US: Senate drops $200M tax provision on foreign airlines with few US flights

The Senate dropped a provision before approving tax legislation early Saturday that would have cost foreign airlines from countries that receive few US flights an estimated $200m over the next decade. The provision added in the Finance Committee was stricken from the final version of the 479-page tax bill, which the Senate approved on a 51-49 vote. Sen. Johnny Isakson, R-Ga., had said the two-page provision aimed to protect airline workers in his state from unfair competition. The provision didn't name the airlines targeted, but the definition fit three Middle East carriers that have been slammed for years by US rivals, including Delta. Critics of the provision said when it was added that it would have penalized airlines in 14 countries, rather than just three state-owned carriers in the United Arab Emirates and Qatar: Emirates, Etihad Airways and Qatar Airways. An international airline group had warned that the provision could provoke other governments around the world to target airlines with new taxes. “The precedent that the Isakson provision, if enacted, would set is atrocious and could easily come back to bite US airlines like the shark in Jaws,” John Byerly, a former State Department official who negotiated aviation pacts called Open Skies agreements with other countries, said before the provision was removed. Jonathan Grella, executive vice president of the US Travel Association, an industry advocacy group, said Saturday that the Senate decision to drop the provision was the most significant moment in a three-year dispute between US and Middle East airlines.<br/>