This just in over the news wire, just in time for me to become a resident of Berlin, is news that the “open-skies agreement” will make it easier, cheaper, and simpler for me to share my time between Germany and the United States; Berlin and DC! Via NY Times

AIR travel to Europe is about to undergo a significant change, one that is likely to spell more choices and cheaper fares for travelers.

On March 30, the so-called open-skies agreement goes into effect, allowing airlines based in the United States and Europe to fly across the Atlantic between any two airports in each region. Before the pact, trans-Atlantic flights were governed by separate agreements between the United States and individual European nations. The pacts required airlines to take off or land in their native countries, and limited which airlines could serve certain airports.

For example, British Airways flights bound for the United States had to originate in Britain. And only two United States carriers were permitted to land at Heathrow Airport, near London: American and United.

When the open-skies agreement kicks in next week, those restrictions will be lifted, essentially letting the open market dictate all trans-Atlantic routes between the United States and Europe. For instance, Continental, Delta and Northwest will be able to serve Heathrow for the first time.

This year, San Francisco, Orlando and Washington all received their first scheduled nonstop flights to Dublin on Aer Lingus under a related transitionary arrangement. And Michael O’Leary, chief executive of Ryanair, the Irish no-frills carrier, has said he plans to start a new airline that will fly from secondary European markets like Liverpool or Birmingham to a half-dozen American cities like Baltimore or Providence, R.I., for a base fare as low as 10 euros, or about $16 at $1.59 to the euro.

“We don’t even begin to get a glimmer of the possibilities of open-market competition yet,” said Jerry Chandler, who writes Cheapflights.com’s travel blog and has been tracking the new open-skies flights. “There could be a lot of flourishing of routes in markets that currently don’t exist, especially from smaller U.S. cities to European hubs.”

The new pact is expected to be game-changing for Europe-bound travel. More routes are expected to open, and prices could fall thanks to the new competition. The agreement is also likely to encourage European carriers to compete more aggressively with one another across the Continent. Lufthansa, the German airline, for example, could set up a hub in Paris; or Air France could set up a hub in Frankfurt.

So far, though, most United States airlines are simply looking to open service to Heathrow — a strategic hub that offers connecting flights not just across Europe, but to the Middle East, Africa and Asia, too. Flights from the United States to Heathrow are expected to increase 31 percent, to 2,932 flights in July from 2,233 this month, according to OAG Back Aviation Solutions.

Northwest plans to add daily service later this year to Heathrow from Detroit, Minneapolis and Seattle. Beginning on March 29, the New York area will get four new flights a day to Heathrow: two from Continental out of Newark and two from Delta out of Kennedy Airport. Travelers in Atlanta will have a new direct flight to Heathrow aboard Delta (as opposed to connecting through Chicago or some other city), as will travelers out of Dallas-Forth Worth and Raleigh-Durham — both aboard American by March 30.

European carriers like KLM Royal Dutch Airlines are also getting into the act with new service between Dallas-Fort Worth and Heathrow. Likewise, Air France will begin operating a daily flight between Los Angeles and Heathrow on March 30.

For many travelers, a direct flight to Heathrow is long overdue. For instance, there are currently no nonstop flights between Dallas-Fort Worth and Heathrow, forcing many passengers to land at other London airports — like Gatwick or Luton — even if they have a connecting flight to catch in Heathrow. “It has been an absolute nightmare,” said Terry Denton, president of Main Street Travel, a Carlson Wagonlit agency in Forth Worth that specializes in missionary trips to Africa and elsewhere that usually require a connection through Heathrow.

Getting from Gatwick to Heathrow involves hauling luggage through passport control, taking a bus or cab across town and going through check-in and security anew — a process that could take three hours. The new routes will allow travelers to bypass that ordeal.

It’s not just Heathrow, however, that’s getting new service. British Airways is planning a subsidiary called OpenSkies that will skip London altogether, beginning with Brussels-New York and Paris-New York service as early as June. And some airlines, anticipating increased competition, are expanding their trans-Atlantic networks. Delta will begin flying from Kennedy Airport to Paris Orly on June 2, cutting out a three-hour-plus layover in Madrid, Nice or elsewhere.

KLM will start a daily flight between Dallas-Fort Worth and Amsterdam on March 30. Previously, Dallas passengers had to change planes in Memphis, New York or another city before arriving in Amsterdam. The new flight will cut at least two hours off the total flight time.

Besides saving time, the new competition should put pressure on airlines to reduce fares. A 2002 study by the Brattle Group, a consulting firm, estimated that an open-skies agreement between the United States and the European Union would generate a 10 percent increase in passenger traffic in formerly restricted markets, which could reduce fares 4 to 10 percent.

Routes to watch include Denver-Heathrow and Seattle-Heathrow, which were previously served by only one nonstop carrier: British Airways. But thanks to the open skies agreement, United will begin flying between Denver and Heathrow on March 30, with introductory fares starting at $570 round trip for travel before May 15. British Airways, by contrast, has been offering that same route for $1,461, according to an online search.

And Northwest Airlines will start flying between Seattle and Heathrow on June 1, with fares for $1,288, compared with $1,302 on British Airways, based on a recent online search.

