Wednesday, September 29, 2010
The International Civil Aviation Organization has created an elaborate website for its onging 37th General Assembly Session in Montreal, Canada here. The website features documents, press releases, and streaming video of the presentations which are being given at the event. A full copy of the Assembly's agenda is available here.
Professor Michael Jacobs was quoted in an article in yesterday's Baltimore Sun on the pending merger between Southwest Airlines and AirTran. Jacobs discussed the antitrust implications of the proposed merger with regard to city pairs to and from the Baltimore-Washington International Thurgood Marshall Airport. See Jay Hancock, Merger Would Give Southwest a BWI Chokehold, Sept. 28, 2010 (available here).
As noted last week on the blog here, Judge Richard Seeborg was asked to issue an injunction blocking the United/Continental merger as part of a private antitrust lawsuit against the link-up. Yesterday, Judge Seeborg declined to block the deal, stating that the plaintiffs in the case had failed to show that they would be personally harmed by the merger. See Judge Allows United-Continental Deal to Proceed, Assoc. Press, Sept. 28, 2010 (available here).
Tuesday, September 28, 2010
The Wall Street Journal has an excellent story in today's edition on U.S./EU aeropolitical relations and the present state of U.S. policy initiatives with respect to foreign ownership of airlines. See Daniel Michaels, EU Transport Commissioner Backs Looser Airline Rules, Wall St. J., Sept. 28, 2010 (available here).
Wednesday, September 22, 2010
Aviation's circumscribed position within the General Agreement on Trade in Services has received scant discussion in the secondary literature over the past several years. A new working paper discussing GATS and ground handling services may help to rectify this lacunae. See Sumangal Narendra, Aviation Ground Handling Market and GATS (Working Paper Sept. 16, 2010) (available here). From the abstract:
This paper aims at exploring the prospects of opening the Aviation Ground Handling Market vis-à-vis the GATS provision. The study is focused on the developments in terms of review and open market access to aviation ground handling services and in the GATS Air Transport Review. Air transport auxiliary services are emerging as important services, especially the Ground Handling Services. Expenditure on Ground handling services forms a substantial part of the operating expense of the airlines. As a response to the changes in the aviation environment, many policy changes and new initiative have been made by the governments. The study focuses on the constraints and implications of further liberalization of these services to boost competitiveness and facilitate efficient movement of goods and passengers. The study revealed that the gradual liberalization of Ground Handling market in India though widely criticized for its slow pace by the airlines, the major user of the services, has been successful so far, considering the response from the stakeholders, especially the regulatory bodies, is concerned. While naturally the airlines but not so much the national carrier, are clamouring for the full liberalization of the market with self-handling rights, the airport operators are concerned about the loss of business, monopoly status, and space constraints. Another dimension to liberalization is the safety and security concerns of the State where the regulators have been advising cautious approach to ensure the safety and security. This paper is divided into four sections: Section 1 giving the GATS and the position of Air transport, specifically the Ground Handling services, Section 2- traces the regulatory developments in the Air Transport with specific reference to Ground Handling market, as also addresses the implications for liberalization of these services through existing bilateral, to increasing pluri-lateral /multi-lateral and regional agreements. Section 3 discusses the Regulatory concerns vis-à-vis suggested course of liberalization. Conclusions are based on the findings. Section 4 enumerates the recommendations regarding areas for further research in.
