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Foreign Ownership Policy - Protectionist?  
User currently offlineLHRBlueSkies From United Kingdom, joined Jan 2007, 493 posts, RR: 2
Posted (7 years 6 months 1 week 6 days 12 hours ago) and read 1619 times:

Having viewed all the news articles and posts regarding the attempts of Virgin America to start up, and the "it's not fair" arguments of the beleaguered US legacies, one has to ask the question, is this nothing more than US protectionism at it's best (worst?)?  confused 

It seems ok for the motor giants of Ford & GM to buy out Saab, Jaguar, and so on, but when it comes to non-US companies looking at reversing the situation (particularly in the aviation sector), oh my gawd, that's not cricket - or baseball!!  duck 

Maybe VS-USA should be allowed to start and fly, thus allowing the spirit of competition the USA is supposed to be all about. I mean, what is the big beef anyway, other than all the legacies realise that if VS got a foot-hold, they would all have to raise the service level, and maybe they simply couldn't do it?

Let the words start flying!  mischievous 


flying is the safest form of transport - until humans get involved!
30 replies: All unread, showing first 25:
 
User currently offlineGoaliemn From United States of America, joined Sep 2005, 463 posts, RR: 3
Reply 1, posted (7 years 6 months 1 week 6 days 12 hours ago) and read 1608 times:

Most countries have similar policies in place regarding major utilities/transportation/infrastructure. Canada is one of the worst. You can't run any business up there at all unless there is some percentage of Canadian ownership, plus you must have an office up there as well.

Every country does it to a degree. Here, on these forums, its most visible in the airlines, since we're all airline nuts. Its more visible with radio station ownership on forums about communications.

Don't point fingers too quickly at the US  Wink


User currently offlineKevin777 From Denmark, joined Sep 2006, 1165 posts, RR: 1
Reply 2, posted (7 years 6 months 1 week 6 days 12 hours ago) and read 1608 times:

Quoting LHRBlueSkies (Thread starter):
It seems ok for the motor giants of Ford & GM to buy out Saab, Jaguar, and so on, but when it comes to non-US companies looking at reversing the situation (particularly in the aviation sector), oh my gawd, that's not cricket - or baseball!!

The US is also totally OK with most of it when it goes the other way - there are mostly no problems in, say, a Danish pharma company buying an American one, or starting a division up over there. It is a special case for aviation; not the US in general. Mainly reasons lie in military issues etc.; dating back to the cold war and so on, and when the US government gave state-backed loan guarantees to airlines so they could purchase brand new 707s etc. in order for the US to have a huge fleet in case of big-time war.

But IMO it's a very bad excuse - there might be reasons for this protectionism, but defense certainly isn't a good one. Say VA's planes are owned 100 % by UK interests, and a disaster/war whatever occurs. If the planes were then needed in the US, I reckon ownership interests etc. would quickly be set aside anyway.

Kevin777  Smile



"I was waiting for you at DFW, but you must have been in LUV" CPH-HAM-CPH CR9
User currently offlineLHRBlueSkies From United Kingdom, joined Jan 2007, 493 posts, RR: 2
Reply 3, posted (7 years 6 months 1 week 6 days 12 hours ago) and read 1601 times:

Quoting Goaliemn (Reply 1):
Most countries have similar policies in place regarding major utilities/transportation/infrastructure.

Good point - and it's all a load of tosh! Surely, in the world of capitalism in which we all live, like it or not, it should be a matter of survival of the fittest? Protecting deadweights from more capable rivals is not good for anyone, let alone the people who pay the airfares!



flying is the safest form of transport - until humans get involved!
User currently offlineArrow From Canada, joined Jun 2002, 2676 posts, RR: 2
Reply 4, posted (7 years 6 months 1 week 6 days 9 hours ago) and read 1561 times:
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Quoting LHRBlueSkies (Reply 3):
Good point - and it's all a load of tosh! Surely, in the world of capitalism in which we all live, like it or not, it should be a matter of survival of the fittest?

Yes, in a perfect world. But every country, including the US, has its hot buttons on foreign ownership -- witness the Dubai Ports World fiasco. And every country, including the US, is quite hypocritical about it, demanding concessions from others that they would never agree to themselves. Just look at the history (and current news) of global trade negotiations, in particular the approach of all players to agricultural subsidies.

