Bowing to the inevitable, US officials have withdrawn their airline-investment liberalisation proposal, dooming US-European Union Open Skies for the foreseeable future.
New US Transportation Secretary Mary Peters says the US Department of Transportation's (DoT) plan to encourage greater foreign investment in US carriers as a first step toward transatlantic liberalisation had met too much congressional opposition and DoT "needs to do more to inform the public, labour groups and Congress".
Although European Commision Transport Minister Jacques Barrot says the two sides will meet again in January to discuss next steps, few observers see much chance of meaningful negotiations. "The US negotiators frankly are out of ideas," says Intervistas GA2 consultant Jon Ash, who adds: "We're pretty much back to where we were in June 2004, and now we may well be at stalemate for the next few years."
Members of Congress who were opposed to the proposal were led by Democrats, who take over control of Congress in January after winning the November mid-term elections. Within days after the election it was clear US-EU open skies was dead although it took until early December for the DoT to formally withdraw its foreign ownership proposal. Republican Jim Oberstar, the Democrat who is taking over the House Transportation panel, stresses Democrats did not oppose Open Skies but merely the use of a new investment regime to reach liberalisation. He suggests that negotiators could advance the larger cause by focusing on means other than investment.
Allan Mendelson, the Sher & Blackwell lawyer who was a top State Department aviation official under former President Clinton, says the problem could be resolved if the EC sought membership in a group like Asia Pacific Economic Co-operation or a multilateral accord.
It is possible European officials may be willing to adopt an Open Skies framework without the investment proposals, although this would entail an about-face because the EC had made investment liberalisation a prerequisite for the larger deal. The Association of European Airlines is expressing hopes that European officials will move beyond their insistence on the foreign investment provisions.
Source: Airline Business