Who Would Run Things?

Foreign control of domestic airlines continues to be a hot topic in Washington, and continues to be the reason a new Open Skies Agreement between the US and the European Union still hasn't been implemented. The issue isn't so much one of who owns the business... but more one of who runs the business.

While the Bush administration sees changing the rules to allow foreigners a greater say in how to run an airline, many lawmakers on Capitol Hill worry that giving outlanders keys to the air carrier will compromise both jobs and homeland security.

Earlier this month -- in an attempt to appease critics -- the administration revised its proposal to say US citizens on the board of any domestic airline must have the right to veto any decision made by an overseas investor. But if that flies, it won't be up to the Department of Transportation or the FAA to oversee management of airline assets. Instead, that job would shift to the Departments of Defense and Homeland Security.

That still doesn't satisfy a lot of lawmakers, who say foreign operators would still be able to control routing, schedules, and pricing here in the US.

The American Chronicle reports that also riled folks like Continental Airlines President Jeffrey Smisek, who in a statement before a February Congressional hearing on the matter said "the right to control US airlines would be given away for rights of little to no value for US combination airlines and the customers they serve."

"London’s Heathrow, Europe’s largest and most significant airport for US-Europe travel, is closed to entry and would remain effectively closed to additional US airlines, even if the multilateral Open Skies Agreement were signed," said Smisek. "This is because absent the provision of competitive, economically viable slots and facilities at Heathrow for US airlines, the greatest single impediment to free and fair US-Europe competition will remain in place."

Oregon Republican Congressman Peter DiFazio takes a different tack. He points out to the Chronicle that many EU member countries opposed the invasion of Iraq. Had foreign investors controlled more airlines... could they have refused a call-up of the Civil Reserve Air Fleet? If that happened, what would have been the impact on our ability to move troops into the combat zone?

The issue is still very much up in the air, with Europe still refusing to approve the Open Skies agreement until the EU gets its way on this issue. Several members of Congress say the administration is simply biding its time... hoping the issue will cool down enough to pass the new regulations without approval from Capitol Hill.

FMI: www.eu.int