DOT backs off airline ownership rule
New Transportation Secretary Mary Peters pulled the plug on a proposal to allow foreign investors in U.S. airlines to take more hands-on control of commercial operations in the face of congressional opposition.
The proposed change to foreign ownership rules governing airlines could derail already difficult talks with the European Union to create a transatlantic free market for aviation. The EU has said allowing cross-border investment is key to an open skies agreement.
The rule would have allowed foreigners, who are limited to 25 percent of an airline's voting stock, to have a greater say in marketing, routing, capacity and other business decisions, while leaving security and safety decisions in the hands of U.S. citizens within the company.
Labor groups, especially pilots' unions, and many lawmakers, opposed the effort because they fear foreign owners will cut jobs or substitute lower wage European workers.
'It was clear from reviewing the comments that the department needs to do more to inform the public, labor groups and Congress about the benefits of allowing more international investment. We need a stronger national consensus about the best means of achieving that objective,' Peters said in a statement.
The Bush administration will continue to search, in cooperation with Congress and the aviation industry, to find new ways to make it easier for airlines to raise money from global capital markets, Peters said.
The United States and EU were scheduled to resume talks for an open skies deal mid-month, but removing the ownership provision is expected to complicate efforts to conclude a deal.
European Commission Vice President Jacques Barrot expressed disappointment in the U.S. decision, adding that the EU considered the actual control provision an 'essential element' to concluding the first phase of an air transport agreement.
Talks are now scheduled in Brussels in early 2007.