Friday, March 23, 2007

EU battles US over airline restrictions

Source: EU-US collision in "open skies"

The EU proved its determination to not yield to US control of transatlantic air travel on Thursday night as it stood steadfast by its idea of reforms for the liberalization of air travel. The US had earlier proposed a more modest “open skies” agreement. The EU reforms would be completely free of restrictions on airline ownership and control.

The UK warned the US that if it failed to agree to the more liberalizing and radical reforms, that current rights granted to the US could be revoked, including traffic rights. Nevertheless, Congress shot down the European demands that the current cap of foreign ownership of US airlines be removed. Currently, the cap prevents foreigners from owning more than 25% of any given US airline.

Meanwhile, airlines on both sides of the Atlantic are looking to increase services between the US and Europe, including services from Ireland to San Francisco. Additionally, both sides have agreed to additional rights for European and US airlines that will, in the near future, potentially lead to lower airfares between the two regions.


- What detrimental consequences would foreign ownership of US-based airlines have for US consumers? Would such detriments be outweighed by potential benefits in any consideration?

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