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US And EU Reach Preliminary Agreement On Airline Ownership  
User currently offlineworldtraveler From , joined Dec 1969, posts, RR:
Posted (4 years 3 weeks 5 days 7 hours ago) and read 7926 times:

This is still a developing story but could go a very long ways to changing the airline environment in Europe and the US.

http://www.reuters.com/article/idCNBFA00112820100325?rpc=44

BRUSSELS, March 25 (Reuters) - European investors might soon be able to take majority control of U.S. airlines and vice versa under a preliminary deal struck on Thursday, a European Commission spokeswoman said.

55 replies: All unread, showing first 25:
 
User currently onlineikramerica From United States of America, joined May 2005, 21416 posts, RR: 60
Reply 1, posted (4 years 3 weeks 5 days 7 hours ago) and read 7922 times:

Quoting worldtraveler (Thread starter):
BRUSSELS, March 25 (Reuters) - European investors might soon be able to take majority control of U.S. airlines and vice versa under a preliminary deal struck on Thursday, a European Commission spokeswoman said.

Preliminary deal is not a deal. If they are truly talking about 50+% ownership and control, it won't pass muster in the USA when brought to Congress.



Of all the things to worry about... the Wookie has no pants.
User currently offlinetharanga From United States of America, joined Apr 2009, 1848 posts, RR: 1
Reply 2, posted (4 years 3 weeks 5 days 7 hours ago) and read 7883 times:

Long overdue, I think, if it comes to pass. Let's open these things up. Who really cares where Virgin America's investors come from? It does not matter.

User currently offlinecommavia From United States of America, joined Apr 2005, 11121 posts, RR: 62
Reply 3, posted (4 years 3 weeks 5 days 7 hours ago) and read 7865 times:

Quoting ikramerica (Reply 1):
Preliminary deal is not a deal. If they are truly talking about 50+% ownership and control, it won't pass muster in the USA when brought to Congress.

  

Yeah - can't wait to see the populist-protectionist crew running Congress these days drone on about how this is going to "destroy U.S. jobs."

I don't really have much trouble with this, but I agree that this is a long, long way from actually becoming law in the U.S.


User currently offlinetexan From New Zealand, joined Dec 2003, 4264 posts, RR: 52
Reply 4, posted (4 years 3 weeks 5 days 6 hours ago) and read 7843 times:

Quoting ikramerica (Reply 1):
Preliminary deal is not a deal. If they are truly talking about 50+% ownership and control, it won't pass muster in the USA when brought to Congress.

While I applaud the effort and would like to see this passed, it has a zero percent chance of passing through Congress. If there is one thing Republicans and Democrats in Congress, or at least on the Aviation Committees and Subcommittees, agree on it is that foreign ownership should not be allowed. It is a preposterous position that limits capital flow into the businesses and curtails growth opportunities. Oh well.

Texan



"I have always imagined that Paradise will be a kind of library."
User currently offlinetistpaa727 From United States of America, joined May 2007, 319 posts, RR: 2
Reply 5, posted (4 years 3 weeks 5 days 6 hours ago) and read 7722 times:

Quoting texan (Reply 4):
If there is one thing Republicans and Democrats in Congress, or at least on the Aviation Committees and Subcommittees, agree on it is that foreign ownership should not be allowed.

I hear a letter writing campaign starting....

Seriously though, it doesn't matter what side of the aisle you are on, it just won't pass which is ridiculous. It seems like the companies that would want to invest in US airlines are well run and would likely help fix some of the issues our industry faces (I know that is a general statement and there are definitely exceptions so don't start with the, xyz airline has had x qtrs of profit). I could also see this as leading to stronger alliances and truly global airlines. Now, the detractors would cite less competition but it is not like we are going to see just 3 airlines come out of this. Each market has a need/demand for multiple airlines with varying levels of service, etc.

Just some thoughts...



Don't sweat the little things.
User currently offlinetharanga From United States of America, joined Apr 2009, 1848 posts, RR: 1
Reply 6, posted (4 years 3 weeks 5 days 6 hours ago) and read 7721 times:

Quoting texan (Reply 4):
While I applaud the effort and would like to see this passed, it has a zero percent chance of passing through Congress

Presumably the administration is on board, or else they wouldn't be bothering to negotiate. I wonder if that would help matters.

Could you list some people in Congress who have voiced strong opinions on this in the past? We have to avoid politics here, but the politics are relevant to the topic, so I'd like to look up their past statements.


