Friday, October 29, 2010
The European Commission announced yesterday that it has launched an investigation into provisions of Russia's bilateral air services agreements with France, Germany, Austria, and Finland which may violate EU law. From the press release:
The European Commission has today launched infringement procedures against France, Germany, Austria and Finland over their bilateral air service agreements with Russia, which inter alia include provisions concerning Siberian overflights. The decision was taken on the initiative of European Commission Vice President Siim Kallas Responsible for Transport. The Commission has concerns over two main issues. First, the agreements in question do not contain a clause recognising that the terms apply equally to all EU carriers, despite the "Open Skies" case-law of the EU's Court of Justice. This can create serious practical problems - for example, if an airline is taken over by an airline from another Member State it stands to lose all its traffic route rights. Second, the bi-lateral air service agreements between the four Member States and Russia contain specific provisions on the setting of traffic rights as well as on the modalities for fixing the charges that EU-designated carriers must pay to Aeroflot in order to fly over Siberia on their way to Asia. The Commission is concerned that such provisions may be in breach of EU antitrust rules and could lead to competition distortions to the disadvantage of both EU airlines and consumers. The Commission is actively assessing the compliance with EU law of the twenty three other Member States' bilateral air service agreements with Russia.
See Press Release, Eur. Comm'n, Air Transport: Commission Launches Infringement Procedures Against France, Germany, Austria and Finland Over Agreements with Russia on Siberian Overflights, IP/10/1425 (Oct. 28, 2010) (available here).
EU/Russian aeropolitical relations have long been cool, though a 2007 agreement between the parties is supposed to abolish the Siberian overflight payments by 2013. For further information on the EU's air transport policy toward Russia, see A Framework for Developing Relations with the Russian Federation in the Field of Air Transport, COM (2005) 77 final (Mar. 14, 2005) (available here).
Blog readers may be interested in Eric Fielding et al.'s new paper, The National Transportation Safety Board: A Model for Systemic Risk Management (Working Paper, Oct. 27, 2010) (available from SSRN here). From the abstract:
We propose the National Transportation Safety Board (NTSB) as a model organization for addressing systemic risk in industries and contexts other than transportation. When adopted by regulatory agencies and the transportation industry, the safety recommendations of the NTSB have been remarkably effective in reducing the number of fatalities in various modes of transportation since the NTSB’s inception in 1967 as an independent agency. Formerly part of the Civil Aeronautics Board (now the Federal Aviation Administration), the NTSB has no regulatory authority and is solely focused on conducting forensic investigations of transportation accidents and proposing safety recommendations. With only 400 full-time employees, the NTSB has a much larger network of experts drawn from other government agencies and the private sector who are on call to assist in accident investigations on an as-needed basis. By allowing and encouraging the participation of all interested parties in its investigations, the NTSB is able to produce definitive analyses of even the most complex accidents and provide genuinely actionable measures for reducing the chances of future accidents. We believe it is possible to create more efficient and effective systemic-risk management processes in many other industries, including the financial services industry, by studying the organizational structure and functions of the NTSB.
Monday, October 25, 2010
The Volume 10, Fall 2010 issue of the International Aviation Law Institutes's journal, Issues in Aviation Law and Policy (IALP), will be available next month. The following articles will appear in the issue:
- Kenneth S. Nankin, The Computer Fraud and Abuse Act: Revenue Protection Weapon for Airlines
- Gabriel S. Sanchez, The Impotence of the Chicago Convention's Dispute Settlement Provisions
- Daniel Friedenzohn, Code-Sharing in the U.S. Airline Industry: Effective Disclosure Requirements for an Aspect of Air Transport That is Complex, Important, and Often Misunderstood
- Iva Savic, Airline Mergers--Responding to Market Changes and Inducing New Market Structures
- Paul Mifsud, Carlos Bonilla, & Vaughn Cordle, United + Continental is a Market Solution That Can Benefit All Stakeholders--Is American + US Airways Next?
- Aaron B. Swerdlow, Modern Approaches to the Powers of the Aircraft Commander Under Article 6 of the Tokyo Convention
- Matthew D. Kasper, The Air Transport Association's Challenge to the European Union's Extension of Its Emissions Trading Scheme to International Aviation: A Legal Analysis
Blog readers interested in subscribing to IALP, ordering back issues, or perusing a list of published articles may do so at the Institutes's website here.
Monday, October 18, 2010
The Australian Department of Infrastructure and Transport expressed its displeasure last week with the U.S. Department of Transportation's tentative decision to deny Delta and Virgin Blue's approval and antitrust immunity for their planned joint venture. See Australian Gov't Dep't of Infrastructure & Tourism, Dkt. No. OST-2009-0155 (Dep't of Transp. Oct. 13, 2010) (available here). Central to the Australian Government's complaint is the fact it signed an Open Skies agreement with the U.S. in 2008. According to the filing, Australia "expected its carriers to receive the full benefits and rights available under open skies agreements, including . . . the opportunity to obtain anti-trust immunity (subject to satisfying relevant competition requirements in both countries)."
Meanwhile, Delta and Virgin Blue have filed an extensive reply to the DOT's show cause order denying the carriers antitrust immunity. Interested readers may access the 81-page document here.
