International Aviation

The Transportation Department's (DOT) recent successes have created momentum and renewed hope that U.S. airlines will have better access to key foreign markets in the future. However, the challenges facing DOT are stiff as foreign governments are often unwilling to permit greater competition between their national airlines and lower-cost U.S. airlines, although U.S. airlines often disagree as to what DOT's strategy should be. The international environment has also become increasingly dynamic, with airlines forming a growing number of alliances to create global and regional route networks. Given the success of such alliances, it is likely that code-sharing will continue to play a large role in bilateral negotiations and any increased rights of direct access or relaxation of foreign investment limits will be linked to the value that governments and airlines place on code-sharing. Unless it solves its data problems, DOT will be limited in its ability to effectively negotiate increased U.S. access to foreign markets and keep abreast of the increasingly global industry, monitor code-sharing's impact on competition and fares, and equitably accommodate competing U.S. airlines.