Friday, October 9, 2015
Despite Russia's veto earlier this summer of a UN Security Council Resolution to establish a tribunal to investigate the downing of Malaysian Airline Flight MH17, the countries who lost nationals in the tragedy are determined to pursue some form of accountability for the attack. Australia, the Netherlands, Malaysia, Belgium and Ukraine are reportedly considering the formation of an independent tribunal that would not require UN approval, similar to the one adopted for the 1988 Lockerbie bombing. Expect to hear more about this idea in the wake of a fairly convincing account produced yesterday by a group of British investigative journalists detailing Russian responsibility for the incident, which will be followed by the next Tuesday's release of an official report by Dutch investigators.
Friday, October 2, 2015
Airlines had been hoping diplomatic talks in Havana earlier this week would clear the way for commercial operations between the countries later this year but according to reports, the FAA will need more time to ensure that Cuba's regulatory apparatus meets U.S. standards.
Thursday, October 1, 2015
According to a Wall Street Journal report, ICAO will acquiesce to the wishes of industry and various Member States that the deadline to comply with new flight tracking standards be pushed back from 2016 to 2018. Reportedly, a proposed requirement that aircraft be equipped with deployable flight recorders is proving particularly contentious as at least Japan, the EU, and the U.S. believe superior technological solutions are available.
Coincidentally, AirAsia today announced plans to install flight tracking systems on its aircraft. Interestingly, AirAsia will use different flight tracking technology then AirAsia India, which announced plans to fit its fleet with tracking systems last month. The AirAsia "franchise" model has at times raised questions about whether "effective control" of all AirAsia affiliates ultimately rests with the Malaysia-based parent. The fact that AirAsia and AirAsia India have chosen different flight tracking suppliers may offer one small data point in favor of affiliate independence.
Wednesday, September 30, 2015
The U.S Congress has passed a bill to prevent the FAA's authorization from lapsing until April of 2016. With the need to pass numerous appropriations bills before the new federal fiscal year begins tomorrow, it was clear that Congress was not yet ready to pass more ambitious legislation that would provide the FAA with long-term funding and direction. Though the summer began with talk about using the next FAA reauthorization to make significant changes, such as the possible privatization of air traffic control, the just-passed status quo extension calls to mind the 23 temporary measures passed before agreement was finally reached on the 2012 reauthorization. If there is reason for optimism, it is that by extending the FAA's funding into Spring, Congress has deliberately detached it from the anticipated budget fights over funding for the rest of the federal government, which is only expected to be extended into December.
Monday, September 28, 2015
As part of a series of economic sanctions imposed against Russia in response to its contributions to the hostilities in Eastern Ukraine, the Ukrainian government has revoked permission for Russian carriers to exercise third and fourth freedom rights to Ukrainian airports. Overflights, except for the transport of military cargo or troops, will still be permitted and presumably second freedom rights will also continue to be honored. Despite aviation's absence from agreements such as GATS, States have long considered air services a legitimate subject for inclusion in broader economic sanctions. Russia has threatened to retaliate with equivalent restrictions on Ukrainian carriers.
Wednesday, September 23, 2015
On Tuesday, September 22, the DePaul University International Aviation Law Institute hosted a morning reception at the Institute’s suite in the College of Law to welcome the incumbent Administrator of the Federal Aviation Administration (FAA), Michael P. Huerta, and the FAA’s Deputy Administrator, Michael G. Whitaker. Also attending were the new Dean of DePaul College of Law, Jennifer Rosato Perea, her predecessor Professor Greg Mark, Institute Directors Professor Brian F. Havel and Professor Bruce L. Ottley, Adjunct Professor Steve Sandler, Institute Executive Director Stephen B. Rudolph, Institute Research Fellow John Q. Mulligan, and several current DePaul aviation law JD and LLM students. As part of the event, the Administrator and Deputy Administrator joined a wide-ranging discussion of FAA regulatory policy moderated by Professor Havel. Among the topics considered were the benefits and drawbacks of the FAA’s extensive rulemaking system, the agency’s expanding reliance on data collection and risk analysis, and the regulatory challenges posed by unmanned aircraft systems. The discussion also examined the FAA’s increasing use of voluntary initiatives and performance-based rules, the agency’s “staged” approach to regulatory issues, the conceptual problems presented by possible regulation of unmanned operations in low-altitude airspace, and the FAA reauthorization bill currently before Congress. Professor Havel concluded the discussion by inviting Administrator Huerta to participate in the Institute’s oral history series, “Conversations with Aviation Leaders,” past installments of which are available for viewing on the Institute’s website.
