Domestic Carriers Fighting Virgin Offshoot

Once again, a proposed "open skies" aviation pact between the US and the European Union was dealt a blow this week... when US officials warned that planned changes to airline ownership and control rules would not be ready in time for a crucial EU meeting set for October.

Acting US Transportation Secretary Mario Cino says intense political opposition to the idea of allowing greater foreign ownership in US airlines prevented an agreement to the new regs.

As Aero-News reported, a tentative agreement was reached between the two sides on the Open Skies treaty last November. That deal hinged, however, on a change in the ownership rules... and its acceptability to the EU.

And since that hasn't happened, the treaty, for the moment, is stillborn -- and according to an undersecretary at the DOT... there is "no specific timetable" at the moment to get it going again.

Just Ask Virgin America

If you need proof of how heated the issue of foreign ownership of airlines is, just ask Virgin America. For an airline that has yet to fly its first flight -- or even receive its operating license -- the upstart carrier is already riling up the domestic air travel industry.

Why? Well, as you may recall... several other carriers, most notably Continental, have been lobbying for months to keep the airline on the ground, and not competing with established carriers. Those airlines say the issue has to do with the question of foreign ownership -- as British-based Virgin Group owns 25 percent of the subsidiary, right at the limit under current US regulations.

But could it be instead... that airlines simply don't want another low-cost carrier sapping business, at a time when many of them are just now beginning to see black ink on their profit/loss sheets?

Some analysts contrast Virgin America's travails with the relatively simple approval process LCC JetBlue went through, six years ago. Of course, JetBlue is home-owned... and it began operations just before 9/11 put the airlines into a state of recession that still lingers.

The last thing those airlines want to see is another carrier taking a slice of the pie, which may just be the true issue here... regardless of who, ultimately, owns what.

FMI: www.eu.int, www.virginamerica.com