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Congress won’t stand in way of U.S.-EU aviation deal

Congress won’t stand in way of U.S.-EU aviation deal

   Congress is unlikely to derail the recent agreement between the United States and Europe on exchanging full access to each other’s aviation markets unless the Bush administration tries again to change legal limits on foreign ownership of airlines, a top committee staff leader said Monday.

   Last week the European Council of Ministers voted to endorse an open skies deal to liberalize transatlantic air transport. The agreement is scheduled to go into effect in 2008. The agreement will allow passenger and cargo airlines the ability to expand their networks with direct flights to cities of their choice, set prices and make other business decisions without allowance for protectionist regulations.

   The deal would also allow European and U.S. airlines to fly from anywhere in their respective territories to the anywhere in the other market without restriction.

      Congress is not required to approve the new aviation agreement, and will likely not take action to prevent implementation for the time being, said David Heymsfeld, staff director for the House Transportation and Infrastructure Committee, in response to a question at the National Industrial Transportation League’s Spring Forum in Arlington, Va.

   The main concern of many lawmakers has been over a side issue on loosening foreign ownership restrictions designed to get Europe to agree to the route exchange. The U.S. Department of Transportation three months ago shelved a plan to allow foreign investors more control of operational decisions while still retaining a minority stake, as required by law, due to opposition from members of Congress and labor unions who feared foreign airline executives would try to eliminate many U.S. workers. The change in the administrative interpretation of the law was designed to get around a previous failed attempt to increase the allowable foreign ownership share in a U.S. airline from 25 percent to 49 percent.

   Earlier this month Rep. James Oberstar, chairman of the Transportation and Infrastructure Committee, and two other congressmen sent a letter to DOT Secretary Mary Peters questioning U.S. concessions, but made no explicit threat to block the deal.   

   Although the agreement does not attempt to change the existing law on foreign ownership, the Transportation Department has held out the possibility of taking up the issue in a subsequent round of negotiations to further deregulate the U.S-EU market. That carrot apparently was enough to get the European ministers to approve the deal.

   “You could see intervention by Congress if the administration below the radar screen tries to allow foreign ownership,” Heymsfeld said.

   Congressional opposition has been blunted by the fact that several U.S. airlines that previously had been vehement opponents of the open skies agreement now favor it because it opens the possibility of much greater access to Heathrow International Airport in London, the busiest in Europe.

   Meanwhile, Congress will decide on a case-by-case basis whether any action is necessary depending on the type of foreign investment that occurs.

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