- The Washington Times - Tuesday, December 5, 2006

3:08 p.m.

The U.S. Department of Transportation today withdrew a proposal to make it easier for foreigners to invest in U.S. airlines after the plan received withering criticism from Congress.

The agency intended to increase the limit of foreign stock ownership in U.S. airlines from 25 percent to 49 percent.

The plan, intended to help increase capital for the struggling U.S. airline industry, which saw four bankruptcies in four years, could resurface later, Transportation Secretary Mary E. Peters said.

“It was clear from reviewing the comments that the department needs to do more to inform the public, labor groups and Congress about the benefits of allowing more international investment,” she said.

A bipartisan group of members of the House Transportation Committee, which last week warned that the Transportation Department faced legal action if it went ahead with the proposal, praised Mrs. Peters’ decision.

“I commend Transportation Secretary Mary Peters for choosing to do the right thing,” said Rep. Jerry F. Costello, an Illinois Democrat and member of the transportation committee. “Forcing this decision on the Congress and the American people would have set the wrong tone heading into next year.”

Transportation officials had said the proposal was key to negotiations over the Open Skies agreement with the European Union, which would liberalize rules for commercial aviation between the United States and the 25 EU countries, allowing U.S. airlines to operate more flights to Europe.

Mrs. Peters today called Jacques Barrot, the EU’s vice president for transport, to inform him of her decision.

“Vice President Barrot expressed disappointment and regretted this decision,” EU spokesman Kasper Zeuthen said.

Mrs. Peters has agreed to hold talks in early in 2007 in Brussels to review the situation and find a way forward, Mr. Zeuthen said.

Corrected online story; earlier edition misattributed Rep. Costello quote in paragraph six above

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