Dizel8
Douglas metal
- Joined
- Feb 27, 2003
- Posts
- 2,817
November 2, 2005 The Bush administration wants to ease restrictions on overseas investment in US airlines, a move that could give struggling carriers a route for fresh capital and break the logjam in transatlantic aviation talks, industry sources said on Wednesday.
Airline industry officials who did not want to be named because it is a government initiative said the Transportation Department is preparing a plan that would ease the tightly scrutinized administrative regulation barring overseas investors from exercising control of domestic carrier operations in certain circumstances.
The administration will not, according to the industry sources with knowledge of the plan, propose any changes to the strict law that caps international investment at 25 percent of voting stock.
Congress has prevented any changes in current ownership regulations, with many lawmakers arguing that control of airlines is a unique component of the American business identity and necessary to ensure national security especially after the September 11, 2001, attacks.
Labor groups and their political allies have also fought hard to prevent ownership changes that they claim could undermine their jobs.
"We've seen dozens of industries from steel to autos to textiles go over the side as a result of globalization or allowing foreign entities to take them over," said Edward Wytkind, president of the AFL-CIO's transportation trades unit.
But US airlines could lose up to USD$10 billion this year, according to industry estimates. Three big carriers are in bankruptcy and face huge hurdles in raising cash to satisfy creditors and potential investors.
Aviation consultants said removing the limits on control might satisfy European negotiators at recently revived talks on liberalizing transatlantic aviation. Previous talks have foundered partly on European demands for greater access to US markets.
John Byerly, the deputy assistant secretary of state for transportation affairs, said the issue is not on the negotiating table. But he said the administration has been exploring options to increase foreign investment.
"It's a good thing to do for our own industry," Byerly said.
The two sides agreed last month in Brussels on key elements of a first-stage deal. The next round of talks is scheduled for the week of November 14 in Washington.
Airline industry officials who did not want to be named because it is a government initiative said the Transportation Department is preparing a plan that would ease the tightly scrutinized administrative regulation barring overseas investors from exercising control of domestic carrier operations in certain circumstances.
The administration will not, according to the industry sources with knowledge of the plan, propose any changes to the strict law that caps international investment at 25 percent of voting stock.
Congress has prevented any changes in current ownership regulations, with many lawmakers arguing that control of airlines is a unique component of the American business identity and necessary to ensure national security especially after the September 11, 2001, attacks.
Labor groups and their political allies have also fought hard to prevent ownership changes that they claim could undermine their jobs.
"We've seen dozens of industries from steel to autos to textiles go over the side as a result of globalization or allowing foreign entities to take them over," said Edward Wytkind, president of the AFL-CIO's transportation trades unit.
But US airlines could lose up to USD$10 billion this year, according to industry estimates. Three big carriers are in bankruptcy and face huge hurdles in raising cash to satisfy creditors and potential investors.
Aviation consultants said removing the limits on control might satisfy European negotiators at recently revived talks on liberalizing transatlantic aviation. Previous talks have foundered partly on European demands for greater access to US markets.
John Byerly, the deputy assistant secretary of state for transportation affairs, said the issue is not on the negotiating table. But he said the administration has been exploring options to increase foreign investment.
"It's a good thing to do for our own industry," Byerly said.
The two sides agreed last month in Brussels on key elements of a first-stage deal. The next round of talks is scheduled for the week of November 14 in Washington.