Bush welcomes EU decision on Open Skies deal

The Bush administration has welcomed the European Union's decision to back the Open Skies agreement, which also enjoys the support of the biggest US airlines.

The deal could face opposition in Congress, however, where James Oberstar, chairman of the House transportation committee, has expressed concern about easing restrictions on foreign ownership of US airlines.

Unions representing pilots and other airline employees are also worried about the deal, particularly the foreign ownership provisions and the fact that foreign airlines will be allowed to fly to third country destinations from US airports.

Transportation secretary Mary Peters insisted yesterday that the agreement would be good for the airlines and would benefit consumers by offering more choice.

"The historic decision by the European Council of Ministers to endorse an open-skies agreement between the US and the EU will bring new and valuable benefits to air travellers and communities on both sides of the Atlantic," she said.

In a letter to Ms Peters last week, however, Mr Oberstar and two other members of his committee said the deal was ambiguous on the issue of allowing more foreign investment in US carriers. "Without further assurance that the law or policy on foreign control of US airlines will not be changed, we cannot support the agreement," he said.

Ms Peters claims that the agreement has been crafted to ensure that it does not conflict with any existing US laws and that ownership issues will be dealt with on a case-by-case basis.

Mr Oberstar has not threatened to block the agreement in Congress but he warned that he would consider legislation to block individual deals approved by the Transportation Department if those deals allow greater foreign control of US airlines.

Last year, Mr Oberstar led a successful campaign to remove a proposal in the agreement that would have allowed European investors to gain limited control over US airlines. Under the agreement approved yesterday, European investors could invest in US airlines but could not gain voting rights or majority shareholdings.

US concerns about foreign ownership of airlines focus on job security for US employees, the survival of less competitive but economically important routes and, above all, national security. A public outcry last year torpedoed a deal whereby a Dubai-based company would take control of a number of US shipping ports and the US insists that it must retain control of all aspects of security at the country's airports.

Legislators are also concerned about foreign ownership because US airlines participate in a programme under which airlines are contracted to provide aircraft and crews in wartime.

For their part, US airlines have been enthusiastic supporters of a new open-skies deal, not least because many are struggling financially and are hungry for foreign investment. Crucially, the agreement opens up London's Heathrow airport to all US carriers that wish to bid for landing slots.

At present, the only US airlines that fly into Heathrow are American Airlines, which has a partnership agreement with British Airways, and United Airlines, which offers only a limited service to Heathrow.

The deal will allow US carriers to expand their routes into Europe and offers certainty about the legal status of such routes following a number of conflicts with the European Commission over bilateral open skies deals.

Supporters of the new agreement are encouraged by the fact that Mr Oberstar has not threatened to obstruct the deal and that any new legislation he introduces is likely to be limited to imposing limits on individual foreign investments in US airlines.

The Bush administration does not need congressional approval to implement the treaty itself, which involves the reinterpretation of existing US laws rather than the introduction of new ones.