Monday, April 30, 2012
Recently the European Parliament adopted new rules granting pilots and cabin crew access to social security rights in their "home base" State, as opposed to the State out of which the carrier operates. See Press Release, European Parliament, Better Social Protection for Airline Staff and Cross-Border Workers, April 18, 2012 (available here). The "home base" is defined as the State where pilots and crew "normally start and end a duty period" and "where the operator is not responsible for the accommodation of the crew member." The measure was intended to improve the functioning of the European single aviation market by ensuring that all airline employees working out of the same airport will be paying into and benefiting from the same social security system. Some low-cost carriers, Ryanair in particular, were known for subjecting foreign employees to the labor laws and social security systems of the State where the carrier's business operations, rather than the employee, was located. See Charlie Taylor, MEPs Vote on Social Security, Irish Times, April 18, 2012 (available here). Labor concerns about work rules have been a significant political impediment to the elimination of foreign ownership rules and the creation of truly global airlines. The impact of this new "home base" rule over the next few years will be worth studying to determine its attractiveness as a possible solution to labor's concerns.
Thursday, April 26, 2012
Farooq Bhoja, head of Bhoja Air, the carrier operating the 737 that crashed last week outside of Islamabad, has been barred from leaving Pakistan and ordered into protective custody. See Pakistan Airline Boss in 'Protective Custody' for Crash Probe, Associated Press, April 21, 2012 (available here). All 127 passengers died in the accident and Pakistan has launched a criminal investigation. The criminalization of aviation accidents has been a controversial subject over the past decade. Elaine Solomon and Dina Relles thoroughly examined the subject last year in an article for the Journal of Air Law and Commerce. See Elaine D. Solomon & Dina L. Relles, Criminalization of Air Disasters: What Goal, If Any, Is Being Achieved?, 76 J. Air L. & Com. 407 (Summer 2011). Readers interested in a more concise explication of the arguments against criminalization may be interested in this 2001 Air & Space magazine piece from Kenneth Quinn. The most recent work on criminalization can be found in the forthcoming Spring 2012 edition of Issues in Aviation Law and Policy (IALP), which will include an article by Steven M. Dejong, Kant Be Done: A Consideration of the Criminalization of Accidents within the Retributivist Paradigm. IALP is available for order here.
Wednesday, April 25, 2012
The European Commission is launching a probe into whether marketing and rebate agreements with France's Nimes airport gave Ryanair "undue economic advantage." See Aoife White, Ryanair Agreements with France's Nimes Airport Probed by EU, Bloomberg Businessweek, April 25, 2012 (available here). Earlier this month authorities began investigating agreements between Ryanair and France's Carcassonne airport. This is the 18th EC probe into Ryanair's relationships with state-subsidized regional airports around Europe, suggesting the EC's planned revisions to its state aid guidlines for aviation are badly needed. See Alex Barker and Rose Jacobs, Brussels Opens its 18th Ryanair Probe, Financial Times, April 25, 2012 (available here).
Tuesday, April 24, 2012
According to reports, Delta is considering significantly increasing its interest in Brazil's second-largest carrier, Gol Linhas Aereas Inteligentes SA. See Rogerio Jelmayer, Delta Airlines in Talks to Increase Stake in Brazil's Gol - Report, Dow Jones Newswires, April 24, 2012 (available here). Delta purchased a 3% stake in Gol last December, but Gol has been struggling with increased fuel costs and competition in the Brazilian market and may be in need of additional funds. See Asher Levine, Brazil Airline Gol Profit Tumbles as Costs Jump, Reuters, March 27, 2012 (available here). When Delta first acquired its stake in December, the company expressed optimism about the growing Brazilian market and the increased traffic expected for the 2014 World Cup. Additionally, the move was seen as part of a broader strategy to expand its presence in the Latin American market. The report indicates that under the current talks Delta would increase its stake in Gol to 20%. Gol has denied the reports. See Rogerio Jelmayer, Brazil's Gol Denies Talks to Sell 20% Stake to Delta, Dow Jones Newswires, April 24, 2012 (available here).
