Release #06.004
February 8, 2006

ALPA President Blasts Proposal to Loosen Foreign Control Rules

WASHINGTON, D.C. --- The head of the nation’s largest airline pilot union today told Congress that a proposal to loosen Department of Transportation rules on foreign control of U.S. airlines would violate federal law, usurp Congress’ authority in setting such policies, and strike yet another blow against airline workers.

“DOT’s proposed rule essentially rewrites the statutory rule on ‘actual control’ enacted by Congress,” said Capt. Duane Woerth, president of the Air Line Pilots Association, Int’l (ALPA). “Changes of this magnitude should be undertaken not by an administering agency but by the legislative branch.”

Woerth was testifying at hearings by the House Aviation Subcommittee on a proposed DOT rule change that would radically reduce controls that prevent foreign owners from dictating a carrier’s business practices and policies. In addition to raising a number of technical and economic policy concerns, Woerth stressed the effect that the rule change would have on airline workers.

“Pilots spend their entire careers accumulating the seniority required to gain access to (international) flying opportunities. In an era when the career expectations of pilots and other airline workers already have been repeatedly frustrated by airline bankruptcies, furloughs, wage concessions, pension plan terminations, and the like, it would be a crowning blow for the U.S. government now to adopt a policy that would tend to eliminate international flying by U.S. carriers,” he said.

Under the new rule, an airline would only have to meet standards in four relatively minor areas to remain in compliance with the statute prohibiting foreign control: corporate documentation, participation in the Civil Reserve Air Fleet program, TSA security regulations, and FAA safety regulations. All other aspects of airline operations, including prices, scheduling, markets, fleet structure, marketing, and alliances, could be controlled by foreign investors, including a U.S. carrier’s foreign airline competitor.

Woerth said that such a departure from current standards amounts to having an executive agency rewrite federal law, and proceeded to methodically outline a series of major objections to the proposal:

• It violates federal law prohibiting foreign control

• A foreign airline could change a U.S. carrier’s schedules, pricing, etc., to feed its own international operations, to the detriment of the U.S. carrier and it employees

• For similar reasons, the U.S. carrier’s ability to furnish aircraft suitable for the U.S. military’s CRAF program could be reduced

• U.S. workers might not have the same labor law protections that are available in the U.S. if a foreign owner began to play them off against workers in a different country

• Aviation safety could be reduced because the proposed rule only requires that foreign-controlled management meet minimum FAA standards, whereas the enviable safety record of U.S. carriers is the result of voluntary participation in programs and practices that go well beyond minimum requirements

• Because of a provision in many bilateral aviation agreements, any U.S. airline under foreign control could be disqualified from providing service under those agreements

• The DOT has not demonstrated a need for foreign investment in U.S. carriers, nor has it shown that investment will not occur absent such a change

Woerth also criticized concessions made by U.S. trade negotiators in the recent talks with the European Union. Citing a June 2004 report from the U.S. Government Accountability Office on the effects of easing restrictions on U.S.-European Markets, he noted that the GAO concluded that whatever benefit U.S. carriers and consumers would eventually gain from such an agreement might not be realized for several years.

This, according to the GAO, is because the U.S. already has open access to the vast majority of European traffic and the only significant restricted market -- London -- is subject to significant airport capacity constraints that would not be eliminated by a liberalized agreement. “In other words, in the GAO’s view, U.S. carriers were not likely to benefit in the short term and possibly only to a small extent even in the longer term by a US-EU ‘open skies’ agreement similar to the initialed text,” Woerth said.

ALPA represents 62,000 airline pilots at 39 airlines in the U.S. and Canada. The text of ALPA’s submission can be found at www.alpa.org.

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ALPA CONTACTS: Linda Shotwell, John Mazor, (703) 481-4440, media@alpa.org