Move dims outlook for airline ‘open skies’ pact
The U.S. on Tuesday scuttled a plan to give foreign investors more control over domestic airlines, dimming prospects for an “open skies” treaty with the European Union to increase transatlantic competition.
The decision by the Transportation Department ended a 13-month struggle with labor unions and Congress over whether foreigners should have more say in airline decisions such as marketing and flight schedules. Foreigners still would have been limited to 25% of U.S. airline voting equity.
The action is a setback for efforts by the Bush administration to boost U.S. airline capital and spur more service. Europeans had made the investor rule a condition for completing an “open skies” treaty with the U.S.
The Transportation Department proposed the ownership rule in November 2005, laying the groundwork for a tentative U.S.-EU accord 16 days later. The “open skies” treaty would let EU-based carriers fly across the Atlantic from anywhere in the 25-nation bloc.
The treaty also would end the exclusivity of British Airways, Virgin Atlantic Airways Ltd., AMR Corp.’s American Airlines and UAL Corp.’s United Airlines on routes between the U.S. and London’s Heathrow Airport, boosting competition.
The U.S. “remains committed” to reaching an “open skies” agreement, Transportation Secretary Mary E. Peters said in a statement announcing the withdrawal of the investor rule.
EU Transport Commissioner Jacques Barrot “expressed disappointment and regretted this decision,” the European Commission said. The U.S. and EU will hold talks “on an urgent basis” early next year, the commission said.
The rule was backed by United, Delta Air Lines Inc. and FedEx Corp., which wanted to use an “open skies” accord to expand overseas.
Opponents included U.S. unions, which feared job losses, and Continental Airlines Inc., which was concerned that it would be unable to gain access at Heathrow to compete in a deregulated market. British Airways and Virgin Atlantic, the largest carriers in the restricted U.S.-Britain market, also opposed a rule change that might have added rivals on their routes.
