Foreign Airlines Still Shut Out From Ownership of US Airlines

Filed in archive Aviation News on March 28, 2010

For many it is a dream come true. Airlines around the world can finally come in and buy stakes in American airlines, thereby increasing quality and finances exponentially. But unfortunately, those who dreamed are left to wait for the next round of talks, and the US can celebrate a major victory in Round 2 of the US-EU Open Skies talks.





The new agreement, reached on the 25th of March, was simply used to take away the temporary label from the last Openskies agreement. The validity of that agreement was guaranteed only if new rules opening up foreign ownership of airlines were implemented. If those conditions were not met, then the Openskies agreement would be revoked, an action that would have been most harmful to the airlines that were only recently granted rights to serve London's Heathrow Airport. They would have had to return to London Gatwick, and all other flights opened under the umbrella of Openskies would have to have been closed. Luckily for the airlines, that hasn't happened.

The US Department of Transportation (DOT), had this to say:

"The new agreement . . . affirms that the terms of the 2007 agreement will remain in place indefinitely. It also deepens U.S.-EU cooperation in aviation security, safety, competition, and ease of travel. In addition, it provides greater protections for U.S. carriers from local restrictions on night flights at European airports. It also includes a ground-breaking article on the importance of high labor standards in the airline industry. The new agreement underscores the importance of close transatlantic cooperation on aviation environmental matters in order to advance a global approach to global challenges."

Which is basically making a lot of statements, but really saying nothing of substance on the Openskies agreement.

Meanwhile, the EU came across a bit clearer:

"Other elements will enter into effect at a later stage as they are subject to legislative changes on either side:

The reciprocal liberalisation of airline ownership and control. This will require legislative changes in the US. Currently, foreign ownership in US airlines is limited to 25% of voting rights. Upon legislative change in the US, the EU will reciprocally allow majority ownership of EU airlines by US nationals."

They have basically stated that the US and EU are trying to align their aviation policies, and will allow foreign ownership to occur.... when Congress allows it. That's the key point.





Regardless of divisions in Congress, the one thing that Republicans and Democrats can agree on, is restricting foreign ownership of American airlines. Democrats need to pander to their supporters in labor unions by protecting their jobs. And Republicans would probably end up using the "Patriotism" argument and say these airlines need to remain in American hands.

So in essence, this new agreement represents a major victory for the US. They are able to keep all previous Openskies terms, which is good for airlines on both sides of the Atlantic; while simultaneously dodging the issue of foreign ownership that was put on the table during the last round of talks. Good job USA!!!