- The Washington Times - Wednesday, February 5, 2003

The U.S. government is proposing rule changes on flights between the United States and Europe that are nearly certain to create stiffer competition for some U.S. airlines.
The federal government wants to eliminate the requirement that a European airline must be owned and controlled by citizens of the country in which the airline is based.
The rule change would reduce treaty obstacles to consolidations among European airlines, allowing them to operate more efficiently and offer more routes in competition with U.S. airlines.
The proposed U.S. policy change is another step toward globalized airline service, said David Stempler, president of the Air Travelers Association, a Washington advocacy organization for airline passengers.
"I think that would benefit passengers on both sides of the Atlantic," Mr. Stempler said.
The benefits could include more competitive prices on trans-Atlantic flights, smoother transitions between connecting flights and the right to earn frequent-flier miles on more routes.
"This is the precise opposite of protectionism," said John Byerly, deputy assistant secretary of state for transportation. "We want a competitive marketplace."
Until now, European Union law and U.S. treaties have ensured that ownership of European airlines was divided among several countries.
The restrictions began with the 1944 Chicago Convention on commercial trans-Atlantic aviation. The British blocked "open-skies" rules that would have eliminated restrictions on ownership of airlines or destinations within other countries. They were concerned U.S. airlines would overwhelm competition from British airlines.
Since then, growing international trade has spread airline service across many countries. The United States has open-skies agreements with 59 countries.
Mr. Byerly said regulatory restrictions are likely to be relaxed further to allow U.S. and foreign airlines to own at least part of each others' businesses.
"This is a step in that direction," Mr. Byerly said.
Before further "liberalization" is allowed, the U.S. government must deal with significant national security concerns, he said.
The federal government reserves the right to use commercial airplanes for the military during national emergencies, such as war. The U.S. government would not have the same authority over foreign-owned airlines.
U.S. Embassy representatives presented their proposal to EU nations last week.
Some U.S. airlines are concerned about new competition from abroad.
"American Airlines believes it is important to preserve the open-skies bilateral agreement," said Sonja Whitemon, American Airlines spokeswoman.
Other U.S. airlines say the State Department's proposal is too new for them to comment.
Airlines could protect themselves from international competition by forming marketing alliances with foreign air carriers. The alliances would allow airlines to coordinate operations like a single company but collect revenue separately.
The effect of the proposed rule change locally would be most obvious at Washington Dulles International Airport, a gateway for many European flights.
The policy change follows a November EU court ruling to strike down treaty restrictions on airline consolidations among European countries.
The changes in U.S. policy would apply to 11 EU countries that participate in U.S. open-skies agreements. Four other countries England, Greece, Spain and Ireland have refused to participate in the agreements.
Exclusion of the four nonparticipating countries from any U.S. policy shift is creating concern among EU officials. They prefer one open-skies agreement between the United States and the European Union as a whole.
"We believe this is a matter which requires an overall solution, and that overall solution comes from the negotiation of an EU-U.S. aviation agreement," said a European Union transport official, who asked not to be identified.

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