Northwest, KLM agreement gains approval

January 12, 1993|By New York Times News Service

WASHINGTON -- The Transportation Department yesterday gave final approval for Northwest Airlines and KLM Royal Dutch Airlines to integrate their services and operate as a single carrier.

An open-skies agreement in September between the United States and the Netherlands gave the carriers of both countries unlimited access to the other's international market.

It was the department's second move toward airline internationalization. Last week it approved a proposal by Air Canada and a group of Fort Worth, Texas, businessmen to invest $450 million in Continental Airlines.

But the agency is prepared to block a proposal by British Airways to invest $750 million for a 44 percent stake in USAir, after the United States and Britain failed to agree on steps to permit greater competition for their airlines.

The Northwest-KLM agreement "is an illustration of the benefit of open skies," said Transportation Secretary Andrew H. Card Jr. "We hope it will provide an impetus for open-skies accords with other countries, moving us further in the direction of a truly global aviation environment."

The Treasury Department predicted that the Northwest-KLM agreement would benefit the public by providing better service and enabling the carriers to operate more efficiently.

Federico F. Pena, Transportation secretary-designate, told a Senate committee last week that he would consider easing the restrictions on foreign ownership of U.S. carriers, which is limited to 25 percent of voting stock and 49 percent of equity.

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