US softens on airline ownership
14.05.08
The US proposed to sweep away a global ‘spider's web’ of airline ownership rules yesterday, taking the EU by surprise ahead of talks on the second stage of an open skies agreement between the EU and US this week. The EU wants a relaxation of US airline ownership rules, but was thought unlikely to get much movement, until a surprise speech by US Deputy Assistant Secretary of State for Transportation Affairs John Byerly yesterday.
The EU wants to do away with US laws that cap foreign control at 25% of the voting stock. Britain has threatened to exercise its right to tear up the first-stage agreement, which forced it to open lucrative routes from Heathrow Airport to more competition, unless the EU wins the right for Europeans to own or control US airlines, but many US lawmakers plus its aviation unions oppose scrapping the limit.
Mr Byerly, the chief US negotiator in the ‘open skies’ talks with the EU, said Washington had an open mind on Europe's long-standing demand to ease American restrictions on foreign ownership of US airlines. But he warned that Washington would seek a far wider deal by pledging to forgo access restrictions on airlines from more than 60 nations, based on the nationality of their owners, a deal which could be expanded to other countries in the future.
He said that such a move would involve ‘dismantling the sticky spider's web of restrictions in bilateral aviation agreement that form a huge impediment to expanded cross-border investment in, and management of, airlines around the world.’
Under those rules, which are starting to be relaxed, a country allows access to airlines from third countries only if they are owned and controlled by nationals of that same country, something that has impeded cross-border airline takeovers.
Mr Byerly said in a speech to the European Aviation Club that Washington acknowledged that letting Europeans own US airlines could boost investment and competitiveness in a US sector which has been hit by a wave of bankruptcies. But the EU would have to convince a skeptical US Congress and trade unions of the benefits.
He also reaffirmed Washington's rejection of EU plans to include civil aircraft flying into and out of Europe in its system for trading carbon dioxide emissions based on legally binding limits.
The US and EU will open talks tomorrow in Slovenia on a second phase of the liberalisation of the transatlantic aviation market, known as ‘open skies.’ The EU's chief negotiator said he was surprised by the US proposal to broaden the talks. Daniel Calleja told reporters: ‘The EU's priority is more on a transatlantic area and then to move forward after that.'
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