By Julie Johnsson |
The U.S. and European Union have struck a sweeping new pact to
liberalize air travel across the North Atlantic, the largest market in
the world, by eliminating restrictions on foreign ownership and control
of airlines.

The Open Skies II agreement, which must be approved
by the U.S. Congress and European parliament, would end U.S. rules
limiting overseas investors to a 25 percent ownership stake in a U.S.
airline.

Under the agreement, European carriers would be free to buy their American counterparts, and vice versa. Germany’s Lufthansa would be allowed to invest in Chicago-based United Airlines, its close Star Alliance partner, for example, or Richard Branson to increase his stake in Virgin America.

Similar efforts to loosen airline ownership restrictions, however, have drawn stiff opposition from members of Congress in the past and raised concerns ranging from national security to job security.

Some opponents worry that foreign owners of a U.S. flag carrier might hamper the U.S. military’s ability to rapidly deploy large numbers of troops in an international crisis.

Union leaders have warned that waiving ownership rules would pave the way for wide-scale outsourcing of airline jobs.

The new agreement includes a provision aimed at allaying fears of labor leaders on both sides of the Atlantic. It ensures that the “existing legal rights of airline employees are preserved, but that the implementation of the agreement contributes to high labor standards,” according to an EU statement on the Open Skies deal.

Other provisions are aimed at streamlining security so international passengers see fewer hassles and greater consistency in screening as they travel between the two economic powers.

The treaty also seeks to “green” aviation by bringing the two sides in sync on market-based measures such as emission trading schemes, greater transparency to noise-based airport measures and use of green technologies, jet fuels and air traffic management.

The treaty, combined with an Open Skies agreement adopted in 2007, would create 80,000 new jobs and boost trans-Atlantic traffic by 26 million passengers over five years, according to a 2007 Booz Allen Hamilton study.