Thursday, September 17, 2015
In a significant judgment released today, the Court of Justice of the European Union ruled that airlines cannot avail themselves of the "extraordinary circumstances" defense in the case of cancellations or delays caused by technical problems in order to avoid paying compensation as required under EU Regulation No 261/2004. EU passenger rights law requires airlines to compensate passengers for cancellations or extended delays, but exempts carriers from this duty if "the cancellation is caused by extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken." The CJEU had previously ruled in Wallentin-Hermann that "technical problems" did not rise to the level of "extraordinary circumstances" that would permit a carrier to avoid paying compensation. KLM attempted to distinguish the facts in this most recent case, Corina van der Lans v KLM, from the Wallentin-Hermann judgment on the grounds that the faulty parts responsible for the delay had not exceeded their average life spans and the carrier had no reason to expect they would fail. The court was unsympathetic to this argument, concluding that part failures are inherent in the normal exercise of air carrier activity, and therefore not "extraordinary circumstances." This is yet another loss for airlines before the CJEU, and barring a hidden manufacturing defect, carriers should assume that they will have to compensate for technical delays.
Wednesday, September 16, 2015
According to reports, the Communist Party of China has spent the past few months investigating top officials at the Civil Aviation Administration of China (CAAC) amidst a broader investigation into corruption at state agencies. Two specific officials were identified as under investigation and it is possible that the probe will affect others who have yet to be named.
Monday, September 14, 2015
The Daily Beast is reporting that last week's high-profile incident in which a British Airways' Boeing 777 caught fire shortly before takeoff was caused by an engine flaw already known to the FAA, and for which the FAA had already issued an Airworthiness Directive mandating increased inspections for that engine type. British Airways claims to have been complying with all FAA directives, suggesting that once the full NTSB investigation is concluded, more frequent inspections may be required going forward.
Wednesday, September 9, 2015
A German court has stopped a strike by Lufthansa pilots, ending disruptions to the carrier's services. The court ruled against the union because it determined that the strike was at least partially motivated by opposition to aspects of Lufthansa's operation of low cost subsidiary Eurowings, an illegitimate issue over which to strike. The consequences of unifying the European market while allowing labor policy to vary from nation-to-nation has been a persistent concern of airline unions, and is the driving issue behind the ongoing dispute between the EU and the U.S. over Norwegian Air International's proposed transatlantic services.
Wednesday, September 2, 2015
Over the past two decades the international airline business has been dominated by two trends that can be regarded as either contradictory or complimentary: the privatization of an industry formerly dominated by national carriers, and frequent public bailouts of privatized airlines during times of financial crisis. The latest example comes from Russia, where state-owned Aeroflot will assume a 75% stake and effective control of the country's first and largest private carrier, Transaero. Combined, the two airlines control over 50% of the Russian passenger market.
Wednesday, August 26, 2015
Last week, the Australian Competition and Consumer Commission (ACCC) gave its blessing to a proposed code-sharing agreement between Qantas and China Eastern. The ACCC had indicated earlier this year that it was inclined to block the deal because it would reduce competition on the Sydney-Shanghai route, but the carriers were able to assuage those concerns by pledging a 21 percent increase in capacity on the route over the next five years.
Friday, August 21, 2015
The Washington Post has obtained copies of FAA files on close encounters between drones and manned aircraft, reporting the number of incidents is nearing 700 so far in 2015, a dramatic increase from the previous year. The Post's report has drawn more attention to an area of growing concern. New York Senator Charles Schumer reportedly intends to introduce an amendment to the upcoming FAA reauthorization bill that would require all drones to be manufactured with built-in geo-fencing that would prevent the drones from operating above 500 feet of altitude or within no-fly zones surrounding airports. The FAA is currently developing rules for commercial drone operations, but hobbyist activity is largely unregulated.
Wednesday, August 19, 2015
Professor Joseph Schwieterman, director of DePaul University's Chaddick Institute for Metropolitan Development and a long-time friend to the International Aviation Law Institute, published an opinion piece in the Wall Street Journal yesterday arguing that the Department of Transportation should take into account the availability of intercity bus services when conducting its investigation into accusations of price gouging by U.S. carriers on select routes in the immediate aftermath of last May's Amtrak derailment in Philadelphia.
