Democrats, Like Republicans, Resistant to Rules Change on U.S. Airline Ownership

A proposed change in aviation ownership rules lacks support among Democrats in Congress just as it met Republican resistance last year.

The European Union (EU) has pushed for the change and made it a condition of an agreement with the United States on a new aviation treaty that would give U.S. airlines greater access to lucrative routes at London Heathrow Airport and attract more foreign investment in U.S. carriers.

Treaty negotiations are set to resume next month, but progress on the rule change is unlikely. The rule bars foreign ownership of more than 25 percent of a U.S. airline's voting stock and requires that airlines be under the "actual control" of U.S. citizens.

The Transportation Department tried to soften the ownership rule last year, but the Republican-controlled Congress balked, leaving treaty talks in limbo.

With Democrats now in control in Congress, opposition has not lessened, said Jim Berard, spokesman for the House Transportation and Infrastructure Committee.

"The DOT insists it does not need Congress' approval to change the rule, but it does need Congress for other things" especially with the Federal Aviation Administration's reauthorization expiring this year, Berard said. "I would guess that the issue is, if it's not dead, it's resting very soundly."

The proposed rule would have allowed a foreign national to assume control of a U.S. airline's day-to-day business decisions. Decisions involving security or Defense Department contracts would have fallen to a U.S. citizen. The rule would have reinterpreted the definition of "actual control" to allow a foreign national to dictate an airline's route structure, marketing and other items of business.

Lawmakers questioned the proposal on national security grounds, primarily because U.S. airlines participate in the Civil Reserve Air Fleet program under which airlines are contracted to provide aircraft and crews in wartime.One concern is that a foreign national at the helm of a U.S. airline might block participation in that program.

John Byerly, deputy assistant secretary for transportation at the State Department, said in a Jan. 10 interview with the Guardian, a British newspaper, that the Bush administration remains committed to finalizing a treaty and wants to hear counterproposals from the EU.

A treaty would require Senate ratification, giving negotiators another incentive to heed lawmakers' concerns.

©2007 Congressional Quarterly Inc.



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