Political Opposition Snares Trans-Atlantic Aviation Deal

A trans-Atlantic deal that was hoped to boost air travel, lower fares and create jobs won't be in place for the summer holidays while the Bush administration seeks to overcome opposition to expanding the foreign role in U.S. airlines, the European Union said Wednesday.

EU and U.S. officials had wanted the agreement approved by June, when President Bush is due to meet EU leaders at a summit in Vienna, Austria. The signing is now unlikely before October, said Stefaan De Rynck, the EU's transport spokesman.

"The rules will not be there, no doubt, for the next travel season, but we are still hopeful of signing an agreement this year," he said in a telephone interview.

The "open skies" agreement would unite the world's two largest aviation markets, allowing EU and U.S. airlines to fly wherever they want and charge whatever they want for trans-Atlantic flights.

The agreement would replace a series of restrictive treaties between individual countries.

Under the bilateral pacts, European airlines can fly to U.S. airports only from airports in their home country. Air France, for example, can only fly to the U.S. from airports in France. Because of this so-called nationality clause, European airlines risk losing U.S. landing rights if they merge - which has led to fragmentation and inefficiency in the European industry.

Authorities on both sides say the deal, which negotiators wrapped up some months ago, is badly needed. But holding it up is a European decision to link approval to changes in American law that limit the involvement of foreigners in running U.S. airlines.

In response, the Bush administration is considering allowing foreign investors a hand in management decisions such as marketing, route-planing and aircraft purchases, which could help attract foreign capital to U.S. airlines.

"Signing this agreement, which is there and which is fine, will depend on meaningful change in the rules of control of U.S. carriers," De Rynck said. "They need a bit more time to look at this."

The changes in administrative regulations would not lift the 25 percent ceiling imposed on foreign ownership of U.S. carriers, nor would they alter American control over decisions relating to safety and security, Jeffrey N. Shane, a senior Department of Transportation official, told a conference in the Netherlands last week.

However, the proposals have run into objections from Congress, labor unions and some airlines, and the administration says it needs more time to discuss the changes.

"The proposal has been the focus of far more controversy in the U.S., frankly, than we had anticipated," Shane said.

"We are putting that rulemaking on a somewhat slower track in order to facilitate a more productive debate," Shane said in another speech last week.

The Brattle Group, a U.S. consulting firm, said in a report on an EU Web site that the agreement would generate upward of 17 million extra passengers a year, bring consumer savings of at least $5 billion a year and boost employment on both sides of the Atlantic.

The EU has signed open skies agreements with Georgia, Chile, Ukraine and Moldova. Agreements are pending with 22 other countries.


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