March 16, 2012
Update on ICAO Emissions Proposals
A story from Reuters today provides more details on the four regulatory approaches being considered by ICAO to solve the global impasse over emissions regulation. See Allison Martell, ICAO Sees Difficult Path to Airline Emissions Plan, Reuters, March 16, 2012 (available here). From the article:
The four options being considered are mandatory offsetting of emissions from airlines, mandatory offsetting with some revenue-generating mechanism, and two cap and trade systems. Under one, all aviation emissions could be traded. Under the other, only increases or decreases from an initial emissions baseline could be traded.
The ICAO governing council met on Wednesday, and will reportedly meet again in June to eliminate one or more options. Reconciling the "common but differentiated responsibility" principle that has been a standard feature of international agreements on climate change with non-discrimination provisions within the Chicago Convention, such as Article 11, remains a major sticking point in reaching an agreement.
March 15, 2012
IALP Special Edition
The International Aviation Law Institute's journal, Issues in Aviation Law and Policy (IALP), has produced its first-ever special edition. The edition contains transcripts of the first three interviews from the Institute's acclaimed "Conversations with Aviation Leaders" oral history series. The series explores the origins, history and record of U.S. airline deregulation as told through the voices and memories of its participants. To date, there have been five interviews, all of which can be viewed at the Institute's website here. By transcribing these interviews, IALP has turned these valuable conversations into more easily searchable and citeable scholarly resources. Later interviews will be collected in a subsequent special edition next winter. The current edition contains interviews with:
- Michael E. Levine - Distinguished Research Scholar at the New York University School of Law, former Executive Vice President of Marketing and International at Northwest Airlines, and former CEO of New York Air, who was a leading staff member of the Civil Aeronautics Board both before and after the deregulation of the U.S. airline industry.
- Dr. Alfred E. Kahn - Late Robert Julius Thorne Professor of Political Economy, Emeritus, at Cornell University and former Chairman of the Civil Aeronautics Board, known as the "Father of Airline Deregulation."
- Robert L. Crandall - Former CEO of American Airlines, a strong early critic of airline deregulation, whose innovations include the computer reservation system and the first frequent-flyer program.
To purchase a copy of the Special Edition or subscribe to IALP, visit the Institute's website here, or send an e-mail to IALP@depaul.edu.
March 14, 2012
WTO Appellate Body Issues Boeing/Airbus Report
An appellate body of the World Trade Organization (WTO) has issued its report on allegations that Boeing received illegal subsidies in the form of municipal bonds and tax breaks as well as federal contracts, and, as has been typical throughout this dispute, both sides have declared victory. See Tom Miles & Tim Hepher, WTO Upholds Ruling on Boeing Subsidies, Reuters, March 13, 2012 (available here). The ongoing trade dispute between the world's two largest aircraft manufacturers began in 2005 when the United States filed a complaint against the EU alleging illegal subsidies to Airbus. The European Communities responded with a similar complaint against the U.S. for allegedly violating the Agreement on Subsidies and Countervailing Measures (SCM) and GATT 1994 through aid to Boeing. The initial panel report issued March 31, 2011 found Boeing to be the recipient of at least $5.3 in illegal subsidies. Yesterday's appellate body report upheld most of the initial panel's findings, in particular finding that NASA contracts and bonds issued by Wichita, Kansas violated articles of the SCM. The appellate body reduced the overall value of illicit subsidies to between $3 and $4 billion. The U.S. will now have six months to end all subsidies and comply with the ruling, though the issue of compliance will likely lead to further proceedings. An appellate body has already ruled on the allegations of subsidies to Airbus and the two sides are currently arguing over whether Airbus has adequately complied with that ruling. See Aviation Prof Blog, Jan. 16, 2012 (available here). The complete appellate body report along with a summary of key findings can be found here.
March 13, 2012
EU Leaders Reject Internal Criticism on ETS
Aircraft manufacturer Airbus, along with several EU carriers including the three largest, Air France-KLM, IAG and Lufthansa, released letters yesterday urging EU leaders to suspend unilateral action regarding aviation emissions until a global agreement had been reached. See Press Release, Airbus, Stop ETS Trade Conflict, March 12, 2012 (available here). The European Commission, Germany and the UK all responded by insisting the ETS will continue to apply to aviation until ICAO produces an acceptable alternative. See Andrew Parker, Kiran Stacey & Gerrit Weismann, Brussels Rejects Air Industry Move on Carbon, Financial Times, March 13, 2012 (available here). The companies are concerned by the prospect of a trade war arising from the ongoing dispute, citing threats of retaliatory measures from foreign States such as China's recent suspension of $14 billion in Airbus orders. Interestingly, Chinese officials have denied taking any retaliatory action against Airbus and indicated they will not use the dispute to influence aircraft purchases by Chinese carriers. See Airlines Free to Buy EADS Planes, Gulfnews, March 11, 2012 (available here). This detracts somewhat from the tough talk that had been coming out of China, and may indicate that the opposition States are not as eager to play hardball as previously thought. Airbus and the collaborating carriers expressed support for reaching a global aviation emissions solution through ICAO, which would eliminate the possibility of the EU aviation industry being targeted for retaliation. There are conflicting reports about what it will take for EU leaders to back down. The Financial Times report suggests EU leaders do not intend to soften their stance until an adequate ICAO-brokered agreement is firmly in place, but others have suggested that EU resolve is weaker than the rhetoric and that a mere proposal, rather than agreement, will be enough. See Mathew Carr, EU Will Back Down on Airline Carbon After ICAO Plan, SocGen Says, Bloomberg, March 13, 2012 (available here). With ICAO anticipating taking the rest of this year to produce a proposal, as well as most of 2013 to secure agreement from Member States, EU leaders will need to specify what they need to see from ICAO before carriers are forced to pay their 2012 ETS bills next Spring. See Aviation Law Prof Blog, March 2, 2012 (available here).
March 12, 2012
IAG Concessions May Not Satisfy EC Concerns Over BMI Deal
International Airlines Group (IAG) reportedly offered to relinquish slots at Heathrow airport to expedite regulatory approval of its planned purchase of BMI British Midland, and by doing so extended the deadline for the European Commission to render its initial decision from March 16 to March 30. According to reports, the European Commission is expected to reject the concessions and begin a full competition probe. See Alex Barker & Andrew Parker, IAG Faces Lengthy BMI Takeover Probe, Financial Times, March 12, 2012 (available here). IAG received good news last week when the UK Office of Fair Trading announced it would not conduct a separate review of the transaction. See Press Release, Office of Fair Trading, OFT Statement on IAG/BMI Merger, March 5, 2012 (available here). However, if the EC proceeds with a full review the acquisition will be substantially delayed.