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US DOT Amends Nprm - Control Of US Airlines

Thu May 04, 2006 3:07 pm

From Today's Air Transport World at

DOT clarifies foreign control proposal to ensure US control of key areas
Thursday May 4, 2006

US Dept. of Transportation, responding to negative comments regarding its proposal to ease how it interprets foreign control of US airlines, yesterday issued a revised Notice of Proposed Rulemaking it said ensures that areas involving safety, security and national defense obligations will remain under the control of US carrier decision-makers.DOT issued its original NPRM last November (ATWOnline, Nov. 4, 2005), intending, it said, to make it easier for US airlines to attract foreign investment by allowing non-US investors to have a direct say in the commercial operations of US carriers, such as scheduling and marketing. The NPRM does not amend the requirement that 75% of the voting stock of a US airline be controlled by US citizens and that two-thirds of the board of directors be US citizens. This may be altered only through an Act of Congress.

However, DOT's proposal met with a hail of criticism on Capitol Hill and a number of lawmakers are trying to delay issuance of a final rule until Congress has more time to examine the issue.

In Wednesday's revised proposal, DOT strengthened the original language. For example, it will "specifically require that US citizens control the adoption of, and any changes to, the carrier's organizational documents" such as the Articles of Incorporation and by-laws that define the airline's structure and governance. Furthermore, "in a key refinement," it will require that all delegations of management responsibility to foreign interests "ultimately be revocable by the board of directors or the voting shareholders."

Turning specifically to matters of safety, security and national defense, the revised NPRM clarifies "that US citizens must control the carrier's overall safety and security programs and policies, not just the carrier's compliance with the requirements of FAA and TSA." Additionally, US citizens must control "the carrier's overall participation in national defense airlift operations, not only the carrier's participation in" the Civil Reserve Air Fleet program.

Notwithstanding strong opposition from some members of Congress, as well as airline unions and a few US airlines, DOT is standing by its position that the rule will "enhance the access of US carriers to global capital markets by expanding the pool of potential investors...provide US carriers with better terms of investment, and facilitat[e] strategic and long-term investment in the US airline industry." Interested parties have 60 days to comment. The NPRM may be viewed at The docket number is OST-03-15759.

by Perry Flint

IMHO doesn't do what DOT says it does. Why would anyone spend money investing in a US airline when they are prohibited from decision making in some very key areas.

The good news is that there is probably enough 'face saving' here for the US Congress to back off, and for the EUrocrats to claim 'victory'. Open skies - here we come!