Aims: An improved method for estimating distances to open clusters is presented, and applied to Hipparcos data for the Pleiades and the Hyades. The method is applied in the context of the historic Pleiades distance problem, with a discussion of previously made criticisms of Hipparcos parallaxes. This is followed by an outlook for Gaia, where the improved method could be especially useful. Methods: The method, based on Maximum Likelihood Estimation, combines parallax, position, apparent magnitude, colour, proper motion and radial velocity information to estimate the parameters describing an open cluster precisely and without bias. Results: We find the distance to the Pleiades to be 120:3 1:5 pc, in accordance with previously published work by F. van Leeuwen using the same dataset. We find that error correlations cannot be responsible for the still present discrepancy between Hipparcos and photometric based methods. Additionally, the three dimensional space velocity and physical structure of Pleiades is parametrised, where we find strong evidence for mass segregation. The distance to the Hyades is found to be 46:35 0:35 pc, also in accordance with previous results from Perryman et al. Through the use of simulations, we confirm that the method is unbiased, and will be useful for accurate open cluster parameter estimation with Gaia at distances up to several thousand parsec.