Foreign ownership restrictions in the American airline industry should be dumped so that overseas investors can inject capital into the struggling aviation market, Barack Obama was told yesterday.

In a letter to the President-elect, Giovanni Bisignani, director-general of the International Air Transport Association, said that he was not asking for an industry bailout of the type requested by carmakers.

Instead, he urged Mr Obama to liberalise ownership rules of the industry, which allow foreign carriers to take a stake worth no more than 25 per cent in any American group.

America fiercely protects its airline business and, in addition to ownership, it also blocks foreign carriers from competing on many domestic routes, such as New York to Washington.

In the letter, Mr Bisignani wrote: “Travelling by air – whether passengers or cargo – is crucial for the country’s economic recovery. Airlines around the world are expected to lose billions of dollars this year, but there are several important unresolved problems you [Mr Obama] have the power to fix that will put the industry on the road to recovery.

“To build a sustainable future, airlines need the same management tools that other businesses take for granted: market access and access to capital. We are confident that government, airlines and labour can work together to remove these arcane restrictions and allow the industry to reach its full global potential.”

Many in the industry believe that the aviation market will require federal assistance in the future. While the fuel price has halved, many carriers are struggling to feel the benefit of the fall in energy costs because they are hedged at a much higher price. At the same time, the global recession has hit demand for air travel hard, particularly lucrative business travel.

Yesterday, American Airlines said that traffic during November had dropped by 14 per cent as companies cut travel expenses and families postponed holiday plans. Continental said that traffic over the same period was down 10.5 per cent.

Chris Tarry, an analyst at CTAIRA, an aviation consultancy, said: “To be successful in this avaition market, you need to cut capacity quicker than the market is falling. And once you have cut, you need to make sure that there are enough passengers prepared to pay your higher fares.”

Mr Tarry predicted that the American aviation market would have to rip out more capacity by scrapping flights and cut the number of carriers. “The Delta and Northwest deal has already happened,” he said. “United and Continental may happen. But while consolidation does happen, will it solve the problems of the industry, which is too much capacity, too high costs and not enough revenue? Sticking two troubled airlines together doesn’t necessarily make a better one.”

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