January 20, 2012
Compromise on Labor Provisions Could Lead to FAA Funding Bill
Congressional leaders have reportedly reached an agreement that will allow them to get past the impasse on union voting rules that was a major reason for the FAA shutdown last August. See John Crowley, Congress Reaches Breakthrough on U.S. Aviation Bill, Reuters, Jan. 20, 2012 (available here). The FAA has operated on short-term funding extensions for the past few years, seriously inhibiting the ability to plan for long-term projects such as the NextGen air traffic control system. The current funding extension ends January 31. This compromise provides optimism that a bill with long-term funding will be passed soon.
January 18, 2012
India Considering Allowing FDI Up to 49 Percent
Reports today indicate that India's Aviation Ministry has recommended rule changes that would allow foreign airlines to purchase shares in Indian carriers. See Anurag Kotoky & Aniruddha Basu, India Moves to Let Foreign Airlines Invest, Reuters, Jan. 17, 2012 (available here). The Ministry's recommendation would permit foreign carriers to own up to 49 percent stake in an Indian airline, a significantly higher limit than the numbers reportedly under consideration a month ago. This would give foreign airlines the same investment rights as non-airline foreign investors. Foreign airlines are currently prohibited from making any investment in Indian carriers. The proposed change awaits approval by the Union cabinet before it can take effect, but industry observers and market investors appear optimistic about the measure's success. See Tarun Shukla & P.R. Sanjai, Cabinet to Take Up 49% Airline FDI, livemint.com, Jan. 18, 2012 (available here). While approving any foreign investment in its airlines is novel for India, the contemplated upper limit of 49 percent would nevertheless keep India firmly within the range of foreign ownership (i.e., less than a majority stake) permitted by the nationality rule in bilateral air services agreements.
January 16, 2012
Latest Updates on Boeing-Airbus Dispute
U.S. and EU trade officials met last Friday and reached agreement on procedures for the next phase of the ongoing dispute over government subsidies provided to Airbus and Boeing. See Eric Morath, EU, U.S. Meet Over Airbus, Wall St. J. MarketWatch, Jan. 14, 2012 (available here). The U.S. alleges that the EU has not adequately complied with last year's WTO ruling on the subsidy dispute, while the EU contends it has fully complied. On friday, both parties agreed to wait for a WTO ruling on EU compliance before beginning proceedings for noncompliance damages. On Friday, the WTO also appointed an arbitrator for the eventual damages proceedings. A WTO appeals panel is currently reviewing the question of U.S. subsidies to Boeing. Should the ruling go against the U.S., Friday's agreement provides the U.S. with six months to demonstrate compliance with the ruling before noncompliance and damage proceedings take place in the same order as agreed upon for the Airbus proceedings.