User currently offlineJBAirwaysFan From United States of America, joined May 2009, 911 posts, RR: 0
Reply 7, posted (4 years 3 weeks 5 days 6 hours ago) and read 7664 times:

I am willing to bet that foreign ownership of US airlines may improve the quality of air service in this country.


In Loving Memory of Casey Edward Falconer; May 16, 1992-May 9, 2012
User currently offlinecommavia From United States of America, joined Apr 2005, 11121 posts, RR: 62
Reply 8, posted (4 years 3 weeks 5 days 6 hours ago) and read 7625 times:

Quoting tharanga (Reply 6):
Presumably the administration is on board, or else they wouldn't be bothering to negotiate.

Or, perhaps more likely, the White House knows that this is a political non-starter on Capitol Hill, and thus they're giving it to the Europeans in the deal since they know they'll never actually have to do it - since it will never be approved by Congress.

Then, when the inevitable comes and it doesn't get approved, the White House can effectively turn around to the Europeans and say, "sorry, we tried, and now that all your big airlines have ATI with their U.S. partners and Open Skies to the U.S., we dare you to renounce the existing agreement."

Quoting tharanga (Reply 6):
I wonder if that would help matters.

Nope.

Congress has their own political constituencies to satisfy. Given the protectionist and populist political atmosphere in Washington these days, I view this deal - with or without Obama's support - as pretty much a non-starter right now.

Quoting tharanga (Reply 6):
Could you list some people in Congress who have voiced strong opinions on this in the past? We have to avoid politics here, but the politics are relevant to the topic, so I'd like to look up their past statements.

Oberstar is a place to start.

Frankly, I'd challenge somebody to produce a quote from a Congressman or Senator who voiced any opinion - strong or otherwise - in favor of lifting ownership caps. There aren't many.


User currently offlineLAXintl From United States of America, joined May 2000, 24325 posts, RR: 47
Reply 9, posted (4 years 3 weeks 5 days 6 hours ago) and read 7537 times:

Relatively free cross border equity deals in the airline industry are a long overdue event.
Just about everything in our society including even defense arms makers are open for foreign (majority) investment.

Liberlized ownership at the end of the day will help the US airline industry, and a healthy and vibrant industry will ensure American jobs.



From the desert to the sea, to all of Southern California
User currently offlineworldtraveler From , joined Dec 1969, posts, RR:
Reply 10, posted (4 years 3 weeks 5 days 6 hours ago) and read 7465 times:

Quoting LAXintl (Reply 9):
Relatively free cross border equity deals in the airline industry are a long overdue event.
Just about everything in our society including even defense arms makers are open for foreign (majority) investment.

Liberlized ownership at the end of the day will help the US airline industry, and a healthy and vibrant industry will ensure American jobs.

We may spar on other issues but I am 1000% in agreeement with you.
There are clearly going to be labor groups opposed to this but the airline industry is a service industry that largely needs people in the place the service is delivered. Maintenance can be outsourced right now... this law doesn't change that. Reservations can be answered anywhere.. .that doesn't change.


User currently offlineMAH4546 From Sweden, joined Jan 2001, 32177 posts, RR: 72
Reply 11, posted (4 years 3 weeks 5 days 6 hours ago) and read 7384 times:

It's about time something gets done about the ridiculous ownership restrictions. Foreign investors should be able to own U.S. airlines with zero restriction.


a.
User currently offlinetharanga From United States of America, joined Apr 2009, 1848 posts, RR: 1
Reply 12, posted (4 years 3 weeks 5 days 6 hours ago) and read 7360 times:

Quoting worldtraveler (Reply 10):
the airline industry is a service industry that largely needs people in the place the service is delivered. Maintenance can be outsourced right now... this law doesn't change that. Reservations can be answered anywhere.. .that doesn't change.

Well said.

Even if VX had majority foreign ownership, or if B6 were renamed LH America, most of the employees are still going to be local hires.


User currently offlineslz396 From , joined Dec 1969, posts, RR:
Reply 13, posted (4 years 3 weeks 5 days 4 hours ago) and read 7048 times:

What is so unacceptable about foreign ownership of US airlines?

As we all know, there are many companies in the US which are foreign owned, so why should an airline be any different really?

What are the first airlines that would 'fall' in European hands? Virgin America? Jetblue?


User currently offlineTalaier From Spain, joined May 2008, 490 posts, RR: 0
Reply 14, posted (4 years 3 weeks 5 days 4 hours ago) and read 7017 times:

This opens the floodgates to transatlantic alliances. I'm sure AA is already planning its wedding with we-know-who.....

