Mixed response to US DOT Proposal

There have been a range of reactions to the proposals published by the United States Department of Transportation this week concerning liberalisation of foreign ownership of US domiciled airlines.bmi, for example has welcomed the proposals. Nigel Turner, chief executive officer of bmi, said: “We need to study the details, but our initial analysis is that the offer is both significant and wide-ranging.Ê It will lift the lid on foreign investment in US airlines and provide for effective economic control by those interests.Ê At the same time, effective safety oversight, security and defence issues remain with US citizens.
“The ownership and control issue is only one of many on the table for the EU and US negotiators.Ê We believe that all these issues need to be considered as part of a balanced deal. Today’s US proposal is, nevertheless, an important step.

“We look to the European Commission and the UK Government to respond positively.

Meanwhile Steve Ridgway, Chief Executive of Virgin Atlantic Airways, further encouraged the EU not to give in to the US in the forthcoming EU/US aviation talks:

“What the US Department of Transportation’s proposal on international investment in US airlines really means is not clear but it appears that they are trying to secure access to Heathrow for their airlines (in the forthcoming EU/US talks) while giving little or nothing in return.  Their proposal would leave in place the fundamental restrictions on foreign companies investing in or controlling US airlines.

“This is a transparent device to fool the EU into agreeing to an imbalanced deal.  For example, when EU/US talks resume soon the US Government will be asking for the right for American airlines to fly in to Heathrow and within Europe and yet it will continue to refuse to allow European airlines to fly within the United States.

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“Virgin Atlantic believes in more competition but the only deal worth negotiating is a true Open Aviation Agreement which removes all the regulations which distort our industry.  This would be a balanced deal giving both sides everything they want and leaving the consumer the winner, with more services and cheaper fares within a combined US and EU aviation area.

“In simple terms, the EU must not trade access to Heathrow - its most valuable asset - for anything less than a true Open Aviation Agreement.  Each side has a number of cards in its hand but the EU holds the Ace and it should only play it to end the game.”

And the response at US Airline Continental reflected the complexity of the argument on the other side of the Atlantic. Continental made it clear that they feel the proposal is a blatant attempt to circumvent the law that the DOT has been unable to convince Congress to change.

“DOT proposes to unilaterally limit the application of the law to only certain aspects of airline management, while the statute requires that U.S. citizens have actual control over all aspects of airline operations,” a Continental spokesman said. “This shows that either the DOT has misinterpreted the law or has ignored the realities of internal airline management and how airlines operate. Actual control over day-to-day operations, including scheduling, pricing, employment and labor decisions and financing, provides foreign citizens actual control of the very areas DOT is trying to carve out. Airline operations cannot be split in the manner DOT is suggesting.”

The foreign control proposed by DOT is also tantamount to allowing foreign airlines to operate domestic flights within the U.S., Continental said, which is clearly prohibited by U.S. aviation law. Any attempt to change this law is also the responsibility of Congress.

U.S.-E.U. negotiations are scheduled to resume on November 14th in Washington with the eyes of the whole airline industry upon them.


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