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CO Calls Proposed DOT Rule "Unlawful"

May 9, 2006 By: Susan Young Travel Agent

Continental Airlines President Jeff Smisek testified Tuesday that the Department of Transportation's supplemental proposed rule to allow foreign control of U.S. airlines is both unlawful and unworkable, and that Congress should take the reins in creating appropriate laws under which foreign entities could increase capital investment in American carriers. Testifying before the Aviation Subcommittee of the Senate Committee on Commerce, Science and Transportation, Smisek said, "In their Alice in Wonderland world, the Department of Transportation is trying to 'interpret' a requirement that actual control of U.S. air carriers must be in the hands of U.S. citizens to mean that actual control of U.S. air carriers may be in the hands of foreign citizens. The truth of the matter is that the proposed rule doesn't offer any protection from foreign domination and control, except for the limited, naive and impractically crafted attempt by DOT to carve-out safety, security, military airlift and organizational documents." Smisek said DOT is promising foreign investors that they will have control of U.S. airlines because otherwise the EU will refuse to sign an open skies agreement. He also said DOT is promising Congress that foreigners won't have control of U.S. airlines. But Smisek says the rule can't—and doesn't—do both. He believes the DOT's proposal will be reversed by the courts if issued by DOT as currently drafted. Smisek isn't alone in his concerns; nearly 190 Members of Congress have voiced support for legislation designed to prevent DOT from issuing the final rule for at least a year or until further studies have been completed.

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