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GAO-04-34R 1 (2003-10-30)

handle is hein.gao/gaobaamit0001 and id is 1 raw text is: im Accountability * Integrity * Reliability United States General Accounting Office Washington, DC 20548 October 30, 2003 The Honorable Trent Lott Chairman The Honorable John D. Rockefeller Ranking Minority Member Subcommittee on Aviation Committee on Commerce, Science, and Transportation United States Senate Subject: Issues Relating to Foreign Investment and Control of U.S. Airlines In May 2003, the Bush Administration proposed amending the legislation that currently restricts foreign ownership of U.S. airlines, raising the allowable percentage of total foreign ownership of voting stock in U.S. airlines from 25 to 49 percent. The Department of Transportation (DOT) suggested that implementing this amendment could provide significant benefits to U.S. consumers and airlines, particularly by providing access to additional capital, which would help the financial health of the industry. DOT and the Department of State also maintain that these new limitations would bring the United States in line with current foreign ownership laws of the European Union (EU). Concerned about the effect that changes in foreign ownership and control requirements might have on the aviation industry, national interests, and consumers-and recognizing that we examined this issue in 1992 when DOT earlier proposed increasing the level of foreign ownership-you asked us to discuss two related topics: (1) current proposals to revise U.S. limits on foreign ownership and control, including information on current shareholders and past examples of efforts by foreign interests to purchase significant equity in U.S. air carriers and (2) whether key analytic issues raised in our 1992 report on foreign ownership and control remain relevant.' This report summarizes the information we provided to Committee staff during our June 25, 2003, briefing pursuant to your request. The briefing slides, which provide more details about our analysis, are attached as enclosure I. 'U.S. General Accounting Office, Airline Competition: Impact of Change Foreign Investment and Control Limits on U.S. Airlines, GAO/RCED-93-7 (Washington, D.C.: December, 1992). GAO-04-34R Foreign Investment in U.S. Airlines

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