US urges Congress to ease airline ownership limits
Transportation Secretary Norman Mineta urged Congress on Monday to approve a plan to ease limits on foreign ownership of U.S. carriers to give struggling airlines greater access to capital.
In a proposal submitted last month to lawmakers considering omnibus aviation legislation, the Bush administration sought approval to raise the limit on how much of a U.S. airline’s voting stock can be held by a foreign entity from 25 percent to 49 percent.
But the proposal would not let foreign investors control a U.S. airline, continuing a policy supported by many members of the House of Representatives and Senate who are concerned too much foreign influence would run counter to U.S. interests.
There are also heightened national security concerns, particularly in the aftermath of the Sept. 11, 2001 hijack attacks. But Mineta said the provision to limit control to U.S. interests should adequately address security questions raised by the Defense Department.
“It is my sincere hope that the United States Congress will include this provision in aviation reauthorization legislation,” Mineta said in a speech to the International Air Transport Association’s annual conference.
“Investment restrictions are a sensitive subject, but given the vital contribution that air service makes to our economies and in our daily lives, we must begin looking at ways for airlines to have increased access to the pool of global capital,” Mineta said.
The change would also make U.S. law broadly consistent with international rules governing airline ownership.
Congressional concern with foreign ownership of U.S. airlines was made clear in April, when lawmakers ordered the Transportation Department to reexamine the ownership structure of cargo carrier DHL Airways.
Rivals FedEx Corp. (FDX) and United Parcel Service Inc. (UPS) contend DHL is controlled by the German postal monopoly Deutsche Post AG . An administrative law judge has ordered DHL to turn over a substantial number of documents on finances, operations and management ahead of an August hearing.
There are some foreign ownership limits in other sectors but the scope is most pronounced in the airline sector.
Some aviation experts say additional sources of capital would be welcome. Others argue boosting access for foreign ownership will put U.S. airlines in a better position to compete globally, especially as international marketing alliances become more popular.
Delta Air Lines (DAL) chief executive Leo Mullin told reporters that Mineta’s initiative was a signficant and positive step that might help carriers struggling financially.
“The potential for investment in terms of foreign ownership is certainly a good tool,” Mullin said of market options available to airlines trying to dig out of their worst-ever industry downturn.
Singapore Airlines chief executive Cheong Choong Kong told reporters at the same meeting that easing the limits would be welcome but questioned why a cap was needed at all.
“Why stop at 49 percent? Why does control of an airline have to remain in national hands?” he asked. “Why should the airline industry be any different from any other industry?” REUTERS
© 2003 Reuters
