Friday, April 23, 2010
The volcanic ash which has caused chaos in the European Union for the past week has put pressure on Member State Governments to complete the Single European Sky initiative. See Joshua Chaffin & Pilita Clark, Renewed Call for Unified Air Traffic Control System, Fin. Times, Apr. 23, 2010 (available here). Under the SES, the navigational airspaces of the EU Member States and members of the European Common Aviation Area (e.g., Norway, Iceland, and Macedonia) would be regulated by a single central authority. EU Member States in particular have been resistant to the change despite agreeing to enabling legislation for the program. See generally European Commission, Single European Sky II: Towards a More Sustainable and Better Performing Aviation, COM (2008) 389 final (June 25, 2008).
An extraordinary meeting to discuss fast tracking the SES initiative is scheduled for May 4. See Press Release, Europa, Spain Calls an Extraordinary Meeting of Transport Ministers to Give Impetus to a "Single European Sky" (Apr. 23, 2010) (available here). In addition to the SES, a review of emergency response procedures for EU airspace will be part of the meeting. However, no revised timetable has been given for final implementation of the SES.
Blog readers interested in the legal and policy challenges of the SES initiative should refer to Niels van Antwerpen's seminal work on the topic,Cross-Border Provision of Air Navigational Services with Specific Reference to Europe (Kluwer Law Int'l, 2008).
Thursday, April 22, 2010
Blog readers may be interested to read Edward Haung & Adib Kanafani's working paper, Taxing for Takeoff: Estimating Airport Tax Incidence Through Natural Experiments (Apr. 17, 2010) (available at SSRN here). From the abstract:
We view the different start dates of U.S. airport taxes as replicated natural experiments. In each, a portion of plane tickets are subject to a new tax of $3. We show that airlines, in response, raise nonstop fares by $6.5 and overshift the tax onto their nonstop passengers; however, they keep connecting fares little changed and appear burdened by the tax. The results suggest that airport taxes and other similar taxes encourage airlines to provide more nonstop services, and we argue that these taxes can be redesigned to promote both efficiency and equity.
In a potential sign that Continental Airlines' merger negotiations with United Airlines may succeed, US Airways announced that it has ended its own merger talks with the Chicago-based air carrier. See Jad Mouawad, US Airways Ends Talks With United, N.Y. Times, Apr. 22, 2010 (available here).
Tuesday, April 20, 2010
In response to the volcanic ash which shut down the European Union's air transport sector last week, the European Commission has convened a special working group to discuss the possibility of relaxing EU State aid rules to allow Member States to provide financial assistance to airlines impacted by the disruption. See Peppi Kiviniemi, EU Group to Mull Updating State Aid Rules for Airlines, Dow Jones Newswires, Apr. 19, 2010 (available here). Not everyone is pleased with this possibility. Peter Ramsauer, German's Transport Minister, said on Monday that he would "resist any [aid] appeal to the State. Ramsauer noted that while some industrial sectors had been harmed by the ash crisis, others had profited from it. See Tony Barber, German Minister Opposes Airline State Aid, Fin. Times, Apr. 19, 2010 (available here).
While EU carriers are drawing comparisons between the economic impact of European airspace closure and the hardships air carriers on both sides of the Atlantic felt after the 9/11 terrorist attacks to bolster their aid request, analysts have been quick to point out that this most recent disruption is unlikely to result in the same longterm drop in demand for air services that the terrorist attacks engendered. The cross-sectoral impact of the crisis also lessens the airlines' pleas for a special exception to EU State aid rules. However, some EU airlines have countered by flatly declaring that they face bankruptcy unless aid is given. See Steve McGrant & David Pearson, European Airlines Seek Help With Cost of Ash Crisis, Dow Jones Newswires, Apr. 20, 2010 (available here).
The European Commission has not been shy about acting on behalf of its airline industry as of late. Last year, in the midst of falling demand for air services, the Commission opted to suspend its "use-or-lose" rule for airport takeoff and landing slots so that airlines could cut flights without the risk of forfeiting their rights to scarce capacity at EU airports. And while it's difficult to tell how credible the threat of airline bankruptcy is following the flight disruption, the Commission is unlikely to wait around for carriers to start failing before it intervenes. The political costs of inaction would be too high.
Monday, April 19, 2010