Airlines in the United States —- and their customers —- are in a difficult spot. Skyrocketing fuel prices are forcing cost cuts elsewhere, so airlines are nickel-and-diming passengers for almost everything, from snacks and meals to checked bags. While U.S. airlines made a combined profit of $5 billion in 2007, the industry lost $32 billion over the previous six years, during which time Delta, Northwest, United and US Airways all filed for bankruptcy.

Is it any wonder, then, that merger talks abound? Delta and Northwest announced plans to merge earlier this year, pending regulatory approval, creating the country's largest airline. United and US Airways recently ended talks to merge, which would have catapulted the carriers ahead of a Delta-Northwest combination. This followed a failed attempt by United to combine with Continental, which was simultaneously negotiating with American Airlines. Only Southwest, among the top seven U.S. airlines, does not appear desperate to merge.

But while airline executives and stock analysts trumpet the necessity of mergers, consumer advocates, politicians and regulators express concern. Consolidation among the major airlines likely will not benefit many travelers, especially those who live in smaller cities, since a key justification for mergers is to cut overlapping costs. Passenger options will be reduced and fares will increase as a result of less competition. The battle to influence regulators who need to approve airline mergers will be intense, pitting Wall Street against Main Street.

But there is another option that receives little consideration: permitting foreign airlines to acquire or merge with U.S. airlines. Right now, for example, foreign airlines like British Airways are permitted to fly to a U.S. destination to pick up or drop off passengers but cannot provide direct service between U.S. cities. Relaxing the restrictions on foreign ownership would allow British Airways and other foreign carriers to serve U.S. locations that are underserved now. It also would avoid the reduction in routes and elimination of cities served when two U.S. carriers merge. And for anyone dreaming of decent meals and better service —- even in economy class —- foreign airlines have a lot to offer, as almost anyone who has flown abroad can attest.

So why isn't this already happening? One reason is that the Federal Aviation Act of 1958 requires that, for airline corporations, 75 percent of the voting interest must be held by U.S. citizens, and two-thirds of its board of directors must be U.S. citizens. Such restrictions seem absurdly arcane 50 years on, in a far more interdependent global economy than was the case during the Eisenhower administration. Part of the rationale for the restriction was to ensure that commercial planes could be used to transport military troops during a crisis. That may have had some appeal at the height of the Cold War, but does anyone today really think the Pentagon is likely to choose to fly Marines on a Delta passenger jet?

National security drum-beaters are not the only obstacles. Unions representing pilots, flight attendants and maintenance workers are wary of losing jobs. But this is a concern for any merger —- either domestic or foreign. And it is highly unlikely that All Nippon Airways will use an entirely Japanese flight crew, or that Lufthansa would be bringing over many German mechanics to work at U.S. airports. In fact, U.S. airline employees arguably would be more secure if their company were to be acquired by a foreign airline because it would be more likely than a U.S. carrier to need an experienced U.S. staff.

Perhaps most important is the message of hypocrisy that protectionism over the U.S. airline industry sends to the rest of the world. At a time when our own trade representatives are demanding that other countries open their financial, retail and other service industries to competition from U.S. companies, we refuse to open our airline market to others. Yet this is the best strategy to improve the financial health of U.S. airlines, while allaying the concerns of travelers in smaller cities and their elected representatives who justifiably fear that a merger between any two major U.S. airlines will adversely affect choice and cost. This kind of foreign aid would be a win for the airline industry, air travelers and U.S. trade policy.

> Terrence Guay is clinical associate professor of international business at Penn State's Smeal College of Business.