EC VP says U.S. airline ownership talks productive

Transportation Reuters

WASHINGTON (Reuters) - Europe is renewing its push for the United States to ease restrictions on foreign ownership of airlines, arguing that access to a steady stream of capital remains a top industry concern.

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European Commission Vice President Siim Kallas said on Wednesday he had productive discussions in Washington this week, but left meetings with no assurance the U.S. government would relax ownership limits anytime soon.

"EU and U.S. airlines are still managing with very small margins of profit. It's definitely lacking behind the needs of investments so the capital is urgently needed," Kallas told reporters at a EU offices.

Overseas investment in U.S. airlines has long been limited to 25 percent voting stock, an amount some carriers and investors say inhibits growth and limits industry potential in a global economy.

Airline ownership is an unresolved sore spot from landmark European Union/U.S. aviation agreements to boost competition in transatlantic markets.

Other prickly issues include passenger security screening and Europe's move to include airlines in its approach for reducing carbon emissions. Kallas was reluctant to discuss security details, calling them sensitive. But he said formal protocols allow for the possibility of negotiating differences over the inclusion of airlines in Europe's emissions trading scheme.

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Kallas said he came away from talks with U.S. House of Representatives Transportation Committee Chairman John Mica aware of the political challenges that proponents of changing the ownership law face. But he was not discouraged.

"There is no assurance things will move, but the understanding is constructive," Kallas said.

The fiercest opposition to relaxing the law was swept away in last year's congressional elections, leaving business friendly Republicans in control of the House and reviving hopes of those who want lawmakers to act.

United Airlines, a unit of United Continental Holdings <UAL.N>, and other American carriers have at times lobbied hard for the change, which is not a pressing issue for all of them.

Organized labor and its allies in Washington are a chief hurdle to changing the law, fearing that allowing overseas control -- especially if the airline involved flew to Europe or Asia -- would reduce jobs and the influence of unions.

(Reporting by John Crawley; editing by Andre Grenon)

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