ABSTRACT
Cross-border investments must be totally liberalized in the airline industry. Alternative solutions have been proposed by national and international entities to foster foreign investments without liberalizing ownership restrictions. However, these alternatives would only serve to strengthen the complexity of the ownership and control issue. For instance, there has been the suggestion to separate ownership from control, i.e. to allow substantial foreign investments in national airlines and still retain national control of the industry, in order to meet various domestic, economic and regulatory concerns. l This solution will in fact not significantly change the current restrictive landscape since the control criterion is already the main factor that determines a country's attitude to foreign investments. Another proposed alternative solution is setting a minimum international standard of 49 per cent foreign voting equity interest in national airlines with the option for States to raise or eliminate the cap. Even though this alternative would surely benefit the industry, it is still not an acceptable solution since foreign investment restrictions will still prevail. Accordingly, the present analysis advocates the abolishment of all national constraints regarding foreign investment in air carriers, for the international community to reform the regulatory framework necessary to help the air transport industry to evolve and adapt to the global economy. The idea of harmonizing national restrictions, suggested ten years ago, is no longer relevant in the present global environment. At present, most States are moving towards a world without this kind of barriers.
