Thursday, August 14, 2014

Recent Investments in Malaysia, Alitalia Hardly Constitute a Trend

A column in the forthcoming print issue of the Economist uses last week's announcement that Malaysia Airlines may return to full state control as an excuse to criticize governments' unwillingness to allow airlines to fail.  Given the unique trials Malaysia Airlines has faced this year, it is an unfair example. While it is true that Malaysia Airlines was losing money before either of this year's tragedies hit, we have no way of knowing whether the state's sovereign wealth fund would have offered to buy out the approximately 30 percent of Malaysia Airlines shares that are privately owned had 2014 been merely business as usual for the airline. What we do know is that the carrier's near-term forecast is entirely different because of the two high profile disasters that have befallen its aircraft. In that way, Malaysia's circumstances arguably resemble that of the U.S. airline industry immediately following the 9/11 attacks when it received considerable financial support from the U.S. government. Obviously, the actions of the U.S. government then and Malaysia today can both be criticized, but neither can accurately be characterized as indicative of the normal relationship between States and their airlines.

Perhaps in recognition of this weakness, the piece includes a brief reference to Etihad's recently announced agreement to purchase a 49 percent stake in Alitalia to broaden its case that governments continue to throw good money after bad in the air transport sector. Unfortunately, this example is no better chosen. Etihad's investment is not an example of political pressures and national pride motivating a domestic government to futilely prop up a failing flag carrier, but the most recent iteration of an ambitious and controversial expansion strategy by a rival with no concern for protecting Italian jobs.

This isn't to say that privatization and liberalization continue unchallenged in the international air transport sector. In fact, the Etihad-Alitalia partnership is likely to raise concerns about the European Union's commitment to both objectives, though it may also provide some needed clarification regarding the  EU's restrictions on foreign ownership and control. But any argument that these two carriers should have been allowed to fail needs to first accurately explain why they were rescued.

August 14, 2014 | Permalink | Comments (0) | TrackBack (0)

Friday, August 1, 2014

U.S. and India Agree on Aviation Security Equipment Testing Program

The United States Trade and Development Agency has announced an agreement to work with two Indian agencies, the Airports Authority of India and the Bureau of Civil Aviation Security, to develop standards and testing procedures suitable for international baggage and passenger scanning systems. It is encouraging to see the two countries working together on improvements to the Indian aviation sector after the United States downgraded India to Category 2 status earlier this year.

August 1, 2014 | Permalink | Comments (0) | TrackBack (0)

Tuesday, July 29, 2014

ICAO Announces Task Force on Risk Assessment for Conflict Zones

After meeting with representatives from IATA and other aviation organizations earlier today, ICAO has announced that it will create a task force to study potential policy responses to the security issues raised by the downing of Malaysia Airlines flight MH17. It appears the task force will be focused on how best to ensure that airlines and civil aviation authorities are provided with the necessary information to accurately determine when the airspace over conflict zones should be avoided. There was some mention of possibly including military or security agency officials on the task force, which seems wise considering those are the agencies with which civilian aviation officials will have to partner more closely to obtain the information necessary to avoid future disasters. Unsurprisingly, institutional changes that would transfer authority to issue airspace restrictions from national authorities to ICAO were ruled out. Hopefully, ICAO's task force will be able to at least devise some best practices for States to follow when evaluating potential threats and approving routes, and the consequences of this recent tragedy will provide sufficient motivation for States to faithfully implement those recommendations.

July 29, 2014 | Permalink | Comments (0) | TrackBack (0)

Friday, July 18, 2014

Liability for MH17

Professor Brian F. Havel was interviewed for a post on Malaysia Airlines' anticipated liability for yesterday's crash in the New York Times' Upshot blog. Under the Montreal Convention, Malaysia is still responsible to its passengers for damages up to the Special Drawing Rights cap despite the outside interference. Whether it will be liable for additional damages will likely come down to whether the decision to fly through contested Ukrainian territory could be considered negligent. The F.A.A. had previously prohibited U.S. carriers from flying through that space, but many other airlines were still operating there. It came as a surprise to many to learn that the rebels may have had access to weaponry capable of shooting down a civilian airliner at cruising altitude. A number of airlines, including Malaysia, have announced in the past 24 hours that they will begin routing around that region.

