The Airline Ownership Issue

Thursday, January 04, 2007

The Airline Ownership Issue

In this column, Slate's Daniel Gross complains about the "clearly obsolete" law (passed in 1938) that limits the ability of U.S. airlines to attract international financial backing. Gross writes:

What could possibly justify maintaining a law under which an airline's certificate of operation can be revoked if foreign ownership rises above the prohibited threshold? National security? Come on.

Every day, thousands of planes belonging to airlines controlled by foreign investors — states, corporations, individuals — land at and take off from U.S. airports without incident.

In theory, it's possible that foreign-owned companies might be more likely than U.S.-owned companies to allow terrorists access to their systems. But on 9/11, it will be recalled, the planes hijacked all belonged to U.S. airlines.

Besides, in the post 9/11 world, we don't rely on airlines for security, we rely on the Transportation Security Administration and government intelligence services to keep us safe.

... The law does succeed in protecting incumbent airlines from potential competition. But that's not a good thing. .... (Anyone who has flown one of the great foreign air carriers knows just how much U.S. airlines need to learn.) And in the commercial aviation industry, much of the ferment, and hence innovation, is coming from overseas.

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