The long-awaited breakthrough in negotiations to liberalise US-European air services could yet be stalled if the US Congress subjects the open skies deal to scrutiny.

The European Commission and the US Department of Transportation (DoT) brokered a preliminary accord in November that saw the USA propose a relaxation of airline ownership and control rules in response to European demands. In return, US carriers will be able to fly to any point in the European Union, including “closed hubs” such as London Heathrow.

But Capitol Hill insiders say many Congressmen are unhappy at the method by which the DoT is proposing the change in ownership rules, describing it as a rule change rather than a policy shift, which would require Congress’s approval. The proposal published by DoT officials just before the final round of talks does not change the language of the law, but formalises the DoT’s interpretations of recent foreign acquisitions, such as KLM taking an interest in Northwest Airlines, where the Dutch flag carrier acquired a large stake but gained limited control; or the ruling that Astar Air Cargo is not under the effective control of DHL Worldwide despite being its largest client. The USA insists that under the new proposal, airline management decisions such as marketing and routeing would still be under the control of US citizens. The 25% limit on non-US stock ownership will stand, but non-citizens will be allowed to hold some top posts in the executive office. The liberalised interpretation will be offered only to nations that have open skies treaties with the USA.

The EC hails the agreement as a breakthough, with the Commission’s director for air transport, Daniel Calleja, “positive” about European transport ministers approving the deal.

But some US airlines have objected because they believe it is a major policy matter that should be decided by Congress, not regulators. Continental Airlines called it an attempt to bypass Congress and do by regulation what the DoT cannot do by legislation. The DoT had asked Congress to change the rules on foreign investment in 2003, but it has refused to act. Last week more than 70 members of Congress raised objections, saying the change was their prerogative.


Source: Flight International