 

July 18, 2014 | Permalink | Comments (0) | TrackBack (0)

Thursday, July 17, 2014

Malaysia Airlines Crash in Ukraine

Earlier today a Boeing 777 operated by Malaysia Airlines and carrying 280 passengers and 15 crew members from Amsterdam to Kuala Lumpur crashed in eastern Ukraine, an area that has been the subject of heavy fighting in recent months. While details are still emerging, officials in the Ukraine and Russia are investigating the possibility that the aircraft was shot down by rebel separatist groups. We'll follow this story closely in the coming days, but some immediate legal questions come to mind. First, will the Ukrainian government declare a state of emergency under Article 9 of the Chicago Convention and close portions of Ukrainian airspace to civilian airlines? Should that have been done before this happened? Second, will Ukrainian authorities be able to to conduct a proper accident investigation in this contested region, and will Russian authorities support Ukrainian authority to do so?

July 17, 2014 | Permalink | Comments (0) | TrackBack (0)

Wednesday, July 16, 2014

AirAsia Gives Japan Another Try

AirAsia recently announced plans to relaunch its Japanese affiliate. The Malaysian low-cost carrier has successfully circumvented rules against foreign ownership and control of airlines by partnering with local investors to establish affiliates in Indonesia, the Phillipines, Thailand and, as of last month, India. AirAsia had previously tried operating an affiliate in Japan in partnership with All Nippon Airways, but that ended last year. Because Japan, like most countries, prohibits foreign investors from owning a majority stake in its airlines, AirAsia was unable to restart the Japanese affiliate until it had found new Japanese partners to hold the 51% of the shares not owned by AirAsia.

July 16, 2014 | Permalink | Comments (0) | TrackBack (0)

Tuesday, July 8, 2014

Drone Operators Charged with Reckless Endangerment

Two men have been arrested for operating a small, unmanned aircraft in dangerous proximity to a police helicopter in New York City. Expect more stories like this until civilian drones have been adequately integrated into the existing air transport system.

 

July 8, 2014 | Permalink | Comments (0) | TrackBack (0)

Monday, July 7, 2014

Lufthansa, Air China Commit to Joint Venture

Lufthansa and Air China have announced a memorandum of understanding for the establishment of a joint venture between the two carriers. Both airlines are already members of the Star Alliance and have cooperated in a variety of forms since 1989, including a code-sharing agreement that has been in place since 2000. The specific routes included and other details of the joint venture, which is anticipated to begin late this year, have yet to be announced, but it is expected to include some revenue sharing. The two carriers have been in discussions over expanding their cooperative arrangements since at least last October.

July 7, 2014 | Permalink | Comments (0) | TrackBack (0)

Monday, June 30, 2014

FAA Releases Interpretation of Rules for Model Aircraft

Last week the Federal Aviation Administration published notice of and requested comment on its interpretation of the special rule for model aircraft established in the FAA Modernization and Reform Act of 2012. Essentially, the FAA is attempting to clarify the types of model aircraft that will be exempt from future FAA rulemaking on drones as called for in the Modernization and Reform Act. For example, the Act exempts unmanned aircraft that are "flown within visual line of sight of person operating the aircraft." The FAA interprets this to require that aircraft operating under this exemption be visible to the operator at all times, without the aid of binoculars or reliance on persons other than the operator. The Act also restricts the model aircraft exemption to aircraft flown strictly for hobby or recreational use. The FAA's interpretation defines "hobby or recreational use" to exclude any commercial operation or usage incidental to a business. The published notice includes helpful examples of non-exempt usages such as realtor using an unmanned aircraft to take aerial photographs of a property. Comments on the FAA's interpretation must be submitted by July 25. 

June 30, 2014 | Permalink | Comments (0) | TrackBack (0)

Wednesday, June 25, 2014

Court Declares U.S. No-Fly List Procedures Unconstitutional

In an opinion released yesterday, U.S. District Court Judge Anna J. Brown ruled that persons whose names have been placed on the federal government's no-fly list are currently being denied the due process required by the U.S. Constitution before the government can deny citizens their right to travel. Specifically, Judge Brown determined that the federal government needs to notify citizens that their names are on the no-fly list, provide them with the reasons for their inclusion on the list and allow them an opportunity to challenge their inclusion on the list. According to the opinion, existing procedures for redress are insufficient.