But don’t expect a full-on fare war just yet. With the price of fuel so high, pricing on trans-Atlantic travel has been “pretty brutal,” said Rick Seaney, the chief executive of FareCompare.com. “Base prices are at an all-time low, but fuel surcharges are up.”

I just read on the wire that “India’s Sensitive Index tumbled 2,029.05 points, or 11.5%, to 15,576.30 in the early minutes, forcing trade to be halted for an hour” which might act as an indicator that the US and European markets may well plunge when they’re opened in the morning. Hopefully, the automatic safe guards will prevent too much of a run in the market. Quite a few people believe that Martin Luther King, Junior, again has saved the day as his birthday on Monday kept the financial markets closed in the US, possibly protecting it from the worst of it. Via the New York Times

Asian stocks extends losses into a second day

By V. Phani Kumar , MarketWatch

Last Update: 11:51 PM ET Jan 21, 2008

HONG KONG (MarketWatch) — Asian stocks came under relentless selling pressure for the second straight session on Tuesday, a day after fears the U.S. economy could slip into a recession triggered a sell-off that spread to Europe and Latin America.

India’s Sensitive Index tumbled 2,029.05 points, or 11.5%, to 15,576.30 in the early minutes, forcing trade to be halted for an hour. The index had finished 7.4% lower in the previous session, after dropping as much as 11% during the day.

“It doesn’t look good at all. We expected it to fall, but nobody expected this kind of correction,” said Sharmila Joshi, a trader with Prabhudas Lilladher in Mumbai.

Japan’s Nikkei 225 average tumbled 4.8% to 12,682.47, while the broader Topix index skidded 4.6% to 1,233.99 in afternoon trading. Earlier in the day, the Nikkei dropped as low as 12,666.09 — its lowest level since September 2005.

Hong Kong’s Hang Seng Index slumped 8% to 21,914.28 as the sell-off deepened from the previous session, when it tumbled 5.5%. The Hang Seng China Enterprises Index plummeted 11.9% to 11,927.55. See related story.

Australia’s S&P/ASX 200 extended losses into the 12th straight session, slumping 5.8% to 5,257.80 and New Zealand’s NZX 50 index ran its losses into the 14th session, dropping 1.1% at 3,607.13, while South Korea’s Kospi shed 4.8% at 1,602.93.

China’s Shanghai Composite, which fell more than 5% in the previous session, sank 4.1% to 4,714.30, Taiwan’s Weighted index tumbled 6.4% to 7,585.93 and Singapore’s Straits Times index lost 4.4% at 2,789.31, while Indonesia’s JSX Composite tumbled 8.3% to 2,279.27.

Tim Rocks, regional strategist for Macquarie Research, said investors were likely to worry about the impact of a U.S. economic slowdown on exporters in Asia.

“Whenever you have got any kind of disappointment in global growth, you always have big downgrades across Asia and particularly in the export-dominated markets,” said Rocks. “On a six-month view, we’re still going to have a lot of earnings downgrades in Asia, linked to the U.S. cycle.”

Rocks said hopes of interest rate action from the U.S. Federal Reserve is “the next great hope for the markets now,” adding that an interest rate cut by the Fed would “certainly be a break for the markets.”

Regional detail

Financials came under selling pressure across the region, with shares of Mizuho Financial Group (8411)(MFG) sinking 4.5% in Tokyo, Macquarie Group (MQG) slumping 9.2% in Sydney and Kookmin Bank (KB) shares dropping 3.4% in Seoul.

In Hong Kong, shares of market heavyweight HSBC Holdings (5)(HBC) tumbled 6.2%, while Singapore’s DBS Group Holdings shed 4.6%.

The decline in crude oil and metal prices hurt resource stocks as well, with Woodside Petroleum (WPL)(WOPEY) plummeting 8.3% and Rio Tinto (RIO)(RTP) slumping 9.2% in Sydney, while shares of commodities trader Marubeni Corp. (8002) dropped 5.6% in Tokyo. In Hong Kong, shares of PetroChina Co. (857)(PTR) plummeted 10.8% and Aluminum Corp. of China (ACH)(2600) stumbled 12.1%, while in Seoul, Posco (PKX) shares dropped 3.2%.

Japanese exporters also ranked among losers in Tokyo, with shares of Toyota Motor Corp. (7203)(TM) dropping 4.6% and Sony Corp. (6758)(SNE) fell 5.1% on concerns over the yen’s rally recently.

In currency trading, the U.S. dollar gained 0.6% to 106.29, recovering some of its recent losses against the Japanese currency, while the Australian dollar rose 0.3% at 91.52 yen.

Crude oil prices fell below the $90 a barrel level in electronic trading on worries related to U.S. demand. February futures of the commodity were recently $2.06 lower at $88.51 a barrel.

In the previous session, European stocks suffered their largest one-day decline since Sept. 11, 2001, with the pan-European Dow Jones Stoxx 600 index ending down 5.4% at 309.67 on heavy losses in banks and insurance firms.

In Canada, the S&P/Toronto Stock Exchange composite index sank 604.98 points, or 4.7% to end at 12,132.14. Brazil’s Bovespa sank 6.6% to 53.694, while Mexico’s Bolsa index fell 4.8% to 25,444. See related story.

U.S. markets are closed Monday for the Martin Luther King Jr. Day holiday.

Varahabhotla Phani Kumar is a reporter in MarketWatch’s Hong Kong bureau.