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Washington Post, 06/15/06

Prospects for a breakthrough in global trade talks are slim, and most bilateral trade deals hold out only modest economic benefits. But there is an opportunity for valuable progress in the airline industry, one of the most regulated and protected corners of business.

Last year the United States and the European Union negotiated an "open skies" agreement, which would scrap restrictions on transatlantic travel: All US airlines would be free to bid for slots at all European airports; a carrier such as Air France would be free to offer flights between, say, Milan and Chicago, rather than being restricted to a few France-US routes.

But this deal, which promises convenient connections and lower fares for travelers, may never be implemented. European ministers are refusing to ratify it until they see the outcome of a separate effort to deregulate US domestic airlines, which has become the subject of a fierce lobbying battle in Congress.

The congressional battle revolves around restrictions on foreign investment in American airlines. Because of anachronistic nationalism, foreigners can't own more than 25% of the voting stock in a US airline, and they are not allowed to influence commercial decisions on fares, routes and so on.

President Bush's Transportation Department, which has also advanced sensible reforms for the rail network, has proposed a slight relaxation in these restrictions. This promises a double win. Foreign capital and management ideas might revive flagging US carriers. And liberalization would help to persuade European transport ministers to ratify the open-skies agreement.

This win-win formula is opposed by Continental Airlines, which jealously guards its access to London's Gatwick Airport and fears open-skies competition. To block the deal, Continental has joined with labor unions to lobby against relaxation of the rules on foreign ownership.

The firm's officials assert that foreign investment in US airlines would compromise national security. But foreigners would be barred from influence over safety or security, and the administration's proposal has the blessing of the Defense Department.

Continental is looking out for its own business interests, pure and simple. The shame is that a powerful caucus in Congress is prepared to accept its specious arguments. Yesterday the House passed a measure that would delay the administration's reform for more than a year, jeopardizing a deal that could save travelers billions of dollars.

The Senate has yet to vote on the issue. It should put national interests before vested interests.

Go back, or read the latest opinions:

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