Free to Fly Act Wants to Eliminate Foreign Investment Cap on Airlines

The Free to Fly Act is taking flight.

Rep. Dave Brat (R-Va.), a member of the bipartisan Travel and Tourism Caucus, introduced H.R. 500, also known as the Free to Fly Act, with the goal of eliminating an antiquated and anti-competitive regulation that prevents foreign investment in U.S. airlines.

The bill repeals a restriction from the 1920s that hinders investment in U.S. airlines and caps foreign ownership in U.S. airlines at 25 percent. This increases the cost of capital and limits consumer choices, according to Brat. The Free to Fly Act seeks to remove the cap altogether.

“The elimination of this outdated restriction is long overdue,” said Brat. “As an economist, I understand that hindering investment hurts American businesses, workers and consumers. The Free to Fly Act would stimulate and expand the travel and tourism industry, creating more choices and reducing prices for consumers, while at the same time increasing financial stability for U.S. airlines and creating jobs for American workers.

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“The current administration has successfully advocated for more foreign investment in America, and it’s time we allow the U.S. airline industry and the traveling public to benefit from outside investment as well. The Free to Fly Act is a win for America’s consumers, workers and airlines.”

The U.S. Travel Association has outlined the need for modernization of U.S. air travel, noting that one of the major problems the industry faces is a lack of competition as well as aging infrastructure and outdated navigation systems.

The association also notes that air travel is expected to increase exponentially in the coming years, growing from 756 million enplanements per year to almost 927 million.

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The bill has received support from several travel industry groups, including the U.S. Travel Association.

Paul Hudson, president of FlyersRights.org, a nonprofit airline consumer organization said:

“Reforming or repealing laws and policies that prohibit foreign competition, inhibit new domestic airlines startups and expansion is essential to improving air travel for the 99 percent of Americans and businesses that depend on commercial air travel for long distance transportation.”

While the American Society of Travel Agents agrees that competition is needed, it disagrees with the substance of the bill.

“In response to outreach from Rep. Brat’s office prior to the bill’s introduction, we did several rounds of consultations with our members on the topic. In the end, while we agree that the U.S. airline industry suffers from a lack of competition, ASTA’s position, long-held, remains in support of lifting the foreign ownership cap to 49 percent, which would match Canada and the European Union, but not doing away with it altogether,” said Eben Peck, executive vice president, advocacy at ASTA.

Read the full bill here.