[Congressional Record Volume 142, Number 68 (Wednesday, May 15, 1996)]
[Senate]
[Pages S5089-S5090]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            UNITED STATES/UNITED KINGDOM AVIATION RELATIONS

  Mr. PRESSLER. Madam President, I rise today to express my great 
frustration with the current state of aviation relations between the 
United States and the United Kingdom.
  At a great cost to the United States economy, the highly restrictive 
United States/United Kingdom bilateral aviation agreement continues to 
be an enormous barrier to free and fair trade between our countries. It 
is a barrier British negotiators have carefully crafted over the years 
that, as intended, quite effectively limits competition in the United 
States/United Kingdom air service market. Simply

[[Page S5090]]

put, it is an agreement which artificially manages air service trade in 
a way that significantly benefits British carriers.
  For U.S. passenger carriers serving the transatlantic air service 
market, these are both the best of times and the worst of times. On the 
bright side, the historic open skies agreement the United States 
recently signed with the Federal Republic of Germany, combined with 
existing open skies agreements with other European countries, means 
that nearly half of all passengers traveling between the United States 
and Europe will be flying to or from European countries with open skies 
regimes. That truly is a remarkable statistic and great news for 
consumers.
  Our aviation relations with the British, however, stand in 
disturbingly stark contrast. Although the British Government extols the 
virtues of transatlantic free trade, its words ring hollow with respect 
to the United States/United Kingdom air service market. United States 
carriers have proven themselves to be highly competitive in every 
international market they serve yet, all United States passenger 
carriers combined have a smaller share of the United States/United 
Kingdom air service market than just one British carrier, British 
Airways. Overall, two British carriers currently control nearly 50 
percent more of the passenger traffic in that market than United States 
carriers. As I have said before, I do not believe market forces are 
responsible for this imbalance.
  What adverse impacts does the highly restrictive United States/United 
Kingdom bilateral aviation agreement have on the United States economy? 
First, each year our economy is losing hundreds of millions of dollars 
of export revenue United States carriers might otherwise capture if the 
United States/United Kingdom air service market truly was competitive. 
Second, it is costing Americans new jobs which otherwise might be 
created if United States carriers could expand their services to the 
United Kingdom. Finally, consumer choice is badly restricted and 
consumers are denied the most competitive air fares.
  Several months ago I announced an initiative I hoped might jump start 
stalled air service negotiations with the British and remedy these 
adverse economic impacts. Regrettably, the British spurned that attempt 
and other good faith efforts by the administration to restart talks. 
For that reason, I have decided to delay indefinitely my plans to 
introduce legislation increasing the permissible level of foreign 
ownership in the voting stock of U.S. carriers to 49 percent. That 
legislation was the cornerstone of my initiative. If the British 
exhibit a genuine willingness to seriously address our air service 
concerns, I will reconsider my decision.
  Quite frankly, I am frustrated with the British intransigence in 
addressing this serious trade issue. They have long blamed a lack of 
reciprocal investment opportunities in the voting stock of U.S. 
carriers as a stumbling block to progress in our air service 
relationship. Finding some merit in that concern, I offered to 
introduce legislation to address it and help clear the way for further 
liberalization of our aviation relationship. The British Government's 
reaction, however, calls into question whether reciprocal foreign 
investment opportunities ever were the concern the British have long 
played them up to be.
  To underscore that skepticism, I noticed in recent months British 
carriers have now moved onto criticizing United States policy on the 
grounds of additional wish list rights such as cabotage and direct 
participation in the Fly America Program.
  Madam President, it has become even more apparent in recent months 
that British aviation policy is not driven by the goal of expanding 
rights for its carriers and moving forward in our aviation 
relationship. Instead, the overarching goal of that policy seems to be 
nothing less than continuing to protect British carriers from vigorous 
competition with United States carriers.
  In particular, the British Government wants to keep in place the 
current system which blocks United States carriers from serving 
London's most popular airport, Heathrow, from most major passenger feed 
hubs in the United States. After all, under the current managed 
competition agreement, the British have totally blocked United States 
passenger feed to Heathrow from major United States hub airports 
including those located in Atlanta, Cincinnati, Dallas, Denver, 
Detroit, Houston, Minneapolis, Newark and St. Louis. No wonder United 
States carriers do not use larger aircraft as the British often chide.
  Mr. President, let me conclude by saying I hope the British 
Government will decide to get in step with the rest of Europe by 
finally agreeing to take meaningful steps to liberalize the United 
States/United Kingdom bilateral aviation agreement. The time for such 
liberalization is long past due.
  Let me also add that I for one believe there will come a time when 
the British truly want some significant aviation rights or regulatory 
relief from the United States. When that time comes, I fully expect the 
administration will use that leverage to the fullest extent possible 
and demand a very high price.

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