Remember, too, that unbridled capitalism was alive and well in the UK in the 19th century. And life for the average bloke in places like Sheffield and Manchester was a living hell.



Never let the facts get in the way of a good story.
User currently offlineSJCRRPAX From , joined Dec 1969, posts, RR:
Reply 5, posted (7 years 6 months 1 week 6 days 9 hours ago) and read 1549 times:

We need to protect some of our jobs, and some of our business. We have a trade deficit with almost every country in the world. So to the Europeans I say go pound some sand because the "give the country away Republicans" will not be in power for at least 10 more years. When we start running a trade surplus with the EU maybe we can talk, for now "FORTRESS AMERICA" is rising again. We don't need foreign ownership of our domestic airlines. Foreign ownership is just another way to out source even more jobs.

User currently offlineSacamojus From United States of America, joined Dec 2006, 228 posts, RR: 1
Reply 6, posted (7 years 6 months 1 week 6 days 9 hours ago) and read 1539 times:

Lets not forget that pure capitalism doesn't work and most countries today have a blended economy( i.e. progressive tax rates, govt. programs for the poor) But on the other hand, I think VS-USA should be allowed to start up operations because you do need competition to keep prices fairly competitive. I have no doubt that one or two legacy carriers will be hurt if they do start operations, but that is how progress is made. Now I can't blame the legacy carriers from trying to stop VA from starting because they are trying to keep what they have. The true culprit here is a law by the US, which in my opinion needs to be reviewed.

User currently offlineBurnsie28 From United States of America, joined Aug 2004, 7536 posts, RR: 8
Reply 7, posted (7 years 6 months 1 week 6 days 9 hours ago) and read 1534 times:

Everyone thinks that BA and stuff could just set up shop in the US and out do US Airlines, newsflash, BA would get destroyed in the US, its not the same market. Now our airlines are protected for good reason, its the back bone of US transportation, and it all pretty much started here, we have the worlds largest airlines and their values are worth a lot more then BA's, LH and so fourth.


"Some People Just Know How To Fly"- Best slogan ever, RIP NW 1926-2009
User currently offlineSebring From Canada, joined Jul 2004, 1663 posts, RR: 14
Reply 8, posted (7 years 6 months 1 week 6 days 9 hours ago) and read 1529 times:

Quoting Goaliemn (Reply 1):
Most countries have similar policies in place regarding major utilities/transportation/infrastructure. Canada is one of the worst. You can't run any business up there at all unless there is some percentage of Canadian ownership, plus you must have an office up there as well.

That is simply not true. Canada has foreign ownership restrictions in a few areas, but most businesses are not subject to any foreign ownership restrictions. Foreigners own 100%, or substantially all, of many oil companies, retail chains, large manufacturers, and so on. Foreign owned factories and distribution centres abound.


User currently offlineCba From United States of America, joined Jul 2000, 4531 posts, RR: 3
Reply 9, posted (7 years 6 months 1 week 6 days 9 hours ago) and read 1520 times:

Quoting LHRBlueSkies (Thread starter):
Having viewed all the news articles and posts regarding the attempts of Virgin America to start up, and the "it's not fair" arguments of the beleaguered US legacies, one has to ask the question, is this nothing more than US protectionism at it's best (worst?)? confused

This whole thing is an ongoing negotiation between the US and UK government. The UK wants the US to allow foreign ownership of airlines so that Virgin US can commence operations, and the US wants the UK government to make London, specifically LHR, part of the US-UK open skies agreements. Neither side seems willing to budge on either issue.

I completely agree that Virgin USA should be allowed to operate, the foreign ownership requirement is stupid. However, the ridiculous Bermuda II rules governing LHR are just as bad, and I think that Washington is smart not to budge on foreign ownership so long as the UK refuses to budge on LHR.


User currently offlineMaverickM11 From United States of America, joined Apr 2000, 17412 posts, RR: 46
Reply 10, posted (7 years 6 months 1 week 6 days 8 hours ago) and read 1504 times:

Quoting Cba (Reply 9):
The UK wants the US to allow foreign ownership of airlines so that Virgin US can commence operations, and the US wants the UK government to make London, specifically LHR, part of the US-UK open skies agreements. Neither side seems willing to budge on either issue.

