Tuesday, February 28, 2012
The Federal Aviation Administration (FAA) has proposed a new rule that would require significant increases in flight time requirements for co-pilots and make additional changes to training and certification requirements affecting pilots. See Press Release, Federal Aviation Administration, FAA Proposes to Raise Airline Pilot Qualification Standards, Feb. 27, 2012 (available here). The new regulation would require that co-pilots hold an Airline Transport Pilot certificate, for which they would need 1,500 hours of flight time. Currently co-pilots are only required to hold a commercial pilot certificate which can be obtained after 250 hours of flight time. The full text of the proposed rule, which will be published and available for public comment tomorrow, is available as a pdf here. The FAA has issued this rule under the authority granted it by Section 217 of the Airline Safety and Federal Aviation Administration Extension Act of 2010, the full text of which is available here.
Monday, February 27, 2012
Israeli Transportation Minister Yisrael Katz has announced that Israel won't sign an Open Skies agreement with the European Union without first assessing the probably impact on Israeli carriers. See Zohar Blumenkrantz, Israel Postpones 'Open Skies' Deal with EU, Citing Local Airline Companies' Interests, Haaretz, Feb. 27, 2012 (available here). Katz has received pressure from Israel's airlines, El Al, Arkia and Israir, as well as the Histadrut, Israel's leading trade union, and as a result will reportedly insist that the final terms of the agreement include protections for the Israeli air transport industry. See Gavriel Queenann, Katz Bows to the Histadrut Over 'Open Skies', Israel National News, Feb. 27, 2012 (available here). It is unclear what is meant by “protections” and whether it is even possible to write a true Open Skies agreement that insulates Israeli carriers from competition. We'll likely know more after the next round of talks take place March 20, but this is a worrisome development for Open Skies proponents.
Thursday, February 23, 2012
In a move that runs contrary to current trends in public aviation policy, the province of British Columbia, Canada today announced the elimination of the aviation fuel tax on international flights. See Press Release, British Columbia News Room, B.C. Delivers on Commitment to Eliminate Jet Fuel Tax, Feb. 23, 2012 (available here). With environmental, security and passenger rights concerns contributing to the proliferation of taxes and regulatory costs on airlines in many States over the past decade this is an uncommon development and one that carriers such as Air Canada are certain to welcome. While it is unlikely that we'll see a broad shift in government policies anytime soon, the uncertain economic outlook for many airlines may prompt at least a few more States to reconsider the burden government policies impose on the industry.
Wednesday, February 22, 2012
Representatives of 26 countries, headlined by Russia, China, India and the U.S., met in Moscow today and reportedly identified several options for combating the EU's attempts to include their carriers in the EU Emissisions Trading Scheme. See Jennifer Ranken, Foes of EU Airline CO2 Rules Agree on Tactics, Reuters, Feb. 22, 2012 (available here). Meeting participants discussed prohibiting airlines from participating in the EU scheme (as China has already done and Russia and the U.S. are reportedly considering), bringing a formal complaint to ICAO, refusing cooperation with EU carriers looking to expand services, and foisting retaliatory charges upon EU carriers. Each State will pursue such measures at its own discretion. The article notes that Russia could also reinstate the excessive and largely illegal overflight charges on EU carriers flying Siberian routes that were only recently eliminated. Additionally, the report suggests that the States are as of yet reluctant to pursue formal dispute resolution through ICAO, as laid out in Article 84 of the Chicago Convention, out of concern that the process could be too slow-moving and may impede ICAO efforts to broker a global agreement. The States plan to meet again in Saudi Arabia this summer.
Tuesday, February 21, 2012
The International Civil Aviation Organization (ICAO) Air Transport Symposium will be held from April 18-20, 2012 in Montreal. The event will address some of the blog authors' favorite regulatory topics including liberalization, market access and limitations on air carrier ownership and control. More information is available here.
Monday, February 20, 2012
The spate of news reports about struggling airlines continues today with word that Kingfisher Airlines had to cancel more than 100 flights over the weekend, stranding numerous passengers, and is now under scrutiny from the Director General of Civil Aviation as a result. See Travel Firms Dump Kingfisher Airlines; KFA Pulls Out Inventory on Many Travel Portals, Economic Times, Feb. 21, 2012 (available here). Apparently, Kingfisher's troubles were precipitated by having its accounts frozen last week by tax authorities. The Indian government has not yet enacted an expected rule change, of which Kingfisher has been a vocal proponent, that will allow carriers to seek investment from foreign airlines. Whether the change is enacted in time to help Kingfisher remains to be seen. The Indian government has rejected the possibility of a bailout, but Kingfisher is insisting it will continue to operate.