User currently onlineikramerica From United States of America, joined May 2005, 21416 posts, RR: 60
Reply 15, posted (4 years 3 weeks 5 days 4 hours ago) and read 6903 times:

Quoting slz396 (Reply 13):
As we all know, there are many companies in the US which are foreign owned, so why should an airline be any different really?

To some, vital infrastructure is not to be foreign controlled simply because it could be "shut off" at any time.

In other words, let's just say China wanted to own all of our airlines. They are not a private company for one thing, but they are also only partial allies. So they control most of our airlines, and one day, during a major dispute over Taiwan, they threaten to shut down air travel if we don't agree to an unrelated demand. Don't say it couldn't happen, because it has happened in the past around the world, which includes the USA pulling such tactics abroad.

That's why.



Of all the things to worry about... the Wookie has no pants.
User currently offlineseven3seven From United States of America, joined Apr 2005, 315 posts, RR: 34
Reply 16, posted (4 years 3 weeks 5 days 4 hours ago) and read 6811 times:

Sorry, keep your grubby European hands off my airline. Not a single European pilot contract can compare to mine.
And my airline makes money so dont even try that argument.

European airlines would love to swoop in and destroy what's left of everyone's contract in the US. Dont like it? Fine go on strike and we'll replace you with tons of eager pilots willing to work for nothing.

Oh and what happens if the US govt. needs that airlift but all of a sudden its all owned by foreign airlines?

We got what we wanted out of all this: Far fewer limits on flying to Europe and intra-Europe plus far more slots at Heathrow. Now we'll bring the talks to a screaming halt. And one good thing about the Obama administration: its a helluva lot more pro labor than a Bush or McCain white house.



My views are mine alone and are not that of any of my fellow employees, officers, or directors at my company
User currently offlineairtran737 From United States of America, joined Apr 2004, 3690 posts, RR: 12
Reply 17, posted (4 years 3 weeks 5 days 4 hours ago) and read 6774 times:
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What will happen when the next big war pops off and the government needs to activate the CRAF program? Say AF buy the majority of DL and decides that they don't agree with the pending military action, and therefore will not let the government use the fleet. Not a good scenario. Let them have a minority stake, but not a majority.


Nice Trip Report!!! Great Pics, thanks for posting!!!! B747Forever
User currently offlinecommavia From United States of America, joined Apr 2005, 11121 posts, RR: 62
Reply 18, posted (4 years 3 weeks 5 days 4 hours ago) and read 6744 times:

Quoting airtran737 (Reply 17):
What will happen when the next big war pops off and the government needs to activate the CRAF program? Say AF buy the majority of DL and decides that they don't agree with the pending military action, and therefore will not let the government use the fleet. Not a good scenario. Let them have a minority stake, but not a majority.

Without seeing the actual text of the legislation, everything is speculation at this point.

However, I feel quite certain in saying that due to the extreme political, and practical strategic, sensitivities on this point, that the U.S. would never have agreed to a deal without some protections in place for things such as this.

For example, I would not be surprised if the agreement still requires that - even if voting ownership is majority-foreign-owned, a U.S. airline must still have a certain proportion of U.S. management and/or Board representation, and that a U.S. airline (which the agreement no doubt defines in some way, probably as an airline that derives x% of its revenue and/or has its operational headquarters within the U.S.) must still fulfill CRAF requirements.

Again - given the political sensitivities here, especially on the point on CRAF - I think that would be a non-negotiable for the White House when they negotiated this deal with the Europeans.


User currently offlinepeanuts From Netherlands, joined Dec 2009, 1411 posts, RR: 4
Reply 19, posted (4 years 3 weeks 5 days 4 hours ago) and read 6729 times:

Quoting airtran737 (Reply 17):
Say AF buy the majority of DL and decides that they don't agree with the pending military action, and therefore will not let the government use the fleet.

No worries. The US could pull a "Chavez" and just "nationalize" it for those purposes.

I hope the rules will be eased but I'm not pinning my hopes on Washington these days...



Question Conventional Wisdom. While not all commonly held beliefs are wrong…all should be questioned.
User currently offlineslz396 From , joined Dec 1969, posts, RR:
Reply 20, posted (4 years 3 weeks 5 days 4 hours ago) and read 6730 times:

Quoting ikramerica (Reply 15):
To some, vital infrastructure is not to be foreign controlled simply because it could be "shut off" at any time.

So if Germany for instance ever declares war on the US again, then Jetblue would be shut down and nobody in the US would be able to fly around anymore? There are more airlines in the US than those that might be foreign owned, I am sure, and besides, they can always be nationalized...

