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US resistant to open skies agreement

City A.M. Reporter
EUROPEAN negotiators said yesterday European ownership of US airlines was in sight after three days of “Open Skies” talks but reaction from the US suggested agreement remained distant.

The US? departments of state and transportation made no mention of lifting ownership limits in summarising the talks that took place in Brussels.

The two sides agreed to make permanent a 2007 agreement allowing airlines to fly between any EU city and any US city, uniting two markets that account for nearly two thirds of global aviation.

They also agreed to deepen US-EU cooperation in aviation security, safety, competition, and ease of travel.

But loosening US airline ownership limits would require action by Congress, where some key lawmakers are seeking to sharpen provisions limiting foreign control, capped at 25 per cent of a carrier’s voting stock.

“Our Congress is not ready to grant this. We cannot commit to it,” said a US aviation consultant.

European transport commissioner Siim Kallas said the draft deal represented a significant breakthrough.

“Both sides have agreed to increase regulatory cooperation, and remove the barriers to market access that have been holding back the development of the world’s most important aviation markets,” he said.

European carriers would have fresh access to US government business under the “Fly America” programme.

In return, US airlines would gain improved market access in the EU and increased share ownership rights from above the current 49.9 per cent.

EU transport ministers will be asked to approve the deal at a meeting in June.

While some US airlines would welcome a new-look merger partner and fresh capital, their labor unions, fearful of losing jobs and favorable work rules, have opposed efforts to allow overseas control.

Unionised pilots, mechanics, flight attendants and other ground workers are supported by leading
Democrats in Congress who control the legislative agenda and have maintained the political bulwark against ownership changes. Some US airlines, like UAL Corp’s United Airlines, have called for lifting the rules.