Pretty much, particularly now that the Dems are in control. What I will never understand is why the unions are so anti foreign ownership. They have no problem blackmailing US owners for more money, I don't understand why they are turning away foreign owners that have more money, and if they're from the EU, they'll probably have a more sympathetic view of labor than American management.



E pur si muove -Galileo
User currently offlineDLPMMM From United States of America, joined Apr 2005, 3590 posts, RR: 10
Reply 11, posted (7 years 6 months 1 week 6 days 8 hours ago) and read 1502 times:

quote=Sebring,reply=8]That is simply not true. Canada has foreign ownership restrictions in a few areas, but most businesses are not subject to any foreign ownership restrictions. Foreigners own 100%, or substantially all, of many oil companies, retail chains, large manufacturers, and so on. Foreign owned factories and distribution centres abound.[/quote]

Much the same as the USA!! Look at CITCO, GSK, Thales, Saint Gobain, Japanese and German Auto manufacturers, Tosco is opening in AZ.....


The EU also has foreign ownership restrictions WRT airlines.

The EU just raised their restriction to 49.9% as opposed to the USA's 25%. So this is just a matter of how much.

Jobs have almost nothing to do with the issue.

It is a matter of national control of critical assets. The USA also has restrictions on ownership of over the air media outlets (radio and TV).



[


User currently offlineCba From United States of America, joined Jul 2000, 4531 posts, RR: 3
Reply 12, posted (7 years 6 months 1 week 6 days 8 hours ago) and read 1495 times:

The entire foreign ownership issue is stupid. The company's ownership will be foreign, but it is not economical to import labor en masse. The pilots, cabin crew, ground crew, and probably even the planning and logistics will be American jobs. So what if the final profit goes to a UK company? You can always buy its stock, it'll just be through the LSE and not the NYSE.

However, the US should hold to this position until the UK opens up Heathrow. If the foreign-owned airline were from another country, I'd say give them a license. These special rules for LHR are ridiculous and put US carriers at a disadvantage (unless you're UA or AA).


User currently offlineGoaliemn From United States of America, joined Sep 2005, 463 posts, RR: 3
Reply 13, posted (7 years 6 months 1 week 6 days 8 hours ago) and read 1485 times:

Quoting Sebring (Reply 8):
. Foreigners own 100%, or substantially all, of many oil companies, retail chains, large manufacturers, and so on.

But they must have a canadian based headquarters. They must have so much of their management on Canadian soil, as well as so many Canadians employed at the head office.

I've worked for companies that have had to do that. They rent some office space out in the Toronto area, and hire afew people to "run" it. Most of the work is done out of country, but they do require some presence there, beyond the retail locations.


User currently offlineLumberton From United States of America, joined Jul 2005, 4708 posts, RR: 20
Reply 14, posted (7 years 6 months 1 week 6 days 8 hours ago) and read 1473 times:

Quoting LHRBlueSkies (Thread starter):
is this nothing more than US protectionism at it's best (worst?)? confused

If the point of this thread was to put U.S. policy under the microscope to the exclusion of "protectionism" in other parts of the world, you failed.

Quoting Arrow (Reply 4):
But every country, including the US, has its hot buttons on foreign ownership -- witness the Dubai Ports World fiasco. And every country, including the US, is quite hypocritical about it, demanding concessions from others that they would never agree to themselves. Just look at the history (and current news) of global trade negotiations, in particular the approach of all players to agricultural subsidies.

 checkmark  The day after world peace breaks out, we'll see a removal of all trade barriers.



"When all is said and done, more will be said than done".
User currently offlineCba From United States of America, joined Jul 2000, 4531 posts, RR: 3
Reply 15, posted (7 years 6 months 1 week 6 days 8 hours ago) and read 1461 times:

Quoting DLPMMM (Reply 11):
Jobs have almost nothing to do with the issue.

It is a matter of national control of critical assets.

I remember reading that if Virgin USA were to be given an operating permit, it would stipulate that the US government reserves the right to requisition those aircraft in a time of emergency, just as it can do with the fleets of American-owned airlines.


