EU, US move to allow foreign ownership

The European Union (EU) and the United States on Thursday took a "major step forward" in aviation liberalisation, paving the way for foreign ownership of their airlines after lengthy talks, Brussels said. However, the International Air Transport Association (Iata) said the results of the deal were disappointing as they did not go far enough on the sensitive issue of EU and US airlines owning controlling stakes in each other. Under the draft deal to move towards EU-US "open skies" in the airline industry, European airlines would be able to take majority stakes in US companies, and eventually, US firms would be able to reciprocate. But the accord calls for legislative changes both in European nations and the US, and needs to be signed off by the US Congress, an uncertain and lengthy prospect. "The new agreement affirms that the terms of the 2007 agreement will remain in place indefinitely," a US Department of State spokesman said in a statement. The 2007 deal, which took four years to thrash out and went into effect early 2008, eliminated air service restrictions between the United States and Europe, allowing airlines from both sides to select routes and destinations based on consumer demand for both passenger and cargo services. Yet Iata remained decidedly underwhelmed. "It is disappointing that, at this critical time, we did not make significant progress on the issue of ownership," Iata Director- General Giovanni Bisignani said in a statement. "The agreement was not a step backwards, but it did not move us forward. The long-term financial sustainability of the industry is dependant on normal commercial freedoms. I urge both governments to keep this on the radar screen for urgent follow-up," he added. EU companies currently can hold no more than a 25 per cent stake in US counterparts. US operators on the other hand are already allowed to control 49 per cent of European carriers, a difference which has long rankled with Virgin Atlantic and others. Airlines would also later get the right to fly passengers from a US airport to five non-EU countries, which have yet to be decided. A full EU-US Open Aviation Area has been estimated to be worth up to €12 billion (Dh59.10bn) in economic benefits and up to 80,000 new jobs.