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U.S. Department of Transportation

DOT strengthens its proposal for international investment in U.S. Airlines

A revised international investment proposal released by the U.S. Department of Transportation would strengthen requirements initially proposed last November concerning U.S. citizens’ control of all safety, security and…

A revised international investment proposal released by the U.S. Department of Transportation would strengthen requirements initially proposed last November concerning U.S. citizens’ control of all safety, security and national defense obligations of domestic airlines while allowing international investors to make decisions on commercial matters involving U.S. airline management.



The supplemental notice of proposed rulemaking issued by the Department reflects comments provided on the November, 2005 proposal from consumers, airlines, aviation personnel and other interested groups. That proposal would make it easier for U.S. airlines to raise money, restructure their businesses and form strategic partnerships and alliances by allowing international investors more say in some aspects of airline operations such as scheduling and marketing.



The supplemental proposal issued would make clear that U.S. citizens who are members of a domestic airline’s board or the voting shareholders, must retain the authority to revoke decision-making authority that international investors may acquire. For example, domestic board members might decide to revoke international investors’ decision-making authority over scheduling and fleet composition if they felt that those decisions were not in their airlines’ best interests. The new provision would make clear that U.S. citizens remain in “actual control” of the airline, as required by statute.



In addition, the revised proposal would strengthen the original proposal’s requirement that U.S. citizens have full control over all policies and implementation relating to safety, security and national defense airlift commitments. The new proposal would specifically prevent international investors from having the ability to hire, fire or control the budgets of senior airline managers with direct responsibility for safety, security and national defense airlift commitments.



As with the original version, the revised proposal would only apply to international investors from countries that have Open-Skies aviation agreements with the United States and allow similar investments by American citizens in their domestic airlines.



The Department revision is seeking additional comment for another sixty days to allow for all interested groups to comment on the revised proposal.

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