US Proposes Relaxation of Restrictions on International Airline Ownership

By Aaron Poehler

Published on May 13, 2008

Deputy Assistant Secretary of State for Transportation Affairs John Byerly stated that according to the terms of a US proposal he plans to present at international aviation deregulation meetings in Slovenia on Thursday, more than 60 countries should be included on a list of nations promising not to bar service by an airline based on ownership nationality.

Current worldwide aviation rules, based on a global treaty ratified in 1944, stipulate that an airline from a particular country must be owned and controlled by citizens of that country. These restrictions have previously hampered several proposed international airline takeovers, including a deal for Russian-based OAO Aeroflot to acquire Italy's Alitalia SpA.

The U.S. proposal would not affect ownership limits placed by countries upon their own airlines. U.S. law currently limits foreign ownership of American air carriers to 25%, while the European Union limits non-EU airline ownership to 49%.

EU negotiators are expected to propose an easement of US restrictions on foreign ownership in Slovenia on Thursday. Byerly indicated that he would be open to the European proposal, but conceded that it will likely be difficult to convince US lawmakers to support the idea.