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Last Updated: Thursday, 4 May 2006, 15:43 GMT 16:43 UK
'Open skies' deal faces delay
Passenger jets
Liberalisation between the EU and US could lead to airline mergers
US airlines, unions and members of Congress have begun lobbying against a plan to give foreign investors more control over American air carriers.

The proposal was introduced by the US government in order to lock down a deal lifting restrictions on flights across the Atlantic to EU countries.

The debate may delay the signing of the "open skies" treaty, which was set to be ratified in June.

Opponents of the new proposal have now been given 60 days to lodge objections.

This means the deal, which was agreed by the EU and the US last November, is unlikely to be signed until October at the earliest.

Security threat?

The US proposal will give foreign investors more of a say in the marketing of airlines, flight routes and types of aircraft operated.

But it does not lift the 25% limit imposed on foreign ownership of US carriers - and has been revised to emphasise that US citizens remain in control of the airline.

In a debate reminiscent of concerns raised over Dubai Ports World taking control of key US ports, some airlines and unions say that giving foreigners more of a say in the running of US airlines could be a threat to national security.

The US government hopes to defuse the opposition, believing that the treaty will increase air travel, lower fares and create jobs.

The EU has not commented on whether it finds the proposal to be satisfactory.

Under the "open skies" deal, US airlines would be free to fly to major airports in the European Union and from there to other internal destinations.

Likewise, European airlines would be able to fly to US airports - and from there to other US destinations.

Airlines would also be able to charge whatever ticket prices they want, on both sides of the Atlantic.

An agreement could see major changes to trans-Atlantic services from London's Heathrow airport, with the US keen to secure wider access for its carriers.

Experts say full liberalisation between the EU and US could transform the industry, leading to mergers between airlines.

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