Friday, February 17, 2012
Air Australia has become the third carrier this year to run out of money and halt operations. The airline has issued a release explaining the situation to customers that can be read here. In an illustration of the degree to which liquidity has become a problem for struggling carriers, the decision to suspend flights was apparently made when the carrier was unable to pay for the fuel necessary for its planes to make a return flight from Phuket. See Kristen Gelineau, Aussie Airline Goes Under, Strands 2,000 Passengers, Associated Press, Feb. 17, 2012 (available here). Insolvency and restructuring firm KordaMentha has been appointed administrator of Air Australia to assist the company through what will likely be a sale or liquidation. See KordaMentha Press Release, Feb. 17, 2012 (available here).
Thursday, February 16, 2012
Perhaps the most important consequence of the FAA funding bill was the certainty and stability it provided the FAA, airlines and airports in their efforts to transition from the current radar-based air traffic control system to the forthcoming GPS-based system known as NextGen. We will discuss the funding bill's impact on NextGen in greater detail tomorrow, but first we felt the need to call attention to a separate development from earlier this week of nearly equal importance. On Tuesday, the Federal Communications Commission (FCC) announced it was revoking the conditional authority it had granted the company LightSquared in January 2011 to operate a wireless broadband network over the nation's airwaves. See Edward Wyatt, F.C.C. Bars the Use of Airwaves for a Broadband Plan, N.Y. Times, Feb. 14, 2012 (available here). LightSquared signals were found to interfere with GPS signals used by private companies, the military and the aviation industry. The potential interference caused by LightSquared technology posed major problems for the aviation industry as many current instruments using GPS would have needed to be replaced. Worse, the changes that would have been required before implementing the NextGen system would likely have significantly delayed the project and substantially increased its cost. See Bob Brewin, Leaked FAA Report Adds Fuel to Debate Over LightSquared Broadband Network, Nextgov, July 27, 2011 (available here). While this turn of events was not entirely fair to LightSquared, as fault appears to lie with the design of the affected GPS technology and not LightSquared's network, the FCC understandably concluded that the burden the LightSquared network would impose on various government and private sectors was too great to allow the company to proceed.
Wednesday, February 15, 2012
With President Obama's signature on the FAA legislation, the FAA finally received the long-term funding certainty it has lacked over the course of 23 temporary funding extensions and a temporary shutdown last August. The legislative disagreement prompting the August shutdown revolved around the following proposed provision:
Section 903 repeals the rule prescribed by the NMB on May 11, 2010, effective January 1, 2011. In May 2010, the NMB changed standing rules for union elections at airlines and railroads, which counted abstentions as votes ‘‘against’’ unionizing, to the current rule which counts only no votes as ‘‘against’’ unionizing, abstentions do not count either way.
For background, the Railway Labor Act (RLA), which governs labor-management relations for railways and airlines, assigns the National Mediation Board (NMB) to oversee those relations and settle disputes over union elections and certifications. On May 11, 2010, the NMB announced a new rule, that going forward it would certify unions where the majority of the voting employees voted to establish a union, as opposed to its previous stance where it had required a majority of eligible employees (including the employees that did not vote) to vote in favor of union establishment. Essentially, employees who had abstained from voting were previously counted as votes against union formation, and were now left out of the final count. As this rule change makes union formation considerably easier, airlines were predictably opposed to the change. On their behalf the Air Transport Association (now Airlines for America) filed suit challenging the new rule. ATA argued that the NMB's new rule violated Section 2, Fourth of the RLA “The majority of any craft or class of employees shall have the right to determine who shall be the representative of the craft or class for the purposes of this [Act].” See 45 U.S.C. § 152, Fourth (available here). However, the D.C. District Court and D.C. Appeals Court both upheld the NMB's ruling on the grounds that the quoted section of the RLA did not clearly and unambiguously indicate that the majority of any craft or class referred to the majority of employees eligible to vote as opposed to the majority of employees that actually vote. See Air Transport Ass'n of America, Inc., v. National Mediation Bd., 719 F.Supp.2d 26, D.D.C. 2010 (available here); Air Transport Ass'n of America, Inc., v. National Mediation Bd., 663 F.3d 476, C.A.D.C. 2011 (available here). The failure of the court challenges prompted Republican legislators, presumably representing the interests of the airline industry, to seek to overturn the rule change by statute as proposed above. Democratic legislators, representing labor interests, refused. To avoid further delays to an FAA funding bill the parties compromised by removing the provision, adding the following language in its stead:
The conference committee agreed to amend title I of the Railway Labor Act by inserting after section 10 that the Mediation Board has authority from time to time to make, amend, and rescind, in the manner prescribed by section 553 of title 5, United States Code and after opportunity for a public hearing, such rules and regulations as may be necessary to carry out the provisions of this Act.
