US And Ecuador Finalize Open Skies Agreement

The United States announced today that it has finalized the text of a new Open Skies Agreement with Ecuador. The announcement comes at the end of the International Civil Aviation Organization (ICAO) Air Services Negotiation Event (ICAN 2021), hosted in Colombia. With the new Open Skies Agreement, expect airlines to add new nonstop service between the US and Ecuador.

JetBlue Fort Lauderdale — At the beginning of the week, JetBlue boosted its offer by $2 to $33.50, whereas Frontier's offer is valued at $24.29 in stock and cash at last night's closing price. Photo: Getty Images

US and Ecuador finalize new Open Skies Agreement

The United States announced that it has finalized the text of an Open Skies Agreement with Ecuador at the end of ICAN 2021. This is the first Open Skies Agreement between the United States and Ecuador and broadens the scope for air service between the two countries.

Pending signature and entry into force, the Open Skies Agreement will expand air service between both countries. The final signing and implementation of the agreement should come soon. The two countries highlighted the positive economic effects, ranging from increased travel and trade to spurring new job opportunities that the deal would provide both countries.

Aircraft contrails — Open Skies Agreements have traditionally led to an expansion of air services. Photo: Getty Images

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What is an Open Skies Agreement?

Open Skies Agreements have been part of the aviation industry for decades. These agreements are designed to allow for an organic expansion of international passenger and cargo service between two countries. The United States has many Open Skies Agreements.

Essentially, these are bilateral agreements between two countries that allow for an expansion of airline services without government intervention. Essentially, this allows US and foreign airlines to add new routes between the two countries without needing specific permissions to operate certain routes.

The US has Open Skies Agreements with many countries around the world. This includes member states of the European Union, Singapore, Brazil, Peru, Qatar, and more. The US currently recognizes over 100 Open Skies Agreements. These agreements have fast-tracked growth, and several airlines have taken advantage of this. This includes Qatar Airways, United Airlines, American Airlines, Air France, Finnair, and more.

United Getty — Open Skies Agreements have allowed airlines to expand significantly in key international markets. Photo: Getty Images

Without Open Skies Agreements, the two governments agree on the number of frequencies that airlines can offer between the two countries. One such example is the agreement between the United States and China that restricts the number of weekly frequencies and capacity between the two countries, leading to some spats between the two countries as China imposed heavy restrictions on air travel.

Expect more air service

Ecuador has been in the news for airline service this year. One of the most high-profile issues regarding Ecuador came in the spring when American Airlines and JetBlue sought to alter their flight operations to the country. Spirit Airlines first objected, citing competitive concerns, and then Eastern Airlines jumped in the ring, seeking additional frequencies between the US and Ecuador.

Under the latest agreement, US airlines can only operate 120 roundtrips per week to Ecuador. American Airlines has 42 of those frequencies. JetBlue has 28. Eastern holds 20 while Delta has 14. United Airlines had nine frequencies, while Spirit only has seven. American Airlines and JetBlue are the largest US airlines between the US and Ecuador.

Any of these airlines could be contenders for adding new services between the US and Ecuador. Spirit Airlines, in particular, has seen a lot of success in Latin America and has bolstered flights to Colombia. American has a historically strong presence in the market. Given that it will be taking out its widebodies from service to exclusively short- and medium-haul destinations, it could add more flights to retain its position.

There is also the potential that Latin American airlines will add services from Ecuador to the US. Two of the top contenders in this space would be LATAM and Avianca, which both have a history of flying to the United States. Avianca already has flights scheduled between Ecuador and New York City.