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EU still seeks easing of US airline-owner limits

The US must make progress in opening airlines to more foreign investment and control for the European Union to adopt a treaty expanding trans-Atlantic flights, EU Transport Minister Jacques Barrot said.

„I don't see what other agreement we might find without any progress being made on the question of ownership and control,” Barrot said in an interview. „I would find it very difficult” to recommend that EU states adopt an „Open Skies” treaty without the progress, he said through an interpreter. Barrot's comments today in Washington indicate that US negotiators may have a hard time maintaining the status quo on foreign ownership and control while expanding overseas flying. The US has said it will explore other options as substitutes for the EU's desire to expand foreign-ownership limits. The two sides open four days of talks on the treaty tomorrow in Washington, with an aim of reaching a deal that could be reviewed by EU transport ministers March 22-23. US Transportation Secretary Mary Peters on December 5 scrapped a proposal that would have given foreign investors more control over US airlines on issues such as buying planes or starting new routes. Europeans had made the control rule a condition for completing an Open Skies treaty. The treaty, tentatively reached in November 2005, would let EU airlines fly trans-Atlantic routes to the US from anywhere in the 27-nation bloc, not just their home countries. It also would end exclusive rights for British Airways Plc, Virgin Atlantic Airways Ltd., AMR Corp.'s American Airlines and UAL Corp.'s United Airlines between the US and London's Heathrow airport.

The EU has said that without a foreign-ownership rule, the 2005 agreement is „unbalanced” because US carriers can fly between nations in Europe, while EU carriers can't offer service between US states. To make up for the loss of the ownership rule, the US is willing to explore five other areas, said John Byerly, deputy assistant secretary for transport affairs at the US State Department. Those are: Clarify that foreigners can own up to 49% of non-voting equity in US carriers; let EU carriers fly between the US and third countries, such as Mexico; loosen requirements that federal workers travel on US carriers; let EU carriers set up US franchises; and commit to certain additional talks after an „Open Skies” deal is struck. „After three and a half years, it is time to strike an agreement,” Byerly said February 1 at a conference. „We'll know by April whether we succeed or fail.” Barrot said today the treaty would add 25 million trans-Atlantic passengers in the first five years after its adoption. (Bloomberg)