House plan would slow airline ownership change

WASHINGTON (Reuters) – A bipartisan proposal introduced in
the U.S. House of Representatives would slow attempts by the
Bush administration to ease rules that restrict foreign
ownership in domestic airlines, congressional officials said on
Thursday.

The bill proposed by Rep. James Oberstar, a Minnesota
Democrat, and Frank LoBiondo, a New Jersey Republican, would
prohibit the Transportation Department from issuing a final
decision on its plan to relax ownership limits for one year. In
addition, any change would have to be approved by Congress.

The Transportation Department could finalize its proposed
regulation within weeks so Congress would have to act quickly
to head off any change.

Congressional Democrats, many of then sympathetic to the
plight of ailing airline unions, oppose the measure on grounds
the change to allow more overseas influence in decisions about
airline operations could impact routes, fleet size, staffing
and work rules.

“This is contrary to the requirements of law and would have
a major impact on air service in the United States and jobs for
U.S. citizens,” Oberstar said.

Lawmakers also are angry the administration is proposing to
bypass Congress.

For decades, federal law has limited foreign investment and
control of U.S. airlines in part to keep out overseas
competitors and ensure the fleet could be used by the Defense
Department for military airlift purposes.

Attempts in recent years by the administration to relax the
overseas investment ceiling of 25 percent voting stock, as well
as restrictions on what role those investors could have in
decision making have been quashed by lawmakers.

The current plan does not propose to change the investment
cap.

Most big airlines, some of which would welcome a new source
of capital, have openly supported the proposal or have been
publicly neutral. Continental Airlines, however, has been an
outspoken opponent.

Continental says action by the Transportation Department on
an issue previously brought before Congress for approval could
create uncertainty among potential investors about whether the
change would be legal. The airline said such uncertainty could
prompt shareholder disputes and litigation.