Monday, May 21, 2007
Last Friday, the U.S. DOT granted Virgin America final approval to begin service. As part of the order, the DOT stated that CEO Fred Reid would be allowed to serve for six more months before he must resign. Virgin America will now get its chance to face vigorous competition from airlines such as Jetblue and Southwest, both of which recently announced new service from Virgin America's home base, San Francisco. Click here for ATW online story.
According to a story in the Washington Post, two Senators from Oregon and Washington have introduced legislation that would create 20 new slot exemptions at Washington Reagan National Airport. Our April 2 blog posting discussed the GAO's findings about potential expansion of service at National.
Friday, May 18, 2007
BA Takes Charge for Price Fixing
According to a story today by the Times (London), British Airways admitted it engaged in price fixing regarding fuel price surcharges. The company is taking a charge of 350 million pounds, which is approximately one-half of British Airways' yearly pre-tax profits.
Benefits of U.S.-EU Open Skies Deal Questioned
In an article in today's Aviation Daily, a U.S. aviation consultant questioned whether or not the EU's projections of 80,000 new jobs and a 50% increase in transatlantic business are attainable. The consultant points to congested large European hubs and air traffic control infrastructure problems as possible impediments to capacity growth. Secondary airports and low-cost carriers may become the real "engine of transatlantic growth" but increased competition may result in lower yields for all airlines. Finally, the consultant predicts that airlines may eventually want to engage in true transatlantic mergers leading them to press for changes in foreign ownership rules in the second stage of talks. An additional document where the consultant expands upon his predictions for what will happen when U.S.-EU open skies takes effect can be accessed by clicking here.
DOT ALJ Finds In Favor of Airlines In LAX Fee Dispute
A strongly worded recommended decision by a U.S. DOT administrative law judge on Tuesday found that Los Angeles International Airport unjustly charged two dozen airlines millions in new annual fees and other costs. The full decision of the administrative law judge can be accessed by clicking here and a Los Angeles Times article discussing the decision can be accessed by clicking here. A final decision must be issued by DOT officials by June 15th.
Friday, May 11, 2007
Virgin Galactic and Cabotage
A recent article in the Financial Times raised the interesting legal issue of whether Virgin Galactic's planned suborbital space flights from New Mexico would be a violation of U.S. cabotage laws. Download Loophole.doc
U.S.-China Aviation Negotiations
According to a report in Aviation Daily, U.S. negotiators are willing to exchange an extended timetable for reaching a full open skies agreement with China for significantly more flight frequencies between the two nations over the next few years.
Small Community Air Service Development Program Docket
As we mentioned in a blog posting a few weeks back, applications for grants under the 2007 Small Community Air Service Development Program were due at the U.S. DOT by the end of April. After perusing the docket, two of the most interesting proposals were filed by the cities of Wichita, Kansas and Rockford, Illinois.
The Wichita proposal asks for a modest $500,000 to help provide ground handling services for existing and potential airlines. Of greater interest, the application contains an history of Wichita's struggles and successes in their longstanding, aggressive efforts to recruit new air service. Wichita's previous efforts to recruit AirTran Airways made it the target of an FAA investigation examining if the agreement between AirTran and the City of Wichita constituted a discriminatory and illegal subsidy. Download awst_wichita_article.doc
A far more costly proposal by the City of Rockford would ask for $3 million to cover the break-even requirements necessary to recruit a charter operator to fly B737-400 service between Rockford and New York City, Phoenix and Ft. Meyers. Under this "Charters for Starters" program, the city hopes to demonstrate the viability of these routes in hopes that a scheduled airline would consider adding service to these cities in the future. An article from the Rockford Register Star discusses the city's plans in greater depth.
Ryanair Pricing and Merger Plans
Ryanair recently announced that it has begun selling all of its tickets with required taxes and fees included in the advertised price to quell EU regulators' complaints of deceptive advertising. See AP article. Michael O'Leary also stated that he would file a lawsuit challenging the decision if the EU decided to block its proposed merger with Aer Lingus. A decision is expected from the EU by July 4. See MarketWatch article.
Friday, May 4, 2007
U.S.-EU Signing of Open Skies Agreement
At a ceremony this this past Monday during a U.S.-EU summit in Washington, D.C., U.S. President George W. Bush signed the first stage U.S.-EU open skies agreement agreement along with European Commission President Jose Manuel Barroso and German Chancellor Angela Merkel. Click here for remarks from the signing ceremony. The hard work from many different parties that led to the agreement, as well as thoughts for the second stage of negotiations are discussed in a recent International Aviation Club speech given by John Byerly, Deputy Assistant Secretary of Transportation Affairs at the U.S. Department of State. The potential economic impact of this new agreement is detailed in a follow on study commissioned by the EU DG-TREN to update the Brattle Group study from a few years ago.
IATA Airline Liberalization Study
The International Air Transport Association (IATA) released an interesting report that discusses the lessons the global aviation industry can learn from other industries about the impact of removing operational, ownership and control restrictions.