User currently offlineNaritaflyer From Japan, joined Apr 2006, 549 posts, RR: 1
Reply 16, posted (7 years 6 months 1 week 6 days 7 hours ago) and read 1446 times:

Quoting Goaliemn (Reply 1):
Most countries have similar policies in place regarding major utilities/transportation/infrastructure. Canada is one of the worst. You can't run any business up there at all unless there is some percentage of Canadian ownership, plus you must have an office up there as well.

I'll let Canadians correct your point but I think you are so wrong on this that you should appologies to Canadian people. There are no such restrictions other than a 25% foreign olwnership limit for airlines.

The foreign ownership rules were established as part of war meaures to protect national security. Remember that airplanes were first used to drop bombs on enemies. Later, foreign control of airlines was used to protect bilateral rights. Say if Alitalia was to be 90% Chinese-owned, the U.S. government could then revoke Aliatlia's U.S. landing rights claiming that those rights belonged to an Italian carier and not a Chinese carrier.

Foreign ownership rules today serve no particular purpose but no one wants to get rid of them because they don't feel the need to do so. Whether Virgin America wants to start an airline in the U.S. doesn't matter for Americans because they have enough competition as it is. As


User currently offlineDLPMMM From United States of America, joined Apr 2005, 3590 posts, RR: 10
Reply 17, posted (7 years 6 months 1 week 6 days 7 hours ago) and read 1446 times:

Quoting Cba (Reply 15):
I remember reading that if Virgin USA were to be given an operating permit, it would stipulate that the US government reserves the right to requisition those aircraft in a time of emergency, just as it can do with the fleets of American-owned airlines.

That may have been proposed by VA, but it does not matter. The restriction are legislated by the congress and congress has not put in an exception for those foreign owned airlines that will sign on to certain "stipulations".

Most every country (including the UK at 49.9%) has similar restrictions. The UK restrictions were recently raised to the 49.9% to conform with the single EU aviation market treaty.

It is also not like there isn't any competition in USA markets, especially those targeted by VA which are some of the most heavily traveled and most highly competitive.


User currently offlineANother From , joined Dec 1969, posts, RR:
Reply 18, posted (7 years 6 months 1 week 6 days 7 hours ago) and read 1436 times:

Quoting Cba (Reply 12):
However, the US should hold to this position until the UK opens up Heathrow. If the foreign-owned airline were from another country, I'd say give them a license. These special rules for LHR are ridiculous and put US carriers at a disadvantage (unless you're UA or AA).

The offer to 'open up Heathrow' is on the table from the EU side. All the US side has to do is to make a gesture on O&C. Much to my disbelief they seemed prepared to accept the DOT 'reinterpretation' of the rules (which would have given them nothing, but a gesture), but sometimes in life you have to give a little to get a lot.

Let's face it, even if the UK offered to rip up Bermuda II tomorrow, some US airlines would oppose it, unless they got free slots at LHR.

Lets look at the issues:

Jobs. For a US domestic airline the employees would be subject to US labour laws. Cheap overseas labour couldn't be imported for this purpose. US airlines already employ non-US citizens for some of their international operations, not sure if change in ownership would change this.

Security. Today - only US airlines are allowed to apply for DOD contracts. This doesn't have to change. If, in the unlikely event, the DOD ever had problems filling their contracts all they would have to do is to allow non-US airlines to bid for the overflow.

It's the Law. A number of commentators have made the point that this is the law and no (expleted deleted) foreigner should tell the US how to do it's business. OK, won't disagree but this should be done only as a quid pro quo. Of course it's the law, we understand that. But it is a dumb law and it should be changed to meet the stated views of the US on free trade.

It would hurt the US. I, personally, don't think so. But can anyone (please) explain to me why a US airline CEO's must be an American citizen? I recall Jeff Katz, ex-AA, as CEO of Swissair. Swiss authorities gave him a Permis to live/work here. It wasn't such a big deal.

IN MY VIEW The ownership and control provisions that have existed since Bermuda I (yes ONE - 1946) are the main reason why this industry is in the toilet. All rules (not just EU, US or Canada) should be removed. Let the free market prevail.


User currently offlineUzzzer From Ukraine, joined Dec 2006, 139 posts, RR: 0
Reply 19, posted (7 years 6 months 1 week 6 days 7 hours ago) and read 1432 times:

Quoting SJCRRPAX (Reply 5):
When we start running a trade surplus with the EU maybe we can talk, for now "FORTRESS AMERICA" is rising again.

Well, didn't I hear this before! Isolationism usually takes away the main success criteria of the market economy - effectiveness.

I see no reason but a tradition to have such an exception in one of the most globalized economies!

Could someone please voice what harm could VS bring?


User currently offlinePar13del From Bahamas, joined Dec 2005, 7115 posts, RR: 8
Reply 20, posted (7 years 6 months 1 week 6 days 6 hours ago) and read 1418 times:

If the EU has set their limit to 49.9% why does the US not follow their example and raise their's to 49.9% then everyone would be on an even footing, would this not aid in the Open Skies negotiations? Conversely, the US could request the EU lower their limit to 25%, the principle either way is the same.

I'm somewhat surprized by this difference, the EU seems to want conformity in most things, why would they complain about the US having a 25% owernership rate when their is at 49.9%, what would their justification be?
I want to take the high road and say that it cannot be that they just want to make money in the US off their transporation industry, without considering fair trade.

This topic had been around for awhile, my memory may be failing me but I don't recall seeing the EU 49.9% mentioned, I'm off to do a google search for more info.


User currently offlineDfwRevolution From United States of America, joined Jan 2010, 968 posts, RR: 51
Reply 21, posted (7 years 6 months 1 week 6 days 6 hours ago) and read 1410 times:

Quoting Par13del (Reply 20):
If the EU has set their limit to 49.9% why does the US not follow their example and raise their's to 49.9% then everyone would be on an even footing, would this not aid in the Open Skies negotiations?

Current regulations in the United States allow 49% foreign ownership / 51% U.S ownership. What's the additional .9% difference make in the grand scheme of things?

Besides, why would the U.S. allow majority foreign ownership when it's really our best bargaining chip in open skies negotiations?


User currently offlinePar13del From Bahamas, joined Dec 2005, 7115 posts, RR: 8
Reply 22, posted (7 years 6 months 1 week 6 days 6 hours ago) and read 1399 times:

Ok, I'm reading an article of a speech by the EU Commission delegation to the US, they mention the US had proposed to raise their percentage from 25 to 49 to be inline with the EU, but this comment is made:

"But I must be clear that it would not meet the EU’s objective which is to allow 100% foreign ownership on both sides. We are open to considering intermediate steps if such steps make sense in commercial terms and if they help rather than hinder subsequent moves towards our ultimate goal."

I don't get this, if the EU's ultimate goal is to allow 100%, why not just do it and only allow nationals from countries who have a similar policy to own the said 100%. I sometimes get the impression that the EU is all about principle and doing what's right regardless of what anyone else thinks, so this one throws me off, are they attempting to use this as a carrot and stick?


User currently offlinePar13del From Bahamas, joined Dec 2005, 7115 posts, RR: 8
Reply 23, posted (7 years 6 months 1 week 6 days 6 hours ago) and read 1392 times:

Sorry about this, but I found the article at this link
"http://www.eurunion.org/News/speeches/2004/041116dc.htm"

Not sure if I can or should make it clickable, so I'm just pasting it here, you could always go to it and read.


User currently offlineANother From , joined Dec 1969, posts, RR:
Reply 24, posted (7 years 6 months 1 week 6 days 5 hours ago) and read 1369 times:

Quoting DfwRevolution (Reply 21):
Current regulations in the United States allow 49% foreign ownership / 51% U.S ownership. What's the additional .9% difference make in the grand scheme of things?

Is that true? From everything I have seen the US considers majority owned to be 75% US owned.

In the EU they consider majority owned by EU cititzens to be 50% plus 1 share.

I think we are about 25% (less 1 share) apart.


25 Robsawatsky : This has more to do with laws regarding incorporation and limiting legal liability when doing business in Canada than foreign ownership restrictions.
26 DfwRevolution : 75% of voting shares must be held by Americans. A foreign group can own up to 49% of the airline provided their voting shares are restricted to 25%
27 Ssides : Agreed.
28 ANother : Thanks for the clarification .
29 Post contains images GBan : If that was true no protection would be needed. Rather interesting definition of "value"
30 Par13del : Regarding the value, it also makes you wonder why the EU or anyone within the EU would want to invest in the US aviation market, unless of course, the
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