Thursday, June 11, 2009
Despite winning tentative approval and antitrust immunity from the Department of Transportation last month, the expanded Star Alliance--which is set to include Continental Airlines--may have to put its plans on standby. In a letter sent on June 8 to Transportation Secretary Ray LaHood (available online here), Senate Judiciary Committee members Herb Kohl (D), Orrin Hatch (R), and Patrick Leahy urged the DOT not to issue a final order on the Star application "until the Justice Department has had a full opportunity to submit formal comments." The letter also "entreat[s] the DOT to adopt any proposed conditions recommended by the DOJ which are intended to serve the interest of competition." The letter closed by expressing the senators' "firm belief" that the DOT should refrain from acting on any alliance application "until all interested government agencies" have "an opportunity to assess the impact those grants might have on American consumers and the American economy." The letter also mentioned the ongoing DOJ/European Commission study of international alliances and asked the Department to "be cognizant" of it.
As readers of the blog may recall, the DOT's tentative approval for the Star application was issued despite Rep. James Oberstar's legislative proposal to sunset all antitrust immunity for international airline alliances. Since then, the House of Representatives has passed the proposal as part of the 2009 FAA Reauthorization Act, H.R. 915, 111th Cong., though the Senate has yet to vote on it. While some analysts believe Rep. Oberstar's proposal will ultimately be dropped from the final version of the bill, it appears that the alliance system will remain under heavy political scrutiny. The Judiciary Committee's letter may also signal a more expansive role for the DOJ in the alliance application process. Given the DOJ's recent turn toward tough rhetoric on antitrust enforcement and consumer protection, see, e.g., Christine A. Varney, Assistant Attorney General, U.S. DOJ Antitrust Division, Vigorous Antitrust Enforcement in This Challenging Era, Remarks to the U.S. Chamber of Commerce (May 12, 2009) (available online here), even if the present alliance system survives, it may be forced to do so under a wide banner of new restrictions.
Wednesday, June 10, 2009
In an underpublicized move, the European Commission sent a proposal to the Council last month to allow Iceland and Norway to accede to the 2007 U.S./EC Air Transport Agreement. See European Commission, COM (2009) 229 final (May 15, 2009) (available online here); see also European Commission, COM (2009) 226 final (May 15, 2009) (available online here). If the accession request is approved, it will mark the first time the 2007 Agreement has acted in fact, if not in principle, as a plurilateral agreement. See 2007 U.S./EC Air Transport Agreement, art. 18(5), 2007 (O.J. L 134) 4 (extending the Agreement to third parties following the development of conditions, procedures, and necessary amendments).
For those unfamiliar with the concept, plurilateral agreements offer non-parties the opportunity to accede after the agreement has come into effect among its founding parties, but typically the latecomers must accept the terms of the agreement in their entirety. See Restatement (Third) of Foreign Relations Law of the United States sec. 312 (1987). While the 2007 Air Transport Agreement is not expressis verbis a plurilateral, the Commission's recent proposal leaves no doubt that both parties are treating it as such. As the Commission document states, the U.S. and EC developed the accession proposal together through the Joint Committee established by Article 18 of the Agreement. See COM (2009) 229 final, supra, at 2. With Iceland and Norway already "hav[ing] adopted the complete acquis communautaire in aviation policy," id., and the proposal itself making no modifications to the 2007 Agreement, see id. at 4, their accession will be in full harmony with the nature of plurilaterals.
Tuesday, June 9, 2009
The International Air Transport Association has posted its Director General and CEO Giovanni Bisignani's 2009 "State of the Air Transport Industry" address online. The address, which was delivered at IATA's Annual General Meeting and World Air Transport Summit in Kuala Lumpar, Malaysia, will not surprise many who have followed the industry's turmoils over the last two years: the abatement of 2008's skyrocketing fuel costs came at the price of a worldwide economic downturn; a new thrust of skepticism toward globalization has resulted in protectionist proposals; government intractability on eliminating foreign investment restrictions for airlines; and rising taxes for aviation. Admittedly, after reading Bisignani's speech, one might wonder whether it is still IATA's mission to "represent, lead and serve the airline industry" or if it hasn't changed to being the industry's prophet of doom.