession vehicle for additional partners.

The Open Skies Coalition, an industry advocacy group, cites data showing that Open Skies agreements save passengers $4 billion annually on US-international routes and that international visitors support more than 15 million US tourism and hospitality jobs.

The US-EU Open Skies Agreement

The US-EU Open Skies Agreement, signed in 2007 and effective March 30, 2008, replaced the patchwork of individual bilateral agreements between the United States and EU member states. For the first time, EU carriers could fly from any EU city to any US airport, and vice versa — eliminating country-of-origin restrictions that had previously limited, for example, British Airways to serving only routes originating in the UK.

Prior to the agreement, the US-EU transatlantic market served 55 million passengers on 385 flights per day in each direction across 235 nonstop city pairs operated by 45 airlines. Research by ESRI (Ireland) estimated that fare reductions of 20% on newly liberalized routes would increase US arrivals into the five EU countries that previously lacked bilateral Open Skies agreements (UK, Ireland, Greece, Spain, Hungary) by 7.3%, while redistributing traffic away from EU countries that already had such agreements.

A Stage 2 protocol, signed June 24, 2010, addressed issues that remained unresolved in the first agreement, including foreign ownership limits, environmental restrictions, and further market access. The protocol provides that if the US Congress permits majority ownership and effective control of US airlines by EU nationals, additional traffic rights — including seventh freedom cargo rights and expanded fifth freedom routes — would automatically become available.

US Foreign Ownership Restrictions

US law restricts foreign ownership and control of US airlines. Under 49 USC 40102(a)(15), a "citizen of the United States" for purposes of holding an air carrier certificate requires that the president and at least two-thirds of the board of directors and other managing officers be US citizens, that at least 75% of the voting interest be owned or controlled by US citizens, and that the entity be under the actual control of US citizens.

These restrictions predate the jet age; they originated from post-World War I national security concerns about foreign control of US air transport. The 25% foreign voting interest cap has prevented transactions that would otherwise attract foreign capital — European airline groups, sovereign wealth funds, and Asian carriers have explored investment in US carriers but are constrained by this ceiling.

No legislative change to the foreign ownership restrictions has been enacted since the US-EU Stage 2 protocol was signed in 2010, and the 75%/25% split remains in effect as of March 2026.

How International Route Authority Works

The DOT is the gatekeeper for both US and foreign airline authority to operate international service.

US carriers require a certificate of public convenience and necessity under 49 USC 41102 to provide foreign air transportation. The DOT must find that the proposed service is "consistent with the public convenience and necessity." Once the DOT grants authority, it is submitted to the President under 49 USC 41307, which allows the President to disapprove the decision on foreign policy or national security grounds.

Foreign carriers require either a foreign air carrier permit under 49 USC 41301, or an exemption from the permit requirement under 49 USC 40109. The DOT's Foreign Carrier Information Packet specifies that the authority "will specifically spell out the routes the foreign air carrier may serve if scheduled service is involved, and will state whether charters are authorized." The FAA must provide positive safety advice before the DOT authorizes a new foreign carrier to operate US service using its own aircraft.

Under an Open Skies agreement, the route authority process is streamlined — the bilateral treaty pre-authorizes unlimited third and fourth freedom services and, in most cases, fifth freedom services. Airlines still submit applications, but the DOT evaluates them against the treaty provisions rather than making a discretionary public interest determination on each route.

The US-Gulf Carrier Dispute: A Case Study

The dispute between the Big Three US carriers (Delta, American, United) and the three Gulf carriers (Emirates, Etihad, Qatar Airways) illustrates how Open Skies agreements interact with competitive dynamics.

In 2015, the Big Three published a white paper alleging that the Gulf carriers had received more than $40 billion in state subsidies since 2004, creating an uneven competitive playing field. The US carriers called for bilateral discussions and a freeze on new Gulf carrier landing rights.

The dispute was resolved through two separate agreements:

• US-Qatar (January 2018): Qatar Airways agreed to publish audited financial statements consistent with internationally recognized accounting standards. Qatar's civil aviation authority stated it was "unaware of any plans" by Qatar Airways to launch fifth-freedom flights to the US.
• US-UAE (May 2018): Emirates and Etihad agreed to publish annual audited financial statements. The agreement did not address Emirates' two existing fifth-freedom routes (Dubai–Athens–Newark and Dubai–Milan–New York).