The conference committee agreed to amend Paragraph Nine of section 2 of the Railway Labor Act to require that in any runoff election for which there are 3 or more options (including the option of not being represented by any labor organization) on the ballot and no such option receives a majority of the valid votes cast, the Mediation Board shall arrange for a second election between the options receiving the largest and the second largest number of votes.
The conference committee agreed to amend section 2 of the Railway Labor Act by raising the showing of interest threshold for elections to not less than fifty percent of the employees in the craft or class.
The first paragraph alters the NMB's process by which it creates new rules for settling disputes under the RLA, so that any new rules are subject to a public hearing. This brings NMB rule-making more in line with that of other agencies as outlined in 5 U.S.C. § 153. The second paragraph merely adds more detailed procedure for runoff elections. It is the third paragraph that contains the compromise on the part of Democratic legislators and has provoked the ire of labor unions. See Greg Sargent, Unions Set to Blast Dems for Selling Out on FAA Reauthorization, Wash. Post, Jan. 30, 2012 (available here). However, the Transportation Workers Union has reportedly declared the compromise acceptable for the purposes of securing funding certainty for the FAA. See Keith Laing, Transportation Union Blesses Deal on FAA, The Hill, Jan. 23, 2012 (available here). Previously, organizers had to obtain signatures from 35% of the employees in order to hold a union election. The new provision will require signatures from 50% of the employees, a much tougher threshold to meet. The most likely result of the compromise is less union elections, but the elections that are called are much more likely to result in union certification.
All block quotes come from the H.R. 658 Conference Report available here.
Edited for grammar 2/16/12.
Tuesday, February 14, 2012
Monday, February 13, 2012
The White House has released its 2013 budget request, and while the proposals are unlikely to become law this year, it's worth highlighting a few aviation-related provisions. The Obama administration is proposing a $100 departure fee for airlines and business jets to help fund air traffic control. Additionally, the budget proposes increasing the security screening fees added to passenger tickets to a minimum of $5 in 2013, with a $.50 annual increase for the next five years, and authorizing the Secretary of Homeland Security to adjust the fee, currently set by statute, through regulation. According to the Budget document, the current fee structure only brings in 43% of revenue needed to cover security measures. The Budget request also cuts grant funding to large and medium airports by $926 million, but compensates the larger airports by granting them the flexibility to secure funding through higher passenger facility charges. These proposals are found on pages 30 and 160 of the Fiscal Year 2013 (available here).
Again, none of these proposals are likely to receive consideration by Congress. Aviation-related spending for the near future is primarily a settled issue given the recent passage of a four-year FAA funding bill. Budget documents can nonetheless provide useful insight into administration priorities, and airlines and airports will probably register at least mild criticism of the fee proposals over the next few days.
Friday, February 10, 2012
Blog readers may be interested to read a new paper by Michael Keen, Ian Perry & Jon Strand, Market Based Instruments for International Aviation and Shipping as a Source of Climate Finance (Jan. 1, 2012) World Bank Policy Research Working Paper Series (available from SSRN here). From the abstract:
The international aviation and maritime sectors today enjoy relatively favorable tax treatment, as their fuels are not taxed and the sectors are not subject to any value-added tax or turnover tax. Nor are these fuel uses subject to any global measures to reduce their associated CO2 emissions, even though they represent at least 5 percent of the global greenhouse gas emissions. A carbon charge on fuels for international aviation and shipping equal to $25 per tonne of emitted CO2 could raise about $12 billion from aviation and about $26 billion from shipping by 2020. Market-based instruments ought to be used to raise such revenue, preferably charges based on the carbon contents of fuels. Such charges would also scale back emissions by at least 5-10 percent. Developing countries ought to be able to keep their own tax revenue, and additional compensation to them for the economic burdens of these carbon charges may be warranted. Such compensation would constitute at most 40 percent of the raised global revenue. Implementing these charges can be a challenge, especially for aviation, where a large number of bilateral air-service agreements would need to be rewritten.
