A war is brewing in the transatlantic travel industry. No sooner did the Open Skies Agreement, an unprecedented change in airline cooperation amongst the governments of the US and the EU, did things turn sour. The UK is getting ready to impose a new tax that will increase flights costs substantially for all passengers.

They are proposing an air passenger duty tax on every flight of up to £100 for long haul flights. The most affected would be transatlantic flights because the new tax system is tiered towards the mileage of the flight.

What is the purpose of this new tax? It's an attempt to curb greenhouse gas emissions. They hope that by making the cost of a transatlantic flight ticket go up, they can discourage airlines from flying half empty planes. The tax will also, for the first time, apply to transatlantic air freight. The overall goal of the new UK passenger tax is to shift the environmental costs associated with global warming to passengers. The logic is that people will not want to pay more and thus think really hard about flying less, thus reducing overall carbon emissions.

As someone who travels frequently to England, I can recognize that it would be an unmitigated disaster for transatlantic air travel and transatlantic tourism. The taxes and fees imposed on a transatlantic airfare are already more than the ticket itself. With the rise in fuel costs hurting the airlines, this will only make transatlantic travel unaffordable for many people.

The more taxes that are imposed the further away my next trip to London will be. This saddens me greatly. The UK government should be encouraging travel and tourism.

If the US government has anything to say about it, it's going to do everything it can to stop this new tax. The US is dubious to the environmental aspects. The government believes that it's simply a cash grab by the UK government, always on the lookout for more tax revenue. It will also be a boon in revenue for airlines. The position of the US government is that this new tax won't force the transatlantic airlines to actually adjust anything. The US also considers this new tax illegal.

Expect people to start flying transatlantic to other European cities, in a way to bypass the UK's new repressive tax regime. The US usually doesn't back down on these things and Gordon Brown has a good history of changing his mind on tax, so stay tuned for further updates on the latest in the Transatlantic Tax War.

In Slovenia this week, the United States and the European Union opened up a second round of talks on their joint 'Open Skies Agreement.'

The result of the previous round was the beginning of the liberalization of transatlantic air travel. This removed many barriers for foreign airlines operating in the US and EU. Now, regardless of country of origin, any airline can fly to any city in the respective countries. For example, if Aer Lingus really wanted to, they could run a direct flight from South Bend Indiana to London, or Paris or any airport in Europe and any airline could do so vice versa.

This has significantly opened up transatlantic air travel and will greatly increase completion for transatlantic fares. Now, with more airlines competing, it will drive the price of transatlantic fares down. This will be great for travelers on a budget.

The goal of the second round of talks that were started today, is to expand the agreement into allowing foreign airlines to operate domestically in the US and EU. For example, allowing a British Airways flight between Chicago and Atlanta. The United States is very leery of this, as they think it will harm domestic airlines who will be open to competition and may not be able to survive.

If these plans go through, expect more mergers and acquisitions in the airline industry. We could conceivably see the founding of a truly global airline that can serve anywhere in the world.

The competition will only good for consumers. Especially consumers looking for a good deal on transatlantic fares. I've been monitoring the transatlantic fare prices over the past few months and I've already noticed fares going down. Even summer fares to London are not that expensive right now.

Let's hope the powers that be continue to works towards transatlantic airline deregulation.