Monday, April 23, 2012
Today marks the beginning of court proceedings in American Airlines' attempt to reject its existing collective bargaining agreements as permitted by 11 U.S.C. § 1113. A good preview of what to expect is available from the Fort Worth Star-Telegram. See Andrea Ahles, American Airlines Bankruptcy Case Goes to Court Today, Fort Worth Star-Telegram, April 23, 2012 (available here). The Star-Telegram's blog, Sky Talk, is also a useful source for regular updates on the hearings going forward.
The spate of recent reports on the Indian government's imminent approval of investment by foreign airlines appear to have been premature as a decision is no longer expected before the end of May at the earliest. See Nigam Prusty and Manoj Kumar, India Decision on Aviation FDI Not Before May-End: Minister, Reuters, April 20, 2012 (available here). The Indian government reportedly feels it needs time to bolster political support for the measure. See Mihir Mishra, Aviation FDI: Cautious, Centre Set to Take Allies on Board, Business Standard, April 23, 2012 (available here).
A draft law to privatize Kuwait Airways has been approved by Kuwait's Council of Ministers and will now receive consideration from the National Assembly. See Kuwait Airline Privatization Plan Wins Cabinet Nod, Associated Press, April 23, 2012 (available here).
Friday, April 20, 2012
Unions representing American Airlines pilots, flight attendants and ground workers made big news this morning by releasing a joint statement announcing their support for a merger between American, currently in bankruptcy, and US Airways. See Press Release, Allied Pilots Association, Allied Pilots Association, Association of Professional Flight Attendants and Transport Workers Union Join in Support of American Airlines-US Airways Merger, April 20, 2012 (available here). For now, American Airlines' management retains the exclusive right to present a reorganization plan to the bankruptcy court, but if other unsecured creditors side with the unions, the court could begin hearing other plans. See David Koenig and Joshua Freed, US Airways Makes Deals With 3 AMR Unions, Associated Press, April 20, 2012 (available here). In its response, American management characterized the union's statement as an opening salvo before the beginning of the bankruptcy Section 1113 process next week, in which American will attempt to reject and alter its collective bargaining agreements with the unions. See Andrea Ahles, American Responds to Union Support of Possible US Airways Bid, Sky Talk, April 20, 2012 (available here).
Thursday, April 19, 2012
EU officials have expressed a willingness to consider whether China's recently announced plans to reduce carbon emissions from aviation could constitute an "equivalent measure" that would exempt Chinese carriers from required participation in the EU ETS. See Barbara Lewis, EU Climate Boss: Studying China's Airline CO2 Plan, Reuters, April 19, 2012 (available here). China is proposing to redirect revenue from an existing passenger tax on international flights to the newly created Civil Aviation Development Foundation, which will be responsible for reducing aviation emissions among other duties. The tax will not be increased, so any claimed emissions reductions from the plan will have to come from the initiatives produced by the Civil Aviation Development Foundation as opposed to a deterrent effect from the tax itself. The authority to exempt carriers from States that adopt equivalent emissions reduction measures is granted by recital 17 of the preamble to Directive 2008/101/EC, the directive that incorporated aviation into the EU Emissions Trading Scheme. The complete text of recital 17 is as follows:
The Community and its Member States should continue to seek an agreement on global measures to reduce greenhouse gas emissions from aviation. The Community scheme may serve as a model for the use of emissions trading worldwide. The Community and its Member States should continue to be in contact with third parties during the implementation of this Directive and to encourage third countries to take equivalent measures. If a third country adopts measures, which have an environmental effect at least equivalent to that of this Directive, to reduce the climate impact of flights to the Community, the Commission should consider the options available in order to provide for optimal interaction between the Community scheme and that country’s measures, after consulting with that country. Emissions trading schemes being developed in third countries are beginning to provide for optimal interaction with the Community scheme in relation to their coverage of aviation. Bilateral arrangements on linking the Community scheme with other trading schemes to form a common scheme or taking account of equivalent measures to avoid double regulation could constitute a step towards global agreement. Where such bilateral arrangements are made, the Commission may amend the types of aviation activities included in the Community scheme, including consequential adjustments to the total quantity of allowances to be issued to aircraft operators.