Friday, October 15, 2010
Blog readers may be interested in a new working paper by Makoto Watanabe & Seongman Moon, Refundability and Price: Empirical Analysis of the Airline Industry (Working Paper, Sept. 20, 2010 (available from SSRN here). From the abstract:
This paper provides new evidence on price dispersion in the US airline industry. Using the observed fare differences between refundable and non-refundable tickets, we first document evidence on the prices passengers pay for an option of returning their tickets. We found that the factors related to the value of refund option and customers' demand uncertainties have a significant impact on the relative refund fares. This finding turns out to be robust for various market structures. Further, taking into account the differential patterns of the relative refund fares, we investigate the impact of market structure on price dispersions.
Monday, October 11, 2010
The International Civil Aviation Organization concluded the 37th General Assembly Session last week by agreeing on a resolution which, inter alia, commits the ICAO member States to reduce carbon emissions by 2% per year until 2050; develop an international framework for market-based measures such as an emissions trading scheme (ETS); and produce a feasibility study for the measures which will be reviewed in 2013. See Press Release, ICAO, ICAO Member States Agree to Historic Agreement on Aviation and Climate Change (Oct. 8, 2010) (available here).
While this all sounds salutary, don't let the rhetoric mislead: ICAO Resolutions are hortatory and aspirational; they are not the equivalent of transnational legislation or a legally binding treaty. At best, the resolution amounts to a political commitment which can easily be derailed by State interests. There are no penalities embedded in the resolution, so the cost of defection is low. Though some observers may lament this reality, perhaps they will be comforted by the fact there was no other viable option. An amendment to the Chicago Convention which imposes a binding obligation on States to meet certain emissions reduction benchmarks is almost unthinkable given the arduous amendment process set forth in the treaty. See Convention on International Civil Aviation art. 94, opened for signature Dec. 7, 1944, 15 U.N.T.S. 295. And besides, there's little evidence that enough ICAO member States would have been willing to take on legally enforcable commitments with respect to aviation emissions reduction measures. In the alternative, ICAO could have proposed a new treaty on aviation emissions, but it would take years to negotiate and the terms would no doubt be watered down from the ambitious reductions goals spelled out in the 2010 Resolution.
Perhaps the most lamentable aspect of the ICAO Resolution is what it didn't include, namely a fresh condemnation of the European Union's plan to apply its ETS for aviation extraterritorialy beginning in 2012. U.S. airlines, represented by the Air Transport Association, are currently challenging the legality of the ETS before the European Court of Justice. Other major aviaion powers, including Brazil, China, and Russia, have also questioned the ETS and are seeking an exemption for their airlines. If these efforts should fail, it is likely that some of these States will resort to the ICAO Council--the organization's executive body--to seek to rule the ETS incompatible with the Convention in accordance with the procedures set forth in Article 84 of the treaty.
Wednesday, October 6, 2010
The DePaul College of Law's International Aviation Law Institute will be hosting John R. Byerly, U.S. Deputy Assistant Secretary for Transportation Affairs, on Thursday and Friday of this week. On Thursday, Mr. Byerly will deliver a guest lecture in Professor Gabriel Sanchez's International Aviation Law course. On Friday, Byerly will take part in the fourth installment of the Institute's "Conversations with Aviation Leaders Series."
Mr. Byerly has been the Deputy Assistant Secretary of State for Transportation Affairs since 2001. In this role, he is the lead U.S. negotiator for air transport agreements, including the landmark U.S.-EU Open Skies agreement and the recent U.S.-Japan air transport agreement, among many others. Before taking his current position, he was the State Department's Senior Advisor for Transportation Affairs. A career member of the Senior Executive Service at DOS, Mr. Byerly has held positions covering a range of duties in American foreign policy, national security, and international economic relations. He has served the Department as General Counsel, Multinational Force and Observers (seconded to Rome Headquarters of Sinai peacekeepers); Special Negotiator for Transportation Affairs; Director, Office of Aviation Programs and Policy; and Deputy Assistant Secretary, Bureau of African Affairs.
The Institute’s “Conversations” oral history series focuses on interviewing those who have shaped the public law and policy of the airline industry during the age of global deregulation. Interviews with Michael Levine, Alfred Kahn, and Robert L. Crandall have been completed, and our plans call for continuing the series with an interview in the spring and autumn of each year. Interested readers may watch the earlier installments in streaming video on the Institute's website here.
The Department of Transportation announced today that it is prepared to grant two Japan/U.S. airline alliances--ANA/United/Continental and JAL/American Airlines--approval and antitrust immunity. See Press Release, Dep't of Transp., DOT Proposes to Approve Antitrust Immunity for U.S.-Japan Aviation Alliances (Oct. 6, 2010) (available here). A full copy of the Show Cause Order is available here.
Undoubtedly the relative speed of the applications' approval will raise a few questions about the DOT's diligence in carrying out its analysis of the joint ventures in question. Perhaps the most powerful explanation of why the alliances were cleared is contained in the ANA/United/Continental application for antitrust immunity itself:
In the negotiations [for a U.S./Japan Open Skies agreement], the Japanese delegation unambiguously communicated that U.S. approval of [the three airlines' antitrust immunity application] on terms acceptable to the Japanese Government is a condition precedent to the entry into force of [the] Open Skies [agreement].
See Joint Application of All Nippon Airways Co., Ltd., Continental Airlines, Inc. & United Airlines, Inc., at 6 n.9, Dkt. No. OST-2009-0350 (Dep't of Transp. Dec. 23, 2009) (available here) (emphasis added).
Friday, October 1, 2010