Congress won’t block airline investment plan

By John Crawley

WASHINGTON (Reuters) – Congress will allow a Bush
administration proposal aimed at attracting foreign investment
in U.S. airlines to proceed, despite security concerns among
some lawmakers, officials said on Thursday.

Lawmakers negotiating final details of emergency war
spending and hurricane relief legislation have agreed to drop
language in the bill that would have delayed the airline
proposal for a year, House and Senate aides said.

The language was the central obstacle to the plan to give
foreign investors more say in airline operations, within the
existing 25 percent voting stock limit.

The revised investment rules, which the U.S. Transportation
Department plans to finalize as early as this summer, also
keeps on track a tentative deal between U.S. and European Union
negotiators to further open transatlantic service, especially
greater access for U.S. airlines to London’s Heathrow airport.

The investment rule change is strongly opposed by
Continental Airlines but UAL Corp.’s United Airlines is
supportive of the move.

A spokesman for the department said transportation planners
will “continue to move forward” with the proposal, which was
introduced last November and updated several weeks ago to
address congressional concerns.

Current rules give foreign investors little or no influence
on operating decisions, conditions that have discouraged
foreigners, with a few exceptions, from taking an interest in
U.S. carriers.

The Bush administration and other proponents say the
changes are overdue to help an industry where four big airlines
have fallen into bankruptcy since 2002 and high costs and
losses define much of the business.

Supporters contend that giving foreigners influence over
pricing, scheduling, fleet plans and other operating issues for
their stake could expand the pool of investors in U.S.
airlines, encourage competition and enhance partnerships.

Previous attempts to ease the restrictions have withered on
Capitol Hill and current congressional objections centered on
national security concerns, which were sharpened by the
controversy earlier this year over whether a Dubai-based
company should manage some U.S. port terminals.

Some lawmakers also objected to the impact foreign
investment could have on labor unions and American jobs in
general.

Continental supports foreign investment in U.S. airlines
but says the administration proposal does not go far enough to
ensure that a carrier is controlled by Americans, as the law
requires.

Continental also believes that the administration’s
international aviation policy is one-sided; that European
companies will eventually get broad access to domestic airlines
and markets with no practical, reciprocal benefit for U.S.
carriers.

United says excessive restrictions on foreign investment
limits the ability of U.S. airlines to tap global capital
markets and compete internationally.