Friday, June 6, 2014
In need of additional revenue, the Egyptian government has introduced a new $25 per person airport tax. The tax is being levied on carriers who pass along the additional costs in the price of ticket sales, rather than passengers having to pay directly at the airport. While the reporting isn't entirely clear, the tax appears to only affect international flights, both departing and arriving.
Monday, June 2, 2014
Because today's biggest story is the release of a proposal by the U.S. Environmental Protection Agency (EPA) to regulate carbon pollution from existing power plants, this seemed like a good time to remind everyone of the agency's authority to regulate emissions from the aviation sector. Though seldom discussed, the same legislation that authorizes today's proposed rule for power plants, the 1970 Clean Air Act (CAA), authorizes the EPA to regulate aircraft emissions as well. It is under this statutory authority that the EPA, in conjunction with the Federal Aviation Administration (FAA), has issued rules concerning other aircraft emissions, such as nitrogen oxide, necessary to meet ICAO standards. As a result of the Supreme Court's 2007 ruling in Massachusetts v. EPA that carbon is a pollutant under the CAA, it is likely the EPA will eventually have to address carbon emissions from the air transport sector the way it has with surface transportation and power plants.
To be clear, the EPA is unlikely to regulate in this area any time soon. To date, the EPA has used its authority under the CAA to keep U.S. aircraft emissions standards in line with and not more stringent than the international standards adopted through the International Civil Aviation Organization (ICAO). The only mention of aviation emissions in Obama administration's 2013 Climate Action Plan is an expression of support for the development of a comprehensive global approach through ICAO. Aircraft emissions are a relatively small percentage of total U.S. emissions compared to the sectors for which the EPA has been writing rules thus far and are therefore much less of a priority. The EPA is also unlikely to be in a hurry to wrestle with the political and legal problems inherent to regulating aviation emissions, in particular the question of how to apply the rules to foreign aircraft, that have caused the EU such grief. Still, the EPA will eventually have to take some action on carbon emissions from the aviation sector and if the ICAO fails in securing a global agreement, what the EPA does will take on considerably more significance.
Anyone interested in learning more about this subject should read Nathan Richardson's Aviation, Carbon and the Clean Air Act.
Tuesday, May 27, 2014
In an apparent effort to reassure foreign airlines, Venezuela will allow six Latin American carriers to repatriate revenues from local ticket sales from the past two years. As noted in a blog post earlier this year, foreign airlines had been cutting service to Venezuela because the government had frozen their access to funds from ticket sales in the country.
Wednesday, May 21, 2014
Reports out of a constitutional complaint hearing suggest that Germany's air travel tax, introduced in 2011, is likely to be upheld when the constitutional court issues its ruling in a few months. The legal challenge was brought by the state of Rhineland-Palatinate, which has expressed concern that the levy is harmful to airports near Germany's external borders.
Friday, May 16, 2014
Reuters is reporting that EU officials may ask the WTO to consider $8.7 billion in tax breaks passed by the State of Washington late last year, primarily for the benefit of Boeing, as part of the ongoing proceedings between the U.S. and EU over subsidies to Boeing and Airbus. The U.S. recently objected to loans given to Airbus for the development of the A350. The long-running dispute shows no sign of abating any time soon.
Wednesday, May 14, 2014
Representatives from States on the ICAO Council, the Air Navigation Commission and the aviation industry met earlier this week to discuss the use of flight tracking technologies for passenger airlines. The meeting was of course prompted by the tragic disappearance of Malaysia Airlines Flight 370 two months ago. The plan appears to be to endorse by September some near-term steps States could voluntarily adopt to improve their flight-tracking capability, with discussions for the eventual development of standards requiring flight tracking. There appears to be a preference right now for performance-based standards that would require that States have the ability to track aircraft without mandating a specific technological approach to doing so.
Thursday, May 8, 2014
We would like to take a minute to recognize former U.S. Congressman Jim Oberstar who passed away last weekend. Oberstar entered the U.S. House of Representatives in 1975, just in time to participate in the policy debate that would culminate in the Airline Deregulation Act a few years later. Though he voted in favor of the act, he would not hesitate to criticize some of deregulation's consequences in subsequent years and was a vocal opponent of the recent wave of industry consolidation. He remained heavily engaged with transportation issues throughout his 36-year career in Congress, ultimately becoming chairman of the House Transportation and Infrastructure Committee. The International Aviation Law Institute had been planning to interview him this fall for the Conversations with Aviation Leaders oral history series.
