http://story.news.yahoo.com/news?tmp...u_050421193226
CHICAGO (AFP) - US authorities should lift the current limits on foreign ownership of airlines to help struggling US carriers compete, United Airlines' top executive said.
Glenn Tilton, chairman and chief executive of United, which is trying to emerge from bankruptcy, said such a move to lift the 25 percent foreign ownership cap would help US-based carriers compete in a global industry that is rapidly consolidating.
"This prohibition not only blocks the capital investment this industry so desperately needs, it excludes US airlines from participating in the supercarrier evolution," Tilton told an aviation summit organized by the Chicago Council on Foreign Relations.
"No matter how well United or any US carrier transforms its business, none of us will be an integral part of the future of global aviation unless there is real change in the US regulatory environment and the creation of a coherent national policy on aviation," he said.
"The US government should reverse course and encourage the development of larger, stronger international carriers that can compete with the likes of Air France/KLM or Cathay Pacific/Air China."
Tilton's comments were echoed by Will Ris, senior vice president of governmental affairs for American Airlines, who said forming alliances was an "unnatural" business response to the current regulatory environment.
"We wouldn't be in these alliances if we could actually merge like normal businesses," Ris said, adding that the federal government's stance that limited foreign investment in airlines is critical to national security is outdated.
The executives said that in talks with the European Union, negotiations over foreign ownership of US airlines must be split from open skies talks in order to resolve the current impasse.
"It really is a tradeoff between the practical and the tactics in current negotiations," Tilton said.
"The practical favors getting one done and moving on to the next step," he said.
The current regulatory environment is marginalizing US network carriers on profitable international markets, Tilton said. Passenger carriers are fighting for survival in a domestic market that is suffering from an excess of capacity.
And while the US government continues to retain its bias towards market fragmentation, European and Asian regulators are encouraging consolidation and cross-boarder ownership.
In order to get labor unions to agree to increased foreign investment, Ris said it is important to separate ownership rules from cabotage -- a controversial issue at the open skies talks that would allow foreign airlines to operate in the domestic US market.
Ris added that the open skies agreement was not a major priority for US airlines.
"As a practical matter there's not enough juice in the US/EU negotiations to get it done. There's no feeling of urgency on this side," Ris said.
"The transatlantic market is saturated," he added. "You're seeing downgrading of equipment going to Europe and the larger planes have been redeployed to Asia and to Latin America where there's some real money to be made."
There is also little sense of urgency on the side of US officials, a State Department official said.
"The signal's got to come from Europe," John Byerly, the deputy assistant secretary for transportation affairs, said in response to questions from a representative of British Airways.
Agreement on an open skies accord would allow any EU airline to fly the transatlantic route of its choice, regardless of its country of origin. At present, British Airways for example can only fly to US destinations from Britain and not from, say, Paris. But US airlines can fly to wherever they want in Europe.
Is this a testament to US CEO's incompetence?
