House votes to delay airline investment plan

By John Crawley

WASHINGTON (Reuters) – The U.S. House of Representatives
voted on Wednesday to delay for one year a Bush Administration
proposal to ease restrictions on foreign investment in U.S.
airlines.

The vote, mainly pushed by pro-labor Democrats, could upset
plans by the Transportation Department to finalize a tentative
“Open Skies” agreement with Europe to broaden transatlantic
travel by commercial carriers.

The administration wants to change long-standing federal
law that gives overseas investors no influence over domestic
airline operations, including pricing, scheduling and fleet
planning.

Transportation planners argue the provision, if enacted,
could spur new capital investment in a struggling domestic
industry and introduce new competition.

The proposal is supported by United Airlines, a unit of UAL
Corp., which is expanding overseas flights, but opposed by
Continental Airlines, which flies internationally, but thinks
U.S. aviation policy gives away too much to Europe.

Attempts to derail the proposal in Congress appeared to
fade last week, but a new push in recent days gained sharp
momentum on the House floor during debate on a transportation
spending bill.

A handful of lawmakers with strong backing from airline
pilots and other labor groups aggressively pushed an amendment
to delay the investment proposal, saying enhanced foreign
ownership could undercut U.S. economic interests and cost
American jobs.

They also argued that allowing foreigners to have a
meaningful interest in U.S. airlines could compromise homeland
security and possibly disrupt a Pentagon program that uses
commercial airlines to transport troops during wartime.

The House passed the amendment, 291-137, before approving
the overall transportation bill for the fiscal year beginning
next October.

The Senate has yet to take up the transportation
legislation.

But mere House passage means the investment issue will
likely be resolved by a committee of congressional negotiators,
who will have to reconcile final transportation spending
legislation. That could take weeks or months or months to
complete.

The Transportation Department would not comment on the
House vote.

The administration is under pressure from Europe to have
the investment matter wrapped up this summer so European Union
transportation ministers can review the “Open Skies” agreement
in October. A spring deadline for action was already missed
because of congressional misgivings.

Administration proponents say the foreign ownership plan
would not harm security or prevent the military from moving
troops and equipment when needed.

Opponents of the proposal also exploited anti-foreign
sentiment that flared during a controversy earlier this year
over a Dubai-based company’s plans to manage several big U.S.
ports. That plan, initially approved by the administration, was
scrapped after a congressional uproar.