Progress in EU aviation talks?

Progress in EU aviation talks?

U.S. officials in bilateral aviation talks have signaled that they will try again to raise foreign ownership limits for U.S. airlines, despite failure to win such change in Congress last year.

The offer came during bilateral aviation talks between the U.S. and European Union in Washington late last month. The offer was in line with the Bush administration's unsuccessful proposal to Congress last year to raise the limit on foreign ownership of U.S. airline stock from 25 percent to 49 percent.

In addition to liberalizing the ownership limit, the package presented by the U.S. included permission for European passenger and cargo flights to fly from EU countries other than their own to U.S. destinations through so-called fifth-freedom rights.

The U.S. believes eliminating the so-called nationality clause could encourage consolidation of Europe's many national airlines, which the U.S. favors. Negotiators eventually tabled the U.S. proposal, even though the European side agrees with many of its principles. Negotiators consider the measure still open for negotiation and insist it has not been rejected.

While the changes discussed at the talks are important to cargo airlines, U.S. cargo carriers also want decisions on night-flight restrictions in Europe. No details emerged from the closed third round on the night-flight debate, which limits hours of flight operations at some European airports. The restrictions are unpopular with cargo carriers, which usually fly at night.

"Compared with the previous negotiations, the previous rounds, where we exchanged positions . . . this week we have entered into a real negotiation of what might be enacted," said Michel Ayral, the European Commission's director for air transport.

In addition to government officials, airline and airport representatives attended the talks, which will affect both cargo and passenger airline operations.

Ayral called the proposal a first step but said negotiators have a long way to go before producing an agreement. Both sides are scheduled to meet again in Brussels the week of March 29, after EU transport ministers convene to discuss their priorities and progress in the talks.

While negotiators from both sides said they were pleased with progress made in the third round of talks, many of the agreements the U.S. makes will eventually require congressional approval. Those provisions include the ownership limit, which Congress ignored last year after Transportation Secretary Norman Mineta tried to slip it into the Federal Aviation Administration reauthorization bill that was already under consideration.

Calling the ownership limit change "a very key issue" for the European side, Ayral said he expects the administration to ensure that the change receives a congressional OK if it becomes part of an eventual bilateral agreement.

"I assume that if the U.S. administration is ready to enter into an agreement that would include 49 percent, the administration would do all their best to secure this change into U.S. law," Ayral said. Europeans would prefer to see full liberalization of ownership limits, but they see 49 percent as progress. Ayral said the Europeans would not have agreed to schedule the next round if U.S. negotiators had not committed to raising the bar on foreign ownership limits.

While ownership and cabotage rights are key to European negotiators, U.S. negotiators want to come away with more open-skies agreements, and specifically with more access to London's Heathrow airport. The two sides have bickered for years over Heathrow rights.

The U.S. has open-skies aviation agreements with 11 of the 15 EU member countries. It lacks agreements with Britain, Greece, Ireland and Portugal.

The two sides have no schedule for concluding negotiations. When talks began in mid-2003, they were expected to last at least several years.