Open skies: Congress needs convincing

Delta Air Lines has become the latest US carrier to state its support lifting ownership levels beyond 49%.  Its managing director for the Atlantic region, Loren Neuenschwander, makes clear that the carrier is prepared to see this restriction lifted as part of an EU-US open skies deal. “If you look at Singapore International Airlines’ 49% stake in Virgin Atlantic, it hasn’t had any impact on Virgin’s business model,” he observes. “25% to 49% just doesn’t present you with any challenges.”

There is plenty of support within US airline boardrooms for an end to ownership restrictions. There is little sign, however, of airline chief executives hammering on the doors of Congress and the White House demanding a change, although United Airlines chief executive Glen Tilton has been made his views on the need to ditch the restrictions pretty clear.

With the UK now apparently willing to see London Heathrow opened up, and the likes of Delta apparently happy enough to get slots through alliance partners, the issue of ownership and control is increasingly looking like the key obstacle to a deal. Labour unions, fearful that that a relaxation will open the way for airlines to ship in cheap labour, are less than keen on the idea, and the military are worried that their ability to requisition aircraft will be compromised – although Neunenschwander notes that this directive has never been invoked in Delta’s 75 year history.

Congress will need some convincing that these issues can be dealt with if it is to give the nod to lifting the restrictions, and has been less than enthusiastic on the move from a 25% to 49% cap. A more concerted effort by the US airline industry to explain the economic and consumer advantages of a deal to Congress, unions and the military could well be necessary to ensure talks do not come up against a brick wall yet again.  

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