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Issues Relating to Foreign Investment and Control of U.S. Airlines

GAO-04-34R Published: Oct 30, 2003. Publicly Released: Dec 01, 2003.
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Highlights

In May 2003, the Bush Administration proposed amending the legislation that currently restricts foreign ownership of U.S. airlines, raising the allowable percentage of total foreign ownership of voting stock in U.S. airlines from 25 to 49 percent. The Department of Transportation (DOT) suggested that implementing this amendment could provide significant benefits to U.S. consumers and airlines, particularly by providing access to additional capital, which would help the financial health of the industry. DOT and the Department of State also maintain that these new limitations would bring the United States in line with current foreign ownership laws of the European Union (EU). Concerned about the effect that changes in foreign ownership and control requirements might have on the aviation industry, national interests, and consumers--and recognizing that we examined this issue in 1992 when DOT earlier proposed increasing the level of foreign ownership--the Subcommittee on Aviation, Senate Committee on Commerce, Science, and Transportation asked us to discuss two related topics: (1) current proposals to revise U.S. limits on foreign ownership and control, including information on current shareholders and past examples of efforts by foreign interests to purchase significant equity in U.S. air carriers and (2) whether key analytic issues raised in our 1992 report on foreign ownership and control remain relevant.

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Topics

Airline regulationAirlinesCommercial aviationCompetitionEmploymentForeign investments in USHomeland securityInternational economic relationsProposed legislationStocks (securities)Transportation safetyPassenger reservation systems