Monday, May 5, 2014
Qatar has announced that it has bought out all of the national airline's private shareholders, including a former prime minister, to bring Qatar Airways under complete government ownership. This provides a worthwhile reminder that while the industry trend over the past decade has been toward privatization, the shift away from State ownership of airlines is far from universal.
Thursday, May 1, 2014
Earlier today the Malaysia Transport Ministry made public a preliminary report produced as part of the investigation into the disappearance of Malaysia Airlines Flight 370. ICAO's Annex 13 to the Chicago Convention, which covers Accident and Incident Investigation, instructs the state conducting the investigation to produce a preliminary report within 30 days of the incident and to distribute it to the states of design and manufacture as well as other states that have assisted with the investigation. This report is from April 9, but it has not previously been made available to the public.
Monday, April 28, 2014
A federal judge has just recently issued the final approval necessary for the settlement of the U.S. Department of Justice's lawsuit opposing the American Airlines/US Airways merger. The settlement received a preliminary approval in November, but U.S. law requires the proposed settlement be subject to a public comment period, followed by time for the DOJ to respond and the judge to consider all comments and responses.
Thursday, April 24, 2014
The Volume 13, Spring 2014 issue of the International Aviation Law Institutes's journal, Issues in Aviation Law and Policy (IALP), will be available next week. The following articles will appear in the issue:
- Bruce L. Ottley, Airline Immunity for Reporting Suspicious Activities Under the Aviation and Transportation Security Act: Air Wisconsin Corp. v. Hoeper
- Gregory O. Principato, Trouble on the Tarmac: Redirecting U.S. Aviation Policy to Promote Economic Growth
- Vincent Correia, Air Passengers' Rights, "Extraordinary Circumstances," and General Principles of EU Law: Some Comments After the McDonagh Case
- Wouter Oude Alink, The Regulation of Registered Traveler Programs
- Mark Ells, Unmanned State Aircraft and the Exercise of Due Regard
- Gabriel D. Kaim & Nicholas A. Morrow, Examining the Standard of Care for Failure to Divert During In-Flight Emergencies
- Eric Johnson, Heads I Win, Tails You Lose: The Illusory "Option" of Montreal Convention Article 33(1) in West Caribbean Airways
- Moses George, The User Development Fee (UDF) in Indian Airports - Legal and Regulatory Issues
Blog readers interested in subscribing to IALP, ordering back issues, or perusing a list of published articles may do so at the Institutes's website here.
Thursday, April 17, 2014
A recent story from the Economic Times highlights the difficulties States encounter as they try to relax restrictions on foreign ownership of airlines without actually allowing foreign ownership or control. India has recently opened up its carriers to investment by foreign airlines, which has allowed Etihad to make a significant investment in Jet Airways. The Directorate General of Civil Aviation is currently introducing measures, such as limiting the number of foreign directors that can be part of a joint venture, that are designed to prevent newly permitted foreign investment from resulting in a transfer of control abroad.
Because of the need for capital, States have become more accepting of foreign investment in airlines. However most still want to have their cake and eat it too, with foreign money coming in, but control remaining local. States will eventually have to decide whether efficient capital allocation or strict ownership rules are of greater importance.
Tuesday, April 15, 2014
Last week the European Commission released the 23rd version of its EU air safety list, identifying airlines that are subject to an operating ban or operational restrictions within the EU because of concerns about their level of compliance with international safety standards. The list can be found here.
Friday, April 11, 2014
ICAO has announced the adoption of a new Protocol to the 1963 Tokyo Convention on offenses committed on aircraft. The Protocol enhances states' authority to penalize passengers who commit disruptive acts on-board aircraft. It is now open for signature and will require 22 ratifications before taking effect. The full text of the Protocol is available here.
Monday, April 7, 2014
A judge has ordered Mexicana de Aviacion, one of the world's oldest airlines at the time it ceased operations in 2010, to begin selling assets to satisfy creditors. Employee unions, who have been keeping alive the possibility of a financial rescue and resumption of operations, announced plans to appeal the decision.