Thursday, February 9, 2012
Indian aviation minister Ajit Singh announced that, subject to cabinet approval, the Indian government has decided to allow Indian carriers to import jet fuel directly to avoid the significant sales taxes currently increasing fuel costs by approximately 24 percent. See Neil Munshi, India Aviation Gets a Fuel Lifeline, Financial Times, Feb. 7, 2012 (available here). While some analysts cautioned that cost savings would be mitigated somewhat by the costs of the infrastructure needed to import the fuel, this change is still seen as highly beneficial for Indian airlines. Combined with the anticipated removal of the ban on investment by foreign carriers, this move reflects a recognition by the Indian government of the severity of the problems facing the Indian air transport industry and the need to reform a regulatory regime that has contributed to the industry's struggles.
Wednesday, February 8, 2012
Oneworld partners British Airways and Japan Airlines have agreed on a revenue-sharing arrangement for flights between Europe and Japan. See Rosalba O'Brien, British Airways, JAL Plan Joint Business, Reuters, Feb. 8, 2012, (available here). This continues the ongoing trend within all three major alliances toward deeper integration between alliance partners. Both carriers will need antitrust immunity from their respective States.
Tuesday, February 7, 2012
Monday, February 6, 2012
Representatives of 26 countries, including China, Russia, India and the U.S., will meet in Moscow February 21 to discuss their shared opposition to the inclusion of their carriers in the EU Emissions Trading Scheme. See Michael Szabo, Opponents of EU Airline CO2 Scheme to Meet in Moscow, Reuters, Feb. 6, 2012 (available here). The talks will presumably include discussion of remaining legal options and potential retaliatory measures.
Friday, February 3, 2012
Earlier today, the House of Congress voted 248-169 in favor of H.R. 658, the FAA Reauthorization and Reform Act.* See Pete Kasperowicz, House Approves First Long-Term FAA Funding Bill in Eight Years, The Hill, Feb. 3, 2012 (available here). We made note of the legislation's key provisions in Wednesday's blog post. The Senate is expected to vote on the measure next week.
*Edited on 2/6/12. The post originally listed the title of the bill as the FAA Air Transportation Modernization and Safety Improvement Act, a title pertaining to previous legislation. The post has been edited to provide the correct title.
As speculated in Monday's blog post, Hungarian flag carrier Malev has ceased operations. See Hungarian Airline Malev Collapses, BBC, Feb. 3, 2012 (available here). The shut down was prompted by the refusal of airport officials in Tel Aviv to allow a Malev plane to depart without payment. The carrier's desperate financial condition became clear three weeks ago when the European Commission ruled that Malev had been receiving aid from the Hungarian government from 2007-2010 in violation of EU competition law. See European Commission press release available here. Malev was ordered to repay an amount on par with its entire 2010 revenues, demonstrating the degree to which it was reliant on State aid. Earlier this week, the Hungarian government declared Malev a "strategically important company" which temporarily protected it from bankruptcy proceedings. That protection was short-lived, as bankruptcy procedures are now likely to begin. The government has announced plans to compensate or find alternate arrangements for today's stranded passengers along with those holding tickets for flights departing within the next three days. See Nicola Clark & David Jolly, Hungarian National Airline Halts Flights, N.Y. Times, Feb. 3, 2012 (available here). Reportedly, Hungarian low-cost carrier Wizz Air intends to expand operations in the wake of Malev's collapse. In addition, Ryanair has announced plans to establish a base in Budapest, while Deutsche Lufthansa and British Airways are also considering expanding services to Hungary. See Gergo Racz, Airlines Move to Fill Gap in Hungarian Aviation Market, Wall St. J., Feb. 3, 2012 (available here). Malev’s failure comes exactly one week after the demise of Spanair.
Thursday, February 2, 2012
Blog authors Brian F. Havel and John Mulligan have written a post for EUtopia law, a blog devoted to developments in EU law, about the Court of Justice of the European Union (CJEU) judgment in Case C-366/10 Air Transport Association of America and Others v Secretary of State for Energy and Climate Change. The post, titled Flying too high? Extraterritoriality and the EU Emissions Trading Scheme: the Air Transport Association of America judgment, is available here.
For a more expansive analysis of the judgment, please be sure to look for the authors' forthcoming article in the Spring 2012 issue of Air & Space Law.