Tuesday, August 18, 2015
A recent collection of papers have advanced the provocative theory that major institutional investors, such as BlackRock, Vanguard, and the like, effectively reduce competition in concentrated industries, including the U.S. airline sector, by holding stakes in competing firms. The economic theory is that by owning shares of all of the major firms within a given industry, these firms profit from most from increases to overall industry profit margins rather than from competition for market share among participants within the industry. While each individual firm should still have incentives to compete, management serves the interests of the company's largest shareholders, and thus disproportionately pursue market discipline strategies. This presumably explains patterns of executive compensation, which are tied more closely to industry performance, and the lack of increased economic output relative to recent profit levels.
Recent interest in this theory has been sparked by an econometric study of the U.S. airline industry finding airline fares to be 3-5% higher because of horizontal shareholdings by institutional investors. Posner and Weyl concisely summarize the findings and conclude that the U.S. congress should respond with legislative changes to the tax treatment of horizontal shareholdings by mutual funds. More recently, Elhauge has released a draft of a paper arguing that existing antitrust law provides sufficient authority to challenge horizontal shareholdings without legislative changes.
There is no indication yet that the DOJ is pursuing this theory in its current investigation of airline collusion, and the theory has critics who are skeptical that the government would take action that so directly threatens the very existence of index funds. Still, it remains an issue worth watching.
Monday, August 17, 2015
Last week Reuters reported that the United States and China held exploratory talks in May about revising the countries' existing bilateral air services agreement. The report indicates that no changes are imminent, formal negotiations will not begin until certain preconditions are met, and significant liberalization does not appear to be under discussion. The report quotes a Chinese official as being more interested in opening markets than in prior years, but that appears to be primarily motivated by a concern that the U.S. and Chinese passenger carriers are approaching the maximum number of weekly flights permitted under the current agreement between the U.S. and Beijing, Shanghai, and Guangzhou (160 round-trip flights for the U.S. carriers, 160 for the Chinese). The reported possibility of adding flights to and from those three major cities while decreasing the number of flights permitted to smaller markets is hardly indicative of a philosophical shift toward liberalization. The U.S., for its part, seems to be willing to play hardball as it is refusing to enter formal negotiations to revise the air services agreement until China addresses U.S. concerns over its slot allocation process at major airports, indicating that adding flights is a greater priority for the Chinese carriers than their U.S. counterparts.
Thursday, August 6, 2015
Tuesday, August 4, 2015
A conflict between French and European law concerning France's failure to recover incompatible state aid to airlines within the four month time frame required by EU regulations appears headed to the European Court of Justice. Last year, the European Commission found that multiple French airports had provided violated community limitations on state aid to airlines in their attempts to attract low-cost carriers such as Ryanair. The French government was directed to recover the approximately 10 million euros in illicit aid from the recipient airlines, but has not yet done in accordance with French law which suspends recovery actions while the matters are being appealed in French courts. European case law requires that France recover the funds within four months regardless of pending appeals.
Monday, August 3, 2015
Katherine Calhoun of SmithAmundsen has an interesting write up of the implications of a recent Seventh Circuit decision. Boeing sought to remove claims against it related to the 2013 Asiana Airlines crash in San Francisco to federal court. The Seventh Circuit determined that claims stemming from a flight operating over water could potentially create the basis for removal to federal court on the basis of admiralty jurisdiction.
Thursday, July 30, 2015
As expected, Russia used its Security Council veto to prevent the U.N. from creating a tribunal to prosecute persons responsible for last year's downing of Malaysia Airlines Flight MH 17. The Chicago Convention and its annexes include provisions for investigating accidents for the purposes of identifying causes and preventing their recurrence, but investigators are not authorized to assign blame or dispense punishment. As a specialized agency of the U.N., it is only natural that ICAO would defer to the U.N. on an issue as sensitive as this. It could be argued that protecting international civil aviation from violence should be seen as a distinct priority that should be institutionally segregated from the larger U.N., but that is not the system we have and granting ICAO the power to conduct criminal prosecutions or to sanction States, other than by revoking their voting privileges, could jeopardize the organization's ability to facilitate technical coordination on matters that are less contentious, but still extremely important. Because of the oft-lamented institutional design of the U.N Security Council, any efforts to prosecute this act will have to be conducted outside of the U.N. system, as was done in the case of the Lockerbie bombing.