Neither agreement renegotiated the underlying Open Skies treaties. The agreements relied on voluntary financial transparency rather than capacity or route restrictions.

International Traffic at US Airports: Current Data

The DOT's International Air Passenger and Freight Statistics report for the year ended December 2024 shows that US and foreign air carriers transported 256.9 million passengers between the United States and the rest of the world, an increase of approximately 6% from the prior 12-month period. US carriers handled 52% of that traffic; foreign carriers handled 48%.

ACI-North America's 2024 traffic rankings show international passenger traffic at North American airports grew 8.7% in 2024, compared to 3.8% growth for domestic traffic. BTS data confirms that US airlines carried 12 million international passengers in August 2024 alone, and 11.2 million in December 2024.

At Minneapolis-St. Paul International Airport (MSP), international passengers reached 3,569,721 in calendar year 2024, a record exceeding the 2019 level and representing a 19.6% increase over 2023. MSP served 32 international destinations, matching its 2019 record, after Aer Lingus resumed Dublin service, Delta added Dublin, and Lufthansa launched year-round Frankfurt service.

Implications for Airport Finance

The Open Skies framework and international route authority process interact with airport financial structures at several points.

International traffic growth as a revenue driver. International passengers spend extended time in terminals (arriving earlier for international security and customs processing), generate duty-free sales, and utilize premium lounge services. The 8.7% growth rate in international traffic in 2024 — compared to 3.8% domestic growth — means that airports with international facilities are achieving revenue growth from the faster-growing segment. The international growth differential (8.7% vs. 3.8%) creates outsize revenue impact for airports with established international infrastructure.

Bilateral agreement changes and airport service. When the US signs or amends an Open Skies agreement, the immediate effect is to expand the pool of authorized carriers for a given market. The Dominican Republic Open Skies agreement, formalized August 2, 2024 and effective December 2024, eliminated restrictions on the number of flights, destinations, and aircraft types between the US and the Dominican Republic and granted fifth freedom rights to carriers of both countries. Airports in markets with Dominican Republic origin-and-destination traffic (New York JFK, Miami, Fort Lauderdale, Orlando) may see new carrier entry or expanded frequencies as a result.

Foreign carrier entry and terminal infrastructure. Foreign carriers operating under 49 USC 41301 permits or 40109 exemptions require Federal Inspection Services (FIS) facilities at the airports they serve. An airport's ability to attract foreign carrier service depends on having sufficient FIS capacity — customs, immigration, agriculture inspection — to accommodate the additional international arrivals. Airports without FIS facilities, or with constrained FIS capacity, face a physical barrier to capturing international traffic growth regardless of what the bilateral agreements permit.

Foreign ownership restrictions and airline capital structure. The 75%/25% foreign voting interest limit under 49 USC 40102(a)(15) constrains the capital available to US carriers. If Congress were to relax this limit — as the US-EU Stage 2 protocol incentivizes — the result would be structural changes to US airline ownership, potentially including partial or full acquisition by foreign airline groups. For airports, this could mean that hub decisions, route planning, and capital commitments are made by entities with different strategic priorities than the current US-controlled carriers.

The Gulf carrier precedent and fifth freedom traffic. The 2018 US-Qatar and US-UAE agreements did not restrict fifth freedom operations. Emirates continues to operate its Dubai–Athens–Newark and Dubai–Milan–New York fifth freedom routes. Fifth freedom service can add international traffic to airports that would not otherwise have nonstop service to the carrier's home market. For an airport, a fifth freedom flight is a new international destination — it adds international enplanements, generates FIS processing fees, and produces non-aeronautical revenue — even though the primary purpose of the route, from the carrier's perspective, is connecting traffic through its hub.

The legal framework governing international air service — the Chicago Convention, the bilateral agreement system, the US Open Skies policy, the DOT's route authority process, and the foreign ownership restrictions — defines the boundaries within which international traffic at US airports can grow. With 256.9 million international passengers in 2024 and a growth rate more than double the domestic rate, the financial stakes of that framework for airports are measurable and current.

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