 

June 25, 2014 | Permalink | Comments (0) | TrackBack (0)

Friday, June 20, 2014

UK Court Allows Passengers 6 Years to File 261/2004 Claims

On the heels of its recent passenger-friendly ruling in Huzar, a UK court again came down on the side of passengers, this time ruling that passengers have up to six years to bring claims for compensation for delayed or cancelled flights. EU Regulation 261/2004, which, among other things, entitles passengers to compensation from airlines for flight cancellations or significant delays, does not set a statute of limitations on those claims leaving those limits to be set by the implementing Member States. In the UK, cases for unpaid debts are subject to a six-year statute of limitations which the UK courts had been applying to 261/2004 compensation and delay claims. In a case decided yesterday, Dawson v. Thomson Airways, the airline argued that the passenger's claim should be subject to the two-year limitation for air transport claims contained in the Montreal Convention. The Court rejected that view. This is just the latest attempt by courts to reconcile the provisions in 261/2004 with the Montreal Convention. Given the Court of Justice of the European Union's repeated rulings that the system of compensation under 261/2004 is not preempted by the Convention, it is reasonable to expect that system of compensation would not be limited by the Convention's statute of limitations.

June 20, 2014 | Permalink | Comments (0) | TrackBack (0)

Thursday, June 19, 2014

Huzar Ruling Narrows Extraordinary Circumstances Exemption

Last week, the Court of Appeal of England and Wales issued a ruling that could significantly alter the landscape for passenger rights claims in the UK. In this case, the question at issue was whether a wiring defect discovered in the course of regular aircraft maintenance could be considered an "extraordinary circumstance" that would absolve the carrier of having to compensate the passenger for the flight delay. The Court of Appeal ruled that technical defects caused by the normal wear and tear that occurs in the operation of an aircraft could not be used to trigger the "extraordinary circumstances" exemption.

June 19, 2014 | Permalink | Comments (0) | TrackBack (0)

Tuesday, June 10, 2014

Unmanned Aircraft Two Steps Closer to Airspace Integration

A few news stories this week highlight the steady progress unmanned aerial vehicles are making toward becoming a regular presence in U.S. airspace. On Monday, Nevada joined North Dakota and Alaska as recipients of FAA authorization to operate unmanned aircraft designated test sites. And earlier today the FAA announced the first ever authorization granted for the commercial operation of an unmanned aircraft over land. The operator will be using the unmanned aircraft to monitor and map oil fields in Alaska under a contract with BP. The FAA Modernization and Reform Act of 2012 instructed the FAA to have unmanned aircraft successfully integrated into the national airspace by September of 2015. Both of this week's developments represent important steps toward that objective, though concerns about integration remain. Earlier this spring, an unmanned aircraft operating near an airport reportedly came close to colliding with a passenger jet.

 

June 10, 2014 | Permalink | Comments (0) | TrackBack (0)

Monday, June 9, 2014

Karachi Airport Operating Again After Attack

Last night a group of Taliban militants reportedly stormed Jinnah International Airport in Karachi, Pakistan, killing 18 people and halting all airport operations for approximately 14 hours. In a relatively quick turnaround, Pakistan's Civil Aviation Authority reported that it had resumed authority over the airport from the State's security forces and the airport was reopened for business at 2 pm local time today.

June 9, 2014 | Permalink | Comments (0) | TrackBack (0)

Friday, June 6, 2014

Egypt Adds New Airport Tax

In need of additional revenue, the Egyptian government has introduced a new $25 per person airport tax. The tax is being levied on carriers who pass along the additional costs in the price of ticket sales, rather than passengers having to pay directly at the airport. While the reporting isn't entirely clear, the tax appears to only affect international flights, both departing and arriving.

