The well known disunity of the US airlines, and their equally known derision of the Department of Transportation in Washington, were set aside recently as they voiced approval of DOT's successful renegotiation of the US-Canada bilateral.

One by one, airline CEOs were quoted in press releases praising transportation secretary Federico Pena's efforts reach an open skies agreement with his counterpart in Canada, Douglas Young. This was quite an event for the airline industry-transportation department relationship, which on both sides could charitably be described as 'dislike-hate'.

These public accolades, however, lasted about as long as it took to say them. As the DOT began awarding route rights for services to Canada in what has been the largest, fastest carrier selection process since the early days of deregulation, grumblings began to appear.

Especially critical have been officials from airlines who were not given access to Toronto, the most lucrative market for both US and Canadian carriers and the city where a three year phase-in period has meant that only Delta and USAir will serve it this year. '(Pena) deserves credit for the agreement,' says a government affairs official from an airline shut out of Toronto. 'But as usual the execution of it has been pathetic.'

In the past, US aviation officials from Pena down would have felt frustration with such an attitude. These days, however, there is an almost nonplussed reaction, reflecting a new found confidence that has been furthered even more as these same officials watch their nine-country European open skies package force the EU's aeropolitical hand.

The fact that US airlines offered little or no encouragement as DOT officials began to negotiate the long-stymied agreement with Canada seems to have emboldened the department's upper ranks as well. 'We are hitting our stride,' says Stephen Kaplan, DOT general counsel and chief negotiator in the open skies talks with Canada. 'I'm hopeful we can make great progress.'

The degree of conflict between the US and Canada that was overcome explains the positive tone of such a comment. Their bilateral had been pilloried for years as an example of trade restraint, made more remarkable since 1990 when the North American Free Trade Agreement was signed, affecting all sectors but transportation.

During the Bush administration, pressure primarily from the airport community pushed the US and Canada into a negotiation that lasted two years and encompassed many frustrating rounds of talks.

Kaplan is deferential to Pena, offering him credit for the success of the Canada negotiation. To a point this is true: it was the secretary who understood the need to appoint a high-ranking political official to direct the talks and give assurances that the agreement was important to the Clinton administration. 'Without a political appointee, it wouldn't have been done,' says Kaplan.

However, most aviation officials in Washington believe open skies between the US and Canada is primarily a victory for Kaplan and Canada's negotiator from the private sector, Geoffrey Elliot. Though aided by a series of fortunately timed events - including a new government's perspective from both sides, resolved differences between Air Canada and Canadian International, and recently developed codesharing ties between US and Canadian carriers - Kaplan's guidance was appropriately fresh, sources say.

'I refused to read the last set of proposals,' says Kaplan, who had previously dealt with international aviation bilaterals on a comparatively limited scale. 'The inclination to start off where we had finished was overwhelming.' When the two sides had last met at the end of 1992 they could not get beyond several sticking points, the most serious being Canada's insistence on US carrier access to Toronto being slowly increased over an eight year period.

Between October and December last year, the discussion between Kaplan and Elliot developed the basic framework for what finally became the US-Canada bilateral. Described as 'candid, comfortable', and 'respectful of the other's political needs', the negotiation contrasts sharply with the usual grim face-off of trading partner countries. The difficult issues like constructing a dispute resolution model or assuring access for Canada's airlines to US airports easily could have killed the discussion.

All came together for a February 23 summit in Ottawa between Bill Clinton and Jean Chrétien, an affair that had been arranged before the US-Canada bilateral looked like it might be successfully renegotiated. Both sides saw the meeting as a deadline, and work was finished in time to give the two leaders a high profile agreement to sign.

Kaplan and other officials, including the secretary, now look back on the first two years as the 'ground work' for successes like US-Canada. But others see things differently. As the third year of the Clinton administration progresses, many believe that Pena's time in office has been encumbered by legislative difficulties - the airport/airline rates and charges controversy, for example - and poorly structured or timed bilateral negotiations, such as the US-German negotiation that scaled back what had been a highly liberal agreement. Also remembered is the absence of a political appointee in the position of assistant secretary for international policy.

Some speculate that it was the success of the US-Canada dialogue that helped Pena in mid March to put Mark Gerchick, former FAA general counsel, into the position of deputy assistant secretary for international policy.

This post does not require a Senate hearing, though sources say that Gerchick is the likely nominee for the vacant assistant secretary position. The start of the nomination process was being delayed by an unfinished background check and the fact that Congress has little room to fit in a nomination.

This post does not require a Senate hearing, though sources say that Gerchick is the likely nominee for the vacant assistant secretary position. The start of the nomination process was being delayed by an unfinished background check and the fact that Congress has little room to fit in a nomination.

Source: Airline Business