Thursday, April 3, 2014
In a vote earlier today, the European Parliament approved an agreement that had previously been negotiated with the Council that would restrict the application of the EU's Emissions Trading Scheme to intra-EU flights for the next few years. Carriers will not be required to submit allowances for emissions on arriving or departing flights between an EU and non-EU State. The exemption only runs through the end of 2016, by which time ICAO has pledged to produce a global plan for reducing emissions from the air transport industry. Should ICAO fail to produce an adequate proposal, the EU would presumably decline to extend the exemption any further. The agreement also imposes a transparency requirement on Member States, to monitor the allocation of revenue from allowances and to ensure that revenue is used for purposes related to climate change.
Wednesday, April 2, 2014
The Supreme Court today delivered its opinion in Northwest v. Ginsberg, this term's case considering the pre-emptive effect of the Airline Deregulation Act of 1978 (ADA). The unanimous opinion, written by Justice Alito, provided few surprises, falling mostly in line with the predictions in our December blog post. The primary question arising from oral arguments was whether the Court would announce a new, more expansive rule regarding the pre-emption of all implied covenants or leave the matter open for state-by-state consideration of the particular workings of each state's various implied covenants. To the dismay of the airlines, the Court chose the latter approach. The opinion includes an acknowledgement of the airlines' concern that differing treatment of various state covenants would subject airlines to a patchwork of legal regimes in contravention of the purpose of federal pre-emption as follows:
But the airlines have means to avoid such a result. A State's implied covenant rules will escape pre-emption only if the law of the relevant State permits an airline to contract around those rules in its frequent flyer program agreement, and if an airline's agreement is governed by the law of such a State, the airline can specify that the agreement does not incorporate the covenant.
Essentially, the Court is reiterating its position in Wolens that pre-emption does not apply to state law rules necessary for the enforcement of "privately ordered obligations" but does apply to covenants that represent policies imposed by the state. The Court clarifies this distinction by declaring that when parties have the ability to contract out of the covenant the covenant is merely a device used for interpreting the wishes of contacting parties, but when parties are prohibited from waiving the implied covenant by contract, as was the case here, then the covenant represents a separate policy choice imposed by the state and one that is subject to the ADA's pre-emption provision. Thus, airlines only have to include waivers of implied covenants in their contracts, and can rely on pre-emption in states where such covenants are not waivable, to ensure that a standardized set of national rules govern their frequent flyer programs.
With regard to the other notable question to arise during oral arguments, whether the evolution of frequent flyer programs to represent material benefits distinct from airline prices and services removes them from the scope of the ADA pre-emption, the Court, as expected, declined to address the matter as it wasn't a part of Ginsberg's complaint.
Thursday, March 20, 2014
As we discussed earlier this month, representatives of the European Union Member States have, in the wake of ICAO's announced timetable for the creation of a global aviation emissions plan, lobbied to effectively exclude foreign carriers from the EU's emissions trading scheme in order to avoid conflict with major trading partners. Members of the European Commission and Parliament, by contrast, have proposed only exempting foreign carriers from responsibility for emissions occurring outside the airspace of EU Member States. A few weeks ago an agreement was announced between members of Parliament and the Council that suggested that a full exemption would be provided, but that agreement still awaits formal approval by the Parliament. Yesterday Parliament's environmental committee voted to reject the compromise, making clear that significant opposition to the full exemption still remains ahead of the crucial April 3 vote.
Tuesday, March 18, 2014
Air Canada has announced that it will suspend its service to Caracas, the capital city of Venezuela. While Air Canada attributed the decision to the ongoing protests and civil unrest underway in Caracas, Air Canada is one of a number of carriers engaged in an ongoing dispute with the Venezuelan government over their inability to access funds from ticket sales because of the country's currency controls. The problems are related to a bizarre practice of Venezuelan citizens purchasing airline tickets, not for the purpose of actually flying, but because possessing a valid airline ticket enables them to exchange local currency for U.S. dollars at the official exchange rate, which is considerably lower than the unofficial rate. This has led to excessive overbooking of international flights out of Venezuela, though a number of foreign carriers have stopped selling tickets until they can be assured they will be paid for the sales.
Friday, March 14, 2014
According to the Financial Times, some U.K. ministers are pushing to devolve responsibility for the air passenger duty to the Scottish government in attempt to undercut one of the Scottish National Party's arguments for independence. The SNP, which objects to the application of the tax to flights into and out of Scottish regional airports, has proposed reducing the duty by 50 percent should Scotland gain the authority to do so under independence. Northern Ireland was granted similar authority over the administration of the APD to flights in or out of its airports in 2012 and used it to revoke the duty entirely for long-haul flights.