Blog readers may be interested to read a new report by the U.S. Government Accountability Office on aviation and the environment. See U.S. GAO, Aviation and the Environment: Systematically Addressing Environmental Impacts and Community Concerns Can Help Airports Reduce Project Delays, GAO-10-50 (Sept. 13, 2010) (available here). From the summary:
The Federal Aviation Administration (FAA) estimates that the number of flights in the United States will increase 20 percent by 2024. It also has identified numerous airports that will need to expand to handle more flights. However, increasing airport capacity and operations poses potentially significant impacts on the environment and quality of life for surrounding communities. This report addresses (1) airports' actions to reduce their environmental impacts, (2) the extent airports believe environmental issues delay development or operational changes, and (3) the strategies airports can adopt to address environmental issues. GAO reviewed pertinent federal laws and regulations; interviewed airport officials, state and local regulatory agencies, metropolitan planning organizations, and community groups for 10 selected airports, as well as federal officials and national industry and advocacy groups; and surveyed the 150 busiest airports as measured by the number of operations. This report does not contain recommendations. A draft was provided to the Department of Transportation, the Environmental Protection Agency, and two organizations representing airports and airport officials. GAO incorporated technical clarifications they provided as appropriate.
Almost all the airports GAO surveyed took some actions to address their environmental impacts in four key areas: reducing noise levels, controlling water pollution, reducing emissions, and using environmentally sustainable practices. These include voluntary actions, such as asking pilots and controllers to use aircraft operational procedures that lower noise levels, as well as actions required by federal and state laws, such as in the areas of controlling water and air pollution. Larger airports, which can have more environmental impacts, were more likely than other surveyed airports to take a wider range of actions, such as soundproofing homes or installing loading bridges that supply aircraft with electric power to lower engine usage and emissions. Finally, GAO found that airports were moving toward a more holistic approach to environmental management, including following environmentally sustainable standards and implementing an Environmental Management System (EMS). Less than half of the surveyed airports believe that addressing environmental issues somewhat or greatly delayed a development project (35 percent) or operational change (42 percent) at their airport over the last 5 years, even though the vast majority had undertaken a capital development project or operational change during this time period. Both the reported delay and the extent and significance of delay were determined by the responding airport. Less than half similarly believe that addressing environmental issues will cause delays in the next 5 years. More airports reported that they had been somewhat delayed than greatly delayed. Larger airports were somewhat less likely than all surveyed airports to believe that addressing environmental issues will cause a delay in development projects (30 percent) or operational changes (36 percent). Addressing water issues and noise issues was the most commonly cited environmental issue that led to delay in implementing development projects and operational changes, respectively. A number of airports have adopted strategies to systematically address environmental impacts and community concerns, which can help both mitigate environmental impacts and anticipate and reduce problems with communities and other stakeholders that can lead to delays. Airports are integrating environmental considerations into their planning process, including 7 of the 10 airports GAO visited. Some airports are also finding success in streamlining the federal environmental review process and in integrating their EMS processes with the federal environmental review process. Finally, effective community outreach that solicits stakeholder input, fosters interactive communication with local communities, and evaluates its outreach efforts can help airports better anticipate and deal with community opposition.
Monday, September 20, 2010
Despite clearance from the U.S. Justice Department, the European Commission, and the airlines' own shareholders, the United/Continental merger may be delayed U.S. District Court Judge Richard Seeborg due to the pending private antitrust suit targeting the tie-up. See Judge Mulls Delaying Merger of United. Continental, Assoc. Press, Sept. 17, 2010 (available here).
Friday, September 17, 2010
Professor Brian Havel was featured in the Chicago Tribune's story on the World Trade Organization's preliminary ruling on alleged illegal subsidies to Boeing. See Julie Johnsson & Kathy Bergen, WTO Rules Boeing Got Illegal Subsidies, Chi. Tribune, Sept. 15, 2010 (available here).
Wednesday, September 15, 2010
There are conflicting reports from EU and U.S. sources concerning the nature of the World Trade Organization's panel decision on approximately $29 billion in subsidies Boeing is alleged to have received. Compare Frank Jordans, Europe Claims WTO Ruling in Boeing Case a Victory, Assoc. Press, Sept. 15, 2010 (available here), with WTO Easier on Boeing Than Claimed: Sources, Reuters, Sept. 15, 2010 (available here). If U.S. sources are to be believed, the WTO may have ruled that Boeing received as little as $3 billion in illegal aid.
