Friday, March 10, 2006

US panel seeks delay of foreign air ownership bid

US panel seeks delay of foreign air ownership bid
By John Crawley

WASHINGTON (Reuters) - A congressional committee wants a four-month review of the Bush administration's proposal to ease restrictions on foreign investment in U.S. airlines, saying the plan raises potential red flags on security.

The House of Representatives Appropriations Committee approved a non-binding resolution late on Wednesday night that was considered amid the firestorm over the proposal by a Dubai-based company to manage key U.S. ports.

That security-driven controversy abated on Thursday when port management giant Dubai Ports World, owned by the United Arab Emirates, said it would divest U.S. assets included in its $6.85 billion purchase of a British rival.

"The committee believes that the U.S. aviation industry is part of our critical infrastructure as are the ports," according to the measure drafted by Rep. John Culberson, a Texas Republican.

"The committee is seriously concerned about the promulgation of any rule which would allow any minority foreign investor to exercise control or decision making authority over any aspect of a U.S. carrier operation," the resolution said.

There currently is very little foreign investment in U.S. carriers.

Transportation planners proposed last year that foreign investors in U.S. airlines be allowed more influence over operations, including decisions on routes, fleet planning and marketing in return for their capital investments.

Proponents say the change -- which could involve foreign airlines taking an interest in a domestic carrier -- would give struggling U.S. airlines new options to raise money and potentially invigorate travel options for consumers.

The initiative does not change congressionally imposed rules that cap investment to 25 percent voting stock and restrict actual control of U.S. airlines to American citizens. But critics of the rule, including unions, say the proposed change could give foreign investors enough power to veto certain elements of airline operations.

However, the proposal's success is directly tied to final European support for a tentative agreement between the United States and the European Union on removing barriers to more competition on transatlantic routes.

There is no timetable for the Bush administration to finalize the proposal -- although the public comment period recently closed and a decision was expected soon. Transportation Secretary Norman Mineta said this week he did not want to delay the rule.

In a statement on Thursday, the Transportation Department emphasized that U.S. citizens would still control all decisions on security and safety of airline operations.