A New Approach to Foreign Ownership of National AirlinesIssues in Aviation Law and Policy (2004)
The author of this article (Paragraph No. 25,201) notes that as the airline industry scrambles to recover from its "perfect economic storm," there is a growing conviction that the tough citizenship tests that virtually all countries impose on their airlines are a timeworn relic of another era. For over 50 years these tests have excluded US airlines from full access to foreign capital markets and from merging with, acquiring,or being acquired by, foreign airlines. The main competitive advantage these tests conferred--keeping foreign airlines out of the US domestic market--has done little to assure the viability of the cash-starved US airline industry. According to the author, the current challenge to the citizenship of DHL Airlines, an American air cargo corporation, provides an ideal opportunity to think seriously about how to put an end to the damaging effects of what he calls "this inefficient, anticompetitive, and poorly-administered citizenship impediment." While the Bush Administration has proposed some modest changes, a much more thorough reform is needed if airlines are truly to become a mature and viable industry. This article canvasses the legal, economic, and policy reasons why the citizenship tests should be abolished, and offers a new framework for completing the promise of deregulation by taking government out of the business of second-guessing airline managers on investments, capital structure, and ownership, while leaving safety and security issues firmly in public hands.
Citation InformationBrian F. Havel, A New Approach to Foreign Ownership of National Airlines, 2001 Issues Aviation L. & Pol'y 13201, 13226 (2001-2004)