Phoenix Aviation Symposium Tackles Foreign Ownership of US Airlines

(MoneyWatch)  There's no better time to be in Phoenix than March, and that's why I find myself at the Phoenix Aviation Symposium this week. Everyone is trying to escape the cold, get some sun, and maybe catch a spring training game or two. But more importantly, the Phoenix Symposium is a very well-regarded event that draws some big name speakers. We touched on several issues yesterday during day one, but I thought I'd use this post to focus on the international issues panel.

The first panel of the day was on international issues, and the lineup was a strong one. We had a mix of government folks and private sector people talking about the world of international travel. As you can imagine, talk quickly turned toward negotiations between the US and the EU on further liberalization of ownership rules and traffic restrictions.

It was quite amusing having American's SVP of Government Affairs Will Ris sitting next to Virgin Atlantic's Director of Commercial and Revenue Planning, Edmund Rose. American, of course, is trying to pursue anti-trust immunity with British Airways and Virgin Atlantic is, well, not so happy about that. But when it came to foreign ownership discussions, the fireworks didn't involve American at all.

Virgin's Rose made his case that opening up foreign ownership of US carriers would "would benefit the US industry." Rose continued, "I would argue that opening up foreign ownership could help consolidation." But it wasn't American's Ris who fired back but rather moderator Jeff Shane when he said, "Last time i checked, there was an airline carrying cabotage traffic around the United States called Virgin America, so why do you need less restriction on foreign ownership?"

Rose followed by saying that Virgin Atlantic was not affiliated with Virgin America directly, so there would still be a great benefit from foreign ownership. Besides, the Virgin America product was pretty nice, he said, so why wouldn't you want more of that? At that point, ALPA's chief John Prater stepped in with his opposition to foreign ownership, and he used a fairly silly example of why.

What if a foreign carrier bought Southwest and moved many of its planes to other parts of the world because it found better opportunities? Well, if there's demand in the US, someone will fill it, so that seemed like a non-starter of an argument. He made it clear that he was a single issue guy - he wanted to keep good jobs in the US. But that concern could be fairly easily addressed via regulations on foreign ownership, and I would think that those sort of regulations should be a requirement for such an agreement.

Ultimately, however, Deputy Assistant Secretary for Transportation Affairs with the US Department of State John Byerly slammed the door shut. "Cabotage [the process of foreign-owned carriers flying domestic routes] is off the table. It's not going to happen." I'm sure that's exactly what the British delegation did not want to hear, and that sort of stance may very well see the next round of liberalization talks this summer end without any progress being made.