Foreign Ownership ( Of US Carriers) Rules

Transportation Says U.S. Citizens
Must Run U.S. Airlines
WASHINGTON (CN) - Airlines run in the United States, or those operating as U.S. air carriers on international routes, must have U.S. citizens at the helm. According to new regulations, the president and at least two-thirds of the board of directors of the company holding the certificate to run a U.S. airline must be U.S. citizens, and at least 75 percent of the voting interest must be owned by U.S. citizens:

Air carrier control, fitness review policies, citizenship issues: Review of Data Filed by Certificated or Commuter Air Carriers To Support Continuing Fitness Determinations Involving Citizenship Issues, Federal Register, April 23, 2007, Volume 72, Number 77, Rules and Regulations, Page 20034, 14 CFR Parts 204 and 399, Docket No. OST-2003-15759, RIN 2105-AD25, Final rule.

(This final rule is effective May 23, 2007.)

SUMMARY: The Department adopts its proposed editorial changes to its rules on Data to Support Fitness Determinations, 14 CFR Part 204, and will maintain its existing procedures for conducting reviews of the continuing fitness of air carriers. The Department had earlier withdrawn a proposal made in this rulemaking to modify the Department's standards for determining whether carriers remain under the actual control of U.S. citizens.

FOR FURTHER INFORMATION CONTACT: William M. Bertram, Chief, Air Carrier Fitness Division (X-56), Office of Aviation Analysis, U.S. Department of Transportation, 400 7th Street, SW., Washington, DC 20590; (202) 366-9721.

DETAIL: By statute, only citizens of the United States may obtain and hold certificate authority under 49 U.S.C. 41102 or 41103 authorizing them to provide air transportation within the United States or operate as a U.S. air carrier on international routes. The statutory citizenship requirements require that at least 75 percent of the voting interest of a U.S. air carrier be owned and controlled by U.S. citizens, that the president and two-thirds of the board of directors and managing officers be U.S. citizens, and that U.S. carriers be subject to the actual control of U.S. citizens. 49 U.S.C. 40102(a)(15).

WHEN CARRIER CITIZENSHIP USUALLY IS EXAMINED: DOT examines carrier citizenship primarily in two situations.

When a firm applies for authority to operate as a U.S. carrier, DOT conducts an initial fitness review, which includes a review of the carrier's citizenship. DOT conducts initial fitness reviews through docketed proceedings, where a public record of the pleadings is maintained; DOT publishes all Department decisions in the case; and DOT gives interested persons an opportunity to comment on the application.

DOT conducts a continuing fitness review if an existing carrier undergoes a substantial change in ownership, operations, or management. DOT usually conducts continuing fitness investigations without a public proceeding and therefore does not create a docket containing record material, publish a final decision, or provide an opportunity for public comment. In some continuing fitness cases, DOT may decide to use more formal public procedures.



AMENDMENTS: 14 CFR Part 204 and 399 are revised as follows:

Section 204.1 is revised to read as follows:

Section 204.1 Purpose.

This part sets forth the fitness data that must be submitted by applicants for certificate authority, by applicants for authority to provide service as a commuter air carrier to an eligible place, by carriers proposing to provide essential air transportation, and by certificated air carriers and commuter air carriers proposing a substantial change in operations, ownership, or management. This part also contains the procedures and filing requirements applicable to carriers that hold dormant authority.


Section 204.2(c)(3) is revised to read as follows:

Section 204.2 Definitions.

* * * * *
(c) Citizen of the United States means:

* * * * *
(3) A corporation or association organized under the laws of the United States or a State, the District of Columbia, or a territory or possession of the United States, of which the president and at least two-thirds of the board of directors and other managing officers are citizens of the United States, which is under the actual control of citizens of the United States, and in which at least 75 percent of the voting interest is owned or controlled by persons that are citizens of the United States.
* * * * *

Section 204.5 is amended as follows:

Paragraph (a)(2) is revised to read as set forth below;

Paragraph (b) is amended to remove the “s” after “Carrier” in the third sentence in the reference to “Air Carrier Fitness Division”;

Paragraph (c) is revised to read as set forth below; and

A new paragraph (d) is added to read as set forth below.

The revisions read as follows:

Section 204.5 Certificated and commuter air carriers undergoing or proposing to undergo a substantial change in operations, ownership, or management.

(a) * * *

(2) The change substantially alters the factors upon which its latest fitness finding is based, even if no new authority is required.
* * * * *

(c) Information filings pursuant to this section made to support an application for new or amended certificate authority shall be filed with the application and addressed to Docket Operations, M-30, U.S. Department of Transportation, Washington, DC 20590, or by electronic submission at [http://dms.dot.gov].

(d) Information filed in support of a certificated or commuter air carrier's continuing fitness to operate under its existing authority in light of substantial changes in its operations, management, or ownership, including changes that may affect the air carrier's citizenship, shall be addressed to the Chief, Air Carrier Fitness Division, Office of the Secretary, U.S. Department of Transportation, Washington, DC 20590.

See also, CRS Report, Foreign Investment in US.


See also, IATA's study of lessons learned from removing barriers to investment in other sectors of economy.