Because "equivalent measures" has never been defined, this provision has long been identified as one that offers the EU and opposing States some potential flexibility to reach a compromise. However, according to the text, a "third country"such as China would need to adopt measures, "which have an environmental effect at least equivalent to that of" the EU ETS. It is unclear how the EU will determine the environmental effect of China's Civil Aviation Development Foundation without at least some understanding of the emissions-reducing measures the Foundation will produce. In the event that EU officials aren't satisfied that China's proposal will have an equivalent environmental effect, recital 17 indicates that the EC has the option of amending the application of the ETS to China's carriers without exempting them completely, presumably by granting the carriers more allowances free of charge as compensation for China's less-than-equivalent emissions reduction efforts. Such a gesture may not be enough to convince China to drop its complaints against the EU scheme, as those complaints have often been couched in terms of sovereignty and the EU's authority to extend the scheme to Chinese carriers rather than the actual cost of the scheme. Regardless, this will serve as an interesting initial test of whether "equivalent measures" can provide a solution to the current impasse.
Wednesday, April 18, 2012
According to Air Transport World, France and Russia have made an adjustment to the bilateral air services agreement between the two countries. See Polina Borodina, Russia, France Amend Bilateral Agreement, Air Transport World, April 17, 2012 (available here). The agreement had previously allowed only Aeroflot and Air France, SkyTeam partners with a codeshare agreement, to provide service on the route between Paris Orly and Moscow. Each country will now designate one additional carrier to provide competition on the route.
Tuesday, April 17, 2012
The ongoing international political and legal dispute concerning the European Union’s Emissions Trading Scheme appears to have diverted the public’s attention from the last “great” aviation regulatory controversy: antitrust immunity (ATI) for international airline alliances. Even so, the matter has not been closed among academics, aviation lawyers, and government officials. While some continue to defend alliances on pure economic grounds, arguing that their network benefits far outweigh the alleged cost of shielding them from U.S. antitrust law, many voices continue to condemn these joint ventures, and the Department of Transportation (DOT) immunization authority which makes them possible, on highly conceptual grounds. The first, and perhaps most prevalent track, is to argue that immunized alliances are contrary to a theoretical construct of efficiency, and thus ought to be condemned. The second, and more obscure, track is the legalist critique, i.e., the argument that the DOT has failed to properly interpret and apply the statutory authority which undergirds its immunization powers when reviewing alliance applications. The often unstated premise of this attack is that the DOT, as an administrative agency, ought to be tethered to thick concept of the rule of law which demands interpretive consistency and, perhaps, other canonical reverences when wielding its authority.
In a forthcoming article, An Institutional Defense of Antitrust Immunity for International Airline Alliances, 56 Cath. Univ. Law Review __ (2012), the International Aviation Law Institute’s Senior Research Fellow, Gabriel Sanchez, argues that these conceptual critiques of the DOT’s immunization practices fail to account for institutional variables such as the Department’s epistemic advantages in setting and executing international aviation trade policy; as such they promote an unrealistic (and normatively undesirable) belief that the DOT ought to forego these policy goals in order to maintain some proposed notion of conceptual fidelity—economic or legalistic. Further, the article considers possible reforms to the DOT’s immunization powers and procedures which emanate from these aforementioned critiques and highlights their institutional deficiencies. For example, the idea that the Department of Justice’s Antitrust Division ought to share joint custody over alliance immunization is unattractive because it injects greater uncertainty into the procedures while placing additional drags on aviation trade negations by potentially comprising the longstanding practice of trading ATI for liberal Open Skies accords.
None of this means that ATI is a permanent phenomenon of international air services trade. Should the political winds change radically in the U.S. and public tolerance for immunized alliances change, Congressional reforms to the DOT’s powers would not only be expected, but democratically legitimate as well. However, the chances of this occurring are slim. In the post-World War II era, Congress has consistently demonstrated great deference to the Executive and its agencies in trade matters, furnishing various forms of “fast track” authority to conclude international trade agreements and set sectoral trade policy; public opposition to this political “outsourcing” has been slight. Given that ATI is part and parcel of U.S. aviation trade, the chances of legislative interference in this