Monday, September 13, 2010
The Federal Aviation Administration has issued a Notice of Proposed Rulemaking which, if adopted, would substantially revise the agency's current regulation of pilot rest requirements. See FAA, Notice of Proposed Rulemaking: Flightcrew Member Duty and Rest Requirements (Sept. 2010) (available here).
Readers interested in learning more about the proposal can read the FAA's official press release here.
Wednesday, September 8, 2010
In a surprising move, the Department of Transportation announced today that it plans to deny antitrust immunity to the Delta Air Lines/Virgin Blue alliance despite the existence of an "Open Skies" agreement between the United States and Australia. From the press release:
The U.S. Department of Transportation (DOT) today proposed to deny an application for antitrust immunity made by Delta Air Lines and affiliates of the Virgin Blue Group with respect to joint services between the United States and Australia. Antitrust immunity allows airlines to closely coordinate their international operations. In today’s show-cause order, the Department tentatively concluded that Delta and the Virgin Blue Group had not demonstrated that the alliance would produce sufficient public benefits to justify a grant of antitrust immunity.
The Virgin Blue Group includes V Australia, Virgin Blue, and Pacific Blue Airlines affiliates in both Australia and New Zealand. In reaching its tentative decision, the Department noted that Delta and its partners have only recently entered the U.S.-Australia market, have not shown developed plans to operate as commercial partners, and have limited their cooperation to a handful of routes, thereby limiting the public benefits their alliance might produce. The Department also said that Delta and the Virgin Blue Group had failed to show that their alliance would have positive effects for consumers, such as lower fares or increased capacity.
See Press Release, Dep't of Transp., DOT Proposes to Deny Antitrust Immunity for Delta/Virgin Blue Alliance (Sept. 8, 2010) (available here).
Over the past several year the DOT has been accused of dispensing antitrust immunity too freely as a concession for States signing liberal air services agreements with the U.S. Even so, the DOT has immunized all three major transatlantic alliances--oneworld, SkyTeam, and Star--and had been expected to grant immunity to the pending United/Continental/ANA and American Airlines/JAL applications. It's unclear whether today's decision demonstrates an about-face on antitrust immunity grants or merely the weakness of the Delta/Virgin Blue application.
Readers interested in reading today's tentative order may do so here.
Blog readers may be interested to read a new paper by Jeffrey Prince & Daniel H. Simon, Do Incumbents Improve Service Quality in Response to Entry? Evidence From Airlines' On-Time Performance (Working Paper Sept. 1, 2010) (available from SSRN here). From the abstract:
We examine if and how incumbent firms respond to entry, and entry threats, using non-price modes of competition. Our analysis focuses on service quality within the airline industry. We find that incumbent on-time performance actually worsens in response to entry, and even entry threats, by Southwest Airlines. Given Southwest’s general superiority in on-time performance, this result is consistent with equilibria of theoretical models of quality and price competition, which generally predict differentiation along quality. We corroborate this intuition with further analysis, showing there is no notable response by incumbents when an airline with average on-time performance (Continental) threatens to enter or enters a route.
Tuesday, September 7, 2010
Just one day prior to his stunning announcement that its leader will not seek reelection as Chicago's Mayor in 2011, the Daley Administration announced that it needs an additional $1 billion to continue its massive O'Hare Airport expansion project. See John Hilkevitch & Julie Johnsson, Chicago Hopes to Borrow Another $1 Billion for O'Hare Expansion, Chi. Tribune, Sept. 6, 2010 (available here).
Wednesday, September 1, 2010
Readers interested in their "rights" as airline passengers according to the Department of Transportation can peruse the recently updated online manual, Fly Rights: A Consumer Guide to Air Travel (2010) (available here).
A summary of the manual is available in Press Release, Dep't of Transp., DOT Updates "Fly Rights" Airline Consumer Guide (Aug. 31, 2010) (available here).