This morning’s Wall Street Journal story on Martin Broughton, chairman of British Airways, predicting that US airlines will soon start lobbying for the relaxation of foreign ownership rules has the ring of truth to me.
The reason is that one senior executive of a US airline said precisely that to me recently (off the record). He said that he could no longer see the point of the US law barring a foreign airline from owning more than 25 per cent of a US one and would not object to it being abolished.
The reason he gave for this was that the industry was largely financed by debt anyway and it did not make much difference who held the equity. This seemed fair enough but underlying it is financial pragmatism – US airlines need capital from wherever they can get it these days.
Of course, from the consumer’s perspective, allowing foreign ownership would be a boon. The US airlines – like those in some other countries – have existed in a protectionist world for too long and it has not helped either standards of customer service or the industry’s solvency.
The long-running battle over the ownership and control of Virgin America showed how protectionist the US market remains. Even my executive was too wary of a backlash to make his views known openly.
But there is nothing like self-interest to batter down longstanding traditions and I suspect Mr Broughton’s prediction may prove true.
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