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Tue, Jun 03, 2003

Hope for Industry: Mineta's View

Delivering the keynote address to the IATA convention that opened Monday in D.C., Secretary of Transportation Norm Mineta presaged some of IATA Director General and CEO Giovanni Bisignani's ideas, outlined (elsewhere in ANN today) in what the organization is calling the "Washington Declaration."

More competition can be a good thing.

Mineta (right) said early, "In recent years, many of the world's long standing and restrictive bilateral agreements have been replaced by more liberal open skies agreements. This liberalization has been successful because it produces public benefits that are simply not possible under restrictive regulations. Liberalization provides airlines with the opportunities and incentives to become more efficient. It provides airlines with new business opportunities while strengthen existing operations. This freedom to grow and compete should be at the heart of every aviation agreement worldwide."

Maybe we need a new way to run things...

"While bilateralism opened markets in the 20th century, the 21st century requires a new model," Mineta continued. "In order to further expand aviation markets, we need a broader, multilateral or regional framework that replaces the current patchwork of aviation agreements. I encourage you to join us in crafting a vision for what is possible in global air transportation." There is no way, he seemed to be saying, that he would let market conditions simply find a solution; government must be the answer.

How about getting more money into US airlines?

Aware of how badly US airlines, in particular, have been hit by the increasing cost of compliance with expensive "safety" regulations, he thought that foreign investors might like to send more money this way; American investors seem to be all tapped out, and wary of the current premium-airline model.

He noted, "The U.S. Department of Transportation recently submitted to the Congress a request for consideration of a proposal to grant U.S. airlines greater access to foreign capital markets. The request raises the permissible level of foreign ownership of voting stock in U.S. airlines to 49 percent, provided that effective control remains in U.S. hands. This change would make U.S. law broadly consistent with the EU rules governing ownership and control of EU member-state airlines."

FMI: www.dot.gov

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