FOREIGN TAKEOVERS OF UNITED-STATES AIRLINES - FREE-TRADE PROCESS, PROBLEMS, AND PROGRESS

Civil aviation has become an international industry, and many foreign air carriers seek access to the lucrative U.S. aviation market by purchasing shares of U.S. airlines. However the Federal Aviation Act imposes limits on foreign ownership. In this Article, Mr. Grant argues that although the Department of Transportation previously exercised its discretion by interpreting liberally its statutory mandate, recently the agency has appeared reluctant to encourage globalized aviation and, in fact, has reversed the trend toward ''open skies.'' Mr. Grant analyzes the ''changed landscape'' of civil aviation, noting that troubled US. carriers welcome capital from any source. He advocates a strategy of ''liberalizing for leverage'' in aviation diplomacy; the United States should implement a policy of explicit linkage between more liberal treatment of U.S. carriers overseas and permissive allowances for foreign investment in U.S. airlines. Mr. Grant recommends amending the Federal Aviation Act so that it authorizes, and even directs, the Department of Transportation to push for more open skies.