How about all those Toyota's you guys drive around in?
Who knows, maybe they have a secret chip installed somewhere under the boot so they can all be remotely prevented from starting from a bunker somewhere deep down Tokio the moment Japan declares war on you too?

See how ridiculous this is? It's more paranoia than pragmatism.

Transatlantic mergers have happened in many domains, and it is only a matter of time before it also happens in the aviation industry. Some of those newly created merged airlines will be American owned, others will be European owned. Welcome to the globalised economy, I'd say.

[Edited 2010-03-25 12:10:42]

User currently offlineUALWN From Andorra, joined Jun 2009, 2654 posts, RR: 2
Reply 21, posted (4 years 3 weeks 5 days 3 hours ago) and read 6699 times:

Quoting worldtraveler (Reply 10):
We may spar on other issues but I am 1000% in agreeement with you.
There are clearly going to be labor groups opposed to this but the airline industry is a service industry that largely needs people in the place the service is delivered. Maintenance can be outsourced right now... this law doesn't change that. Reservations can be answered anywhere.. .that doesn't change.

And I agree with you too! Worrisome?

Quoting ikramerica (Reply 15):
In other words, let's just say China wanted to own all of our airlines. They are not a private company for one thing, but they are also only partial allies. So they control most of our airlines, and one day, during a major dispute over Taiwan, they threaten to shut down air travel if we don't agree to an unrelated demand. Don't say it couldn't happen, because it has happened in the past around the world, which includes the USA pulling such tactics abroad.

China can bring the US (or most any other country) to a halt by stopping the shipment all the goods that we buy from them every day. The Gulf countries can bring the US, Europe, Japan, etc. to a halt by stopping the oil flow. What is so unique about the airline industry? BP operates in the US. Is there anything more strategical than energy?

Quoting seven3seven (Reply 16):
European airlines would love to swoop in and destroy what's left of everyone's contract in the US.

I'm sure that's their goal...



AT7/111/146/Avro/CRJ/CR9/EMB/ERJ/E75/F50/100/L15/DC9/D10/M8X/717/727/737/747/757/767/777/AB6/310/319/320/321/330/340/380
User currently offlinetharanga From United States of America, joined Apr 2009, 1848 posts, RR: 1
Reply 22, posted (4 years 3 weeks 5 days 3 hours ago) and read 6683 times:

Quoting seven3seven (Reply 16):
Oh and what happens if the US govt. needs that airlift but all of a sudden its all owned by foreign airlines?

Make participation in the Civil Reserve Air Fleet mandatory for anybody who wants to take advantage of the foreign investment.

Even if BA-AA merged, I'd assume AA would keep its US operating certificate and registrations.


User currently offlinecommavia From United States of America, joined Apr 2005, 11121 posts, RR: 62
Reply 23, posted (4 years 3 weeks 5 days 3 hours ago) and read 6659 times:

Quoting tharanga (Reply 22):
Make participation in the Civil Reserve Air Fleet mandatory for anybody who wants to take advantage of the foreign investment.

Even if BA-AA merged, I'd assume AA would keep its US operating certificate and registrations.

Exactly - perfect solution: maintain the requirement that only a U.S. airline with a U.S. operating certificate is permitted to fly within the domestic U.S., and just allow Europeans to buy U.S. airlines (with U.S. operating certificates). Then the requirements of all U.S. airlines with U.S. operating certificates to participate in CRAF would be intact, and that would still provide the ability for Europeans to buy in - it would just prevent a European airline (thus not subject to CRAF) to come in and fly within the domestic U.S. market.


User currently offlinetexan From New Zealand, joined Dec 2003, 4264 posts, RR: 52
Reply 24, posted (4 years 3 weeks 5 days 3 hours ago) and read 6659 times:

Quoting commavia (Reply 8):
Frankly, I'd challenge somebody to produce a quote from a Congressman or Senator who voiced any opinion - strong or otherwise - in favor of lifting ownership caps. There aren't many.

True. The closest I can find is Florida Congressman John Mica:

Quote:
1.) Aviation is a global industry. According to a June 2009 Oxford Economics report, a total of 2.5 billion passengers are flown worldwide annually; as of 2007 35% of the value of trade in manufactured goods was transported by air; and over 5.5 million workers are employed directly in the industry worldwide. Efforts to restrain globalization by limiting investment and putting bilateral agreements at risk represent backwards thinking. What we need is a forward-thinking, globally-oriented approach. We must come to terms with the fact that this is a global industry.

