Reuters reports today that the United States withdrew a proposal to ease restrictions on foreign involvement in U.S. airlines. It is the second time Congress has prevented the Bush administration from changing those laws. Opponents of the process say giving foreign interests more decision-making powers could compromise security and cost jobs. Currently, they are limited to 25 percent voting stock with virtually no say on day to day operations.
The easing of these restrictions is key to the Open Skies program with the European Union. The draft agreement of which this was key would include more access for U.S. carriers into London Heathrow,
The EU responded in a press release, noting their disappointment. U.S. Secretary of Transportation Mary Peters will be sending U.S. representatives to hold consultations on an urgent basis early next year in Brussels to try and figure out how to proceed.
We appreciate the security concerns of the current Congress, but the EU Open Skies initiative would lead to increased competition and free market conditions on the Atlantic. That, unfortunately, could lead to foreign carriers knocking American carriers off of routes. U.S. carriers have looked to international service, especially European service, due to a lack of competition that allows them to make a profit above their domestic routes. With competition from Europe, that advantage might be negated.