Monday, March 2, 2009

The Return of Section 801

Those who have followed Rep. James Oberstar's crusade to bind international aviation in new regulatory strictures may not be surprised to learn that Section 801 from the stillborn FAA Reauthorization Act of 2007, H.R. 2881, 110th Cong. (2007), is part of the 2009 version, H.R. 915, 111st Cong. (2009).  The section would amend the statutory provisions on ownership and control of U.S. airlines by mandating that

an air carrier shall not be deemed to be under the actual control of citizens of the United States unless citizens of the United States control all matters pertaining to the business and structure of the air carrier, including operational matters such as marketing, branding, fleet composition, route selection, pricing, and labor relations.

A 2007 letter to Rep. Oberstar from Rep. John L. Mica, ranking Republican member of the House Transportation and Infrastructure Committee, warned that the language could be interpreted by a future Administration as requiring that all middle and upper management positions in U.S. airlines be occupied by U.S. citizens.  Not surprisingly, Rep. Oberstar has chosen not to heed that warning. 

Clearly, the language is not in the "spirit" of the 2007 U.S./EC Air Transport Agreement.  If the bill passes with the new control requirements intact, it would throw another bolt on the door to authentic liberalization and likely sour the ongoing negotiations for a second stage agreement.  The language may also contradict the 2007 Agreement's provisions for branding and franchising opportunities (cf. Article 10(8) & Annex 5).  Between this proposed amendment and a pending bill which could very well mark the end of the international aviation alliance system (discussed on the blog here and here), Rep. Oberstar appears to be charting a course for the international aviation industry away from "Open Skies" and back under the dark clouds of regulatory dominance and managed trade.

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