The debate in the USA over foreign ownership and control of airlines has come under a spotlight early in 1999 with airline and government officials discussing how a relaxation of the rules may occur.

US Secretary of Transportation Rodney Slater stirred the controversy last year when he said the Clinton administration might propose to relax the current ownership limits. That prompted aviation officials this year to debate the issue at an aviation law forum in Washington DC. Charles Hunnicut, US assistant secretary for aviation, argues that the next step in liberalising aviation should be to review such "extra-bilateral" issues as capital restrictions and government travel policies that permit staff to fly only on US carriers.

Frances Farrow, Virgin Atlantic's general counsel, used the conference to renew calls for the USA to relax its 25% foreign ownership limit. She labelled the policy "protectionist and hypocritical". By retaining this limit, Farrow says: "The US has completely undermined its own position as the natural leader to push for and promote international liberalisation."

But sceptics remain concerned about the prospect of more foreign control. Edward Driscoll, president of the National Air Carrier Association, stresses that foreign ownership and cabotage limits are based on valid concerns for national security. Hunnicut agrees those rules include a national security dimension, but Farrow argues this factor is much overblown. She cites the examples of Brittania and Monarch airlines, which are owned entirely by non-UK interests. Farrow says: "These companies are UK airlines - with exactly the same obligations that other UK airlines have - despite the fact that their ultimate owners are respectively Canadian and Swiss nationals."

Scott Yohe, Delta Air Lines' government affairs representative, believes the debate should be shifted to procedural issues. Delta favours removing all restrictions, but the USA should not proceed unilaterally, Yohe warns. He urges Washington to use the prospect of US liberalisation as a lever to pry open the rest of the world before relaxing its own controls. Farrow told Airline Business that sounded like "a pretext to do nothing".

Source: Airline Business