Although he doesn't explicitly state he wants to do away with foreign ownership restrictions, it is close.

Texan



"I have always imagined that Paradise will be a kind of library."
25 Post contains links BeyondBristol : Basically it's as everyone on here suspected and the US has got what they wanted without really giving anything up, and they WILL NOT need to give any
26 Post contains images commavia : Precisely. And since, as has already been discussed, this is politically dead-on-arrival on Capitol Hill, and the White House knows it, this was effe
27 ikramerica : Sorry, but it's not so much Germany. Look what happened with Dubai Ports. The USA sold vital assets to a friendly national corporation: P&O of th
28 FlyDreamliner : The US Congress will NEVER let this through. People are constantly up for reelection, and there is no way this plays well with voters at all... airlin
29 JohnClipper : Well, if I remember, doesn't the first stage of Open Skies go "bye-bye" if the second stage is not agreed on? So everyone that just arrived into LHR (
30 commavia : The first stage could go "bye bye" if an E.U. signatory country wanted it, but that was always an empty threat anyway, since it was highly doubtful t
31 usdcaguy : All the better. Given the paltry state of the US economy, we need to keep foreign ownership of US carriers out and Americans with jobs in those jobs.
32 Post contains links Sebring : I guess nobody bothered to read the followup story. This looks nothing like EU ownership of US carriers. Not even close. http://www.reuters.com/articl
33 Dizzy777 : Some rather strange ways of looking at this are being voiced here, so lets look at it a different way.. It seems to be ok for american companies to ha
34 texan : For most industries, American companies may have majority stake in foreign firms and vice versa. Airlines and a few other industries are protected. B
35 UALWN : Still, the damage would be far superiorr to the damage that LH could inflict in the US public by owning B6... Is that so? Is ATI related to this? And
36 slz396 : We've been talking a lot about foreign investors buying into existing airlines, which are so called stategic US interests; but what is particularly we
37 jfr : Question: When would these new rules take effect?
38 slz396 : And just how would full German ownership of B6 change the US employment at Jetblue for instance? Other than the CEO maybe, there wouldn't be any Germ
39 Airport : Hmm, call me unpatriotic, but if, say, Europeans could run an airline much better than a U.S. airline can, why would I, as a consumer, want them to b
40 tharanga : I'm not so sure I have any national pride for the current US airlines. If anything, I'd be happy that foreign investors think our industry is still w
41 commavia : As another poster said, the U.S. actually has one of the most open and competitive economies on earth, with investors and market actors from virtuall
42 avek00 : Maintaining restrictions on the ownership of US carriers by foreigners continues to make sense for the United States because 1) We rely on our air car
43 tharanga : I would not just wave this off as no big deal. After all, the individual countries of the EU still have their own militaries, so questions of militar
44 commavia : You answered your own question. European countries don't regulat CRAF - at least not to my knowledge. Either way, though, it's really a moot point: y
45 tharanga : Right, but it's not as if it's always been that way. The process of building the common market required putting aside some national jealousies. It's
46 Post contains images HBGDS : Foreign ownership does not mean you can ignore American law. CRAF would remain in place, and that would make some airlines think twice about acquirin
47 VinnieWinnie : Are you sure you know what you are talking about? 1) There will usually always be a representative from the mother company in the foreign subsidiary.
48 avek00 : But it MAY give rise to undesirable situations, especially in circumstances affecting America's national security. For example, many countries, inclu
49 Kleiner : Paranoia will destroy ya... 1. Foreign investors want to make money. You'll see new airlines, better service, lower prices. 2. US Military is making t
50 tharanga : These can only do so much. There will always be times when you need boots on the ground to be effective. You'll need the lift, sooner or later. That'
51 Mortyman : You do know that whenever the USA goes invading countries, it gets help from foreign owned shipping companies to transport the hardware, like tanks a
52 LAXintl : For the protectionist clan here that worry about loosing control of a US airline in case of a conflict or something, I think you need to step back on
53 commavia : True - in a practical sense, CRAF is the last thing the U.S. would really have to worry about in a global conflict. That being said, I understand the
54 Post contains links Mortyman : Kongsberg Defence & Aerospace ( Norway ) http://en.wikipedia.org/wiki/Kongsberg_Defence_%26_Aerospace * PROTECTOR M151 Remote Weapon Station ( Th
55 commavia : I didn't say that no foreign companies sell to the U.S. Defense Department - I said not many. And what I really should have said - to further clarify
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