Airline ownership

By THIS IS MONEY
Updated:

 

The Daily Mail City team explains what is presently going on in regards to airline ownership.

What's happening?

Well, industry body IATA has added its voice to the clamour for structural changes to the industry in order to save the airlines from oblivion.

The body urged authorities globally to change the arcane rules that govern the ownership of national airlines.

Almost every other business sector has the freedom to access global capital and the ability to merge across national boundaries, and IATA argues airlines need to be given those same rights.

What are the rules?

At the moment, all European airlines must be at least 51% EU owned. Virgin Atlantic is a classic example, as Sir Richard Branson's Virgin Group owns 51% and Singapore Airlines has 49%.

In theory, British Airways could be bought by Iberia, or Lufthansa, or Air France-KLM.

But, the rules would make it almost impossible for American Airlines or Emirates to buy BA.

US airlines have even stricter rules on foreign ownership, with a maximum limit of 25% foreign ownership.

What else?

The issue also affects traffic rights that determine where airlines can fly. All routes are governed by separate bilateral treaties between national governments.

So, Emirates can't fly from Barcelona to London because it is not 51% EU owned. Likewise, BA is not able to fly between US cities. BA and others want all these rules swept away, allowing full liberalisation.

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