=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SFGate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/n/a/2006/12/06/financial/= f002555S34.DTL --------------------------------------------------------------------- Wednesday, December 6, 2006 (AP) Low Trans-Atlantic Fares Slipping Away By AOIFE WHITE (12-06) 00:25 PST NEW YORK, (AP) -- Travelers seeking cheaper flights across the Atlantic lost out Tuesday after the Bush administration scrapped a proposal that would have permitted foreign investors to have more control of U.S. airlines. Transportation Secretary Mary E. Peters said the department bowed to job and security fears when it yanked a proposal to lift a 25-percent limit on foreign ownership of U.S. carriers. That dashed European hopes for an aviation deal in the near future that would strip away rules that give only few airlines the lucrative right to carry passengers across the Atlantic. EU transport chief Jacques Barrot said dropping the foreign investment rule was "an essential element" to moving forward with talks. The EU had hoped for a deal this year. Air travel in Europe and the United States accounts for 60 percent of global traffic, and a "whole new era of pricing" would have been possible if foreign investors were allowed to control U.S. airlines, according to Tom Parsons of bestfares.com, an online discount travel agency. Parsons said the U.S. government historically has limited foreign investment based on the rationale that it may need U.S. airlines' planes to transport troops in the event of war. Officials from both sides will meet early next year to discuss what can = be done, but the U.S. officials effectively turned down Europe's main demand — to open up the U.S. aviation sector to foreigners. That was viewed as a precursor to a pact allowing airlines from both regions to fly where they want and charge what they want across the Atlantic. Only two U.S. carriers — AMR Corp.'s American Airlines and UAL Corp.'s United Airlines — are permitted to fly into Europe's busiest airport, London Heathrow. Similar restrictions stop European airlines from flying from airports outside their home country to the U.S. — and prevent a new wave of low-cost carriers from competing with former state-owned air companies on the lucrative trans-Atlantic routes. Advocates for a deal hoped it could increase air travel, lower air fares, create jobs and boost investment in U.S. carriers and encourage more European airlines to combine. But labor unions, some airlines and some Democrats in Congress opposed a move that could cost U.S. jobs and allow foreign investors — even foreign governments — control over an industry critical to national security. Airlines also have mixed feelings about the "open skies" deal. Atlanta-based Delta Air Lines Inc. championed the pact, eager to expand its trans-Atlantic routes. But Continental Airlines Inc. of Houston lobbied against it, saying it doesn't give U.S. airlines enough access to Heathrow. The chairman of British Airways PLC, Martin Broughton, pressed the European and U.S. negotiators last November to go even further to open up airlines to competition. Others questioned whether the carrier was willing to give up landing slots at Heathrow to make such a pact work. Delta said on Tuesday it was disappointed by the Department of Transportation's decision "given the promise the rule held for enabling the U.S. to obtain an open skies agreement with the EU and for increasing U.S. carrier access to capital." The Atlanta-based carrier said it hoped U.S.-EU future talks could still make a breakthrough. Continental refused to comment when contacted Tuesday, and American said it "doesn't take a position either way." Airline shares were mixed in afternoon trading Tuesday. The Amex Airline Index was up a fraction, with only seven of 11 components rising. ___ AP reporters Shaila Dani in New York and Michael J. Sniffen in Washington contributed to this story. ------------------------------------------------= ---------------------- Copyright 2006 AP