US DOT proposal gets a mixed reaction

US DOT proposal gets a mixed reaction
The proposal by the U.S. Department of Transportation (DOT) to ease foreign ownership restrictions in order to encourage more investment in the US airline industry has been greeted with mixed reactions. This proposal will be discussed on Nov. 14 in Washington, D.C.

According to DOT, it proposes to "reduce substantially the significance of foreign influence over many purely economic decisions, such as choice of markets, type of equipment and rate-setting." But the moot point is that the U.S. citizen control would still extend to "those areas of airline operations where there currently remains significant government involvement or regulation." The 25 per cent cap on foreign voting interests in a U.S. carrier would also remain. DOT said it was an initiative on its part to have a liberalised aviation pact between the United States and the European Union.

Virgin Atlantic criticised DOT's proposal saying: "It appears that [U.S. regulators] are trying to secure access to London Heathrow Airport for their airlines while giving little or nothing in return". According to its CEO Steve Ridgway, DOT's proposal would provide U.S. carriers unrestricted access to fly throughout Europe, but the European carriers would still be barred from operating within the United States.

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Lord Soley, the former Labour MP and campaign director for Future Heathrow, also felt that regional flights operating from Heathrow would be affected if curbs of airlines flying between Britain and the US are lifted. He also feared that this so-called "Open Skies" pact would make Heathrow, one of the busiest in the airports in the world, lose its stature as one of Europe's premier hubs.

On the other hand Continental Airlines minced no words as it felt that this was "a blatant attempt to circumvent the law that the DOT has been unable to convince Congress to change" and an obvious concession to the European Union.

Willie Walsh, the chief executive of British Airways also expressed his displeasure saying, “Because government regulators have had a lot to say about foreign ownership and control. …we have not seen cross-national mergers and sensible economic rationalization that we see in every other global industry.”

But, Nigel Turner, chief executive officer of BMI, welcomed it. He felt that this was an “important step”. He expects both the European Commission and the UK Government to “respond positively.”