Tuesday, March 19, 2013

U.S. Backs Taiwan Bid to Participate in ICAO Assembly

The U.S. Senate and House of Representatives have both introduced bills supporting Taiwan's bid for observer status at the next ICAO Assembly meeting. Taiwan is unable to become a full member of ICAO as Article 93 of the Chicago Convention restricts membership to sovereign states.

March 19, 2013 | Permalink | Comments (0) | TrackBack (0)

Monday, March 18, 2013

TSA Receiving Pushback on Changes to Permitted-Items List

The Transportation Security Administration's recent announcement that it would begin allowing passengers to bring certain previously prohibited items, such as small pocket knives, aboard aircraft has garnered negative public attention. According to the linked article, lawmakers are already proposing legislation to keep the rule change from taking effect. Whether the proposed change outlasts the ongoing criticism remains to be seen.

March 18, 2013 | Permalink | Comments (0) | TrackBack (0)

Friday, March 15, 2013

New 787 Battery Undergoing Certification

Earlier this week it was announced that Boeing had received FAA approval to test a new battery for its 787 aircraft. According to Boeing chief engineer Mike Sinnett the certification process is approximately one-third complete and the 787 could be cleared to fly in a matter of weeks. Both the FAA and the Japanese Civil Aviation Bureau are investigating the problems attributed to the previous battery and both will need to sign off before the 787 is again certified to fly in their respective countries.

March 15, 2013 | Permalink | Comments (0) | TrackBack (0)

Thursday, March 14, 2013

Air France v Folkerts

In yesterday's post on the EC's proposed revisions to passenger rights regulations, we linked to a recent CJEU judgment, Air France v Folkerts, one of many the Court has issued clarifying the requirements under EC Regulation 261/2004. In this case, a passenger's flight was delayed by 2.5 hours causing the passenger to miss her connecting flight and arrive at her final destination 11 hours after her scheduled arrival time. Article 7 of Regulation 261/2004 requires compensation for delays longer than three hours, but the article does not specify whether the length of delay is measured at the point of departure or at the passenger's arrival at his or her final destination. The Court makes note of the fact that both interpretations are in evidence elsewhere in the regulation. The Court distinguishes Article 7 from Article 6, which expressly refers to delays from the point of departure, on the basis of the two articles distinct purposes. Article 6 specifies the assistance an airline must provide to passengers awaiting a delayed departure, while Article 7 provides compensation for the passenger's inconvenience ex post facto. It is sensible then to conclude, as the Court did, that if the intent of the article is to compensate a passenger for his or her inconvenience, the degree to which the passenger is inconvenienced will largely be determined by the timing of the passenger's arrival at his or her final destination. The Court's ruling is therefore to be celebrated by those who place greatest emphasis on providing redress proportional to the damage done.

Viewed from a law and economics perspective the ruling is more problematic as it opens up airlines to liability for any delay in departure that causes a missed connecting flight. Thus the incentive structure established in Article 6, which encourages airlines to keep departure delays under three hours (for certain flights), is to some degree made irrelevant by Article 7 which in light of this new interpretation provides a strong incentive for airlines to eliminate departure delays entirely, perhaps resulting in a much stricter regulation than the drafters of 261/2004  intended. This judgment could also incentivize airlines to schedule longer layovers to mitigate the risk of potential missed connections, which may not be in consumers' best interest.

Ultimately, I believe the Court has selected the interpretation that best fulfills the intent of Article 7. In so doing, however, it has again demonstrated how the ambiguities of Regulation 261/2004 continue to produce unexpected consequences while awaiting revision

March 14, 2013 | Permalink | Comments (0) | TrackBack (0)

Wednesday, March 13, 2013

EC Proposes Revisions to Air Passenger Rights Regulations

The European Commission has released a plan to revise the EU's existing passenger rights regulations. Perhaps the most crucial element of the new proposal is the attempt to clarify a number of the ambiguities in Regulation 261/2004. The Court of Justice for the European Union has over the past few years repeatedly had to clarify the existing rules with regard to matters such as delays on connecting flights or the meaning of extraordinary circumstances. The aviation industry has been largely unhappy with the resulting uncertainty as well as many of the CJEU's pro-passenger clarifications, and thus far is giving mixed reviews to the proposed changes.

March 13, 2013 | Permalink | Comments (0) | TrackBack (0)

Thursday, March 7, 2013

LATAM Chooses Oneworld

LATAM Airlines Group, the new entity formed from the merger of South American carriers LAN and TAM, announced that it will belong to the oneworld alliance beginning in 2014. Prior to the merger LAN had been a member of oneworld and TAM a member of the Star Alliance. Chile's competition regulators made withdrawal from one of the two alliances a condition for approval of the merger. The decision to join oneworld isn't a surprise, given LAN's deeper and longer-standing ties to oneworld than those between TAM and the Star Alliance, which TAM had only recently joined. The predictability of the result doesn't make it any less consequential as a move to the Star Alliance would have left oneworld struggling for market share in the Latin American market while simultaneously placing the Star Alliance in a commanding position. For a more comprehensive breakdown of how the decision might affect the competitive balance between the alliances and influence other movement within Latin America, see here

March 7, 2013 | Permalink | Comments (0) | TrackBack (0)

Wednesday, March 6, 2013

Korean Air Seeks Stake in Czech Airlines

Korean Air has made an offer to purchase a 44% stake in Czech Airlines. Reportedly, Korean Air was the only bidder for the State-owned Czech flag carrier.

March 6, 2013 | Permalink | Comments (0) | TrackBack (0)

Monday, March 4, 2013

787 Defects Raise Questions About FAA Designee Progam

Reuters had an interesting article this weekend about the degree to which the FAA relies on employees of aircraft manufacturers to inspect the design and manufacture of aircraft. While the article focuses on a change in policy that was implemented eight years ago, the industry's regulatory practices have long reflected manufacturers' advantages over regulators with regard to budget size and technical expertise. This dynamic is well-captured by John Braithwaite and Peter Drahos in their chapter on Air Transport in Global Business Regulation. At one point, Braithwaite and Drahos go so far as to describe the development of aircraft airworthiness standards by writing, "It is exaggerating only a little to say that Boeing sets regulatory standards for the world." (p. 460)

March 4, 2013 | Permalink | Comments (0) | TrackBack (0)