June 6, 2014 | Permalink | Comments (0) | TrackBack (0)

Monday, June 2, 2014

Regulating Aviation Emissions Under the Clean Air Act

Because today's biggest story is the release of a proposal by the U.S. Environmental Protection Agency (EPA) to regulate carbon pollution from existing power plants, this seemed like a good time to remind everyone of the agency's authority to regulate emissions from the aviation sector. Though seldom discussed, the same legislation that authorizes today's proposed rule for power plants, the 1970 Clean Air Act (CAA), authorizes the EPA to regulate aircraft emissions as well. It is under this statutory authority that the EPA, in conjunction with the Federal Aviation Administration (FAA), has issued rules concerning other aircraft emissions, such as nitrogen oxide, necessary to meet ICAO standards. As a result of the Supreme Court's 2007 ruling in Massachusetts v. EPA that carbon is a pollutant under the CAA, it is likely the EPA will eventually have to address carbon emissions from the air transport sector the way it has with surface transportation and power plants.

To be clear, the EPA is unlikely to regulate in this area any time soon. To date, the EPA has used its authority under the CAA to keep U.S. aircraft emissions standards in line with and not more stringent than the international standards adopted through the International Civil Aviation Organization (ICAO). The only mention of aviation emissions in Obama administration's 2013 Climate Action Plan is an expression of support for the development of a comprehensive global approach through ICAO. Aircraft emissions are a relatively small percentage of total U.S. emissions compared to the sectors for which the EPA has been writing rules thus far and are therefore much less of a priority. The EPA is also unlikely to be in a hurry to wrestle with the political and legal problems inherent to regulating aviation emissions, in particular the question of how to apply the rules to foreign aircraft, that have caused the EU such grief. Still, the EPA will eventually have to take some action on carbon emissions from the aviation sector and if the ICAO fails in securing a global agreement, what the EPA does will take on considerably more significance.

Anyone interested in learning more about this subject should read Nathan Richardson's Aviation, Carbon and the Clean Air Act.   

June 2, 2014 | Permalink | Comments (0) | TrackBack (0)

Tuesday, May 27, 2014

Venezuela Resolves Currency Dispute with Latin American Carriers

In an apparent effort to reassure foreign airlines, Venezuela will allow six Latin American carriers to repatriate revenues from local ticket sales from the past two years. As noted in a blog post earlier this year, foreign airlines had been cutting service to Venezuela because the government had frozen their access to funds from ticket sales in the country.

 

May 27, 2014 | Permalink | Comments (0) | TrackBack (0)

Wednesday, May 21, 2014

German Airline Tax Likely to Survive Constitutional Challenge

Reports out of a constitutional complaint hearing suggest that Germany's air travel tax, introduced in 2011, is likely to be upheld when the constitutional court issues its ruling in a few months. The legal challenge was brought by the state of Rhineland-Palatinate, which has expressed concern that the levy is harmful to airports near Germany's external borders.

May 21, 2014 | Permalink | Comments (0) | TrackBack (0)

Friday, May 16, 2014

EU May Bring Boeing Tax Breaks into Ongoing WTO Dispute

Reuters is reporting that EU officials may ask the WTO to consider $8.7 billion in tax breaks passed by the State of Washington late last year, primarily for the benefit of Boeing, as part of the ongoing proceedings between the U.S. and EU over subsidies to Boeing and Airbus. The U.S. recently objected to loans given to Airbus for the development of the A350. The long-running dispute shows no sign of abating any time soon.

May 16, 2014 | Permalink | Comments (0) | TrackBack (0)

Wednesday, May 14, 2014

ICAO to Consider Standards for Flight Tracking

Representatives from States on the ICAO Council, the Air Navigation Commission and the aviation industry met earlier this week to discuss the use of flight tracking technologies for passenger airlines. The meeting was of course prompted by the tragic disappearance of Malaysia Airlines Flight 370 two months ago. The plan appears to be to endorse by September some near-term steps States could voluntarily adopt to improve their flight-tracking capability, with discussions for the eventual development of standards requiring flight tracking. There appears to be a preference right now for performance-based standards that would require that States have the ability to track aircraft without mandating a specific technological approach to doing so.

May 14, 2014 | Permalink | Comments (0) | TrackBack (0)