deltawatch
Veteran
- Aug 20, 2002
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"I suspect that at some point a major airline may have to come to Congress to say, 'We will not get financing to emerge from bankruptcy without foreign investment,"' said Jonathan Hill, an aviation lawyer in Washington, D.C. (UNITED??)
"At that point, it may be a political imperative that Congress is willing to accommodate, but that hasn't happened yet," he added.
Fresh competition?
The ownership limit is closely tied to ongoing "Open Skies" talks between the United States and the European Union on lifting restrictions in the trans-Atlantic aviation market.
The United States has offered to raise the ceiling to 49%, but European Commission officials say that is not enough.
Some experts agree that anything short of allowing foreign companies to buy 100% of U.S. airlines is meaningless.
"It wouldn't mean much unless (the change) allowed control as well," said Michael E. Levine, a former airline executive.
"Otherwise it just seems to me to be an invitation (for foreign investors) to put more money into companies they don't control and thereby increase their risk exposure," added Levine, now a law professor at Yale University.
To be sure, many analysts doubt foreign airlines' eagerness to get into the United States given its current woes.
And allowing non-U.S. executives to control domestic airlines would also create new headaches for the existing carriers by fostering fresh competition.
British entrepreneur Richard Branson, who controls Virgin Group has struggled to launch his proposed low-fare start-up Virgin America mainly because he would not be able to own more than 25% of it.
And the founder of British no-frills airline EasyJet, Stelios Haji-Ionannou, recently told Reuters the foreign investment barrier is the main reason he has not tried his luck starting up U.S. operations.
"At that point, it may be a political imperative that Congress is willing to accommodate, but that hasn't happened yet," he added.
Fresh competition?
The ownership limit is closely tied to ongoing "Open Skies" talks between the United States and the European Union on lifting restrictions in the trans-Atlantic aviation market.
The United States has offered to raise the ceiling to 49%, but European Commission officials say that is not enough.
Some experts agree that anything short of allowing foreign companies to buy 100% of U.S. airlines is meaningless.
"It wouldn't mean much unless (the change) allowed control as well," said Michael E. Levine, a former airline executive.
"Otherwise it just seems to me to be an invitation (for foreign investors) to put more money into companies they don't control and thereby increase their risk exposure," added Levine, now a law professor at Yale University.
To be sure, many analysts doubt foreign airlines' eagerness to get into the United States given its current woes.
And allowing non-U.S. executives to control domestic airlines would also create new headaches for the existing carriers by fostering fresh competition.
British entrepreneur Richard Branson, who controls Virgin Group has struggled to launch his proposed low-fare start-up Virgin America mainly because he would not be able to own more than 25% of it.
And the founder of British no-frills airline EasyJet, Stelios Haji-Ionannou, recently told Reuters the foreign investment barrier is the main reason he has not tried his luck starting up U.S. operations.
