EU airline FDI caps are ineffective, outdated

Author: Danielle Myles | Published: 24 Dec 2015

An overhaul of Europe’s struggling airline industry contemplates changes to non-EU ownership and control restrictions, and beefed-up fair competition clauses in bilateral agreements marred by state-subsidy controversies.

Reforms proposed by the European Commission earlier this month are long-overdue, but they face a difficult road to implementation. Any changes to foreign direct investment (FDI) caps must be reciprocal, and some Gulf airlines – which have benefitted from the decline of European aviation – have taken the plans as an attack on their government-backed industry.  

In its Aviation Strategy, the Commission promises to issue interpretative guidelines on its rule that a foreign entity can’t own and control 50% or more of an EU airline’s shares. Its goal is to create more legal certainty for investors and airlines, and according to the industry, it can’t come soon enough.

"For decades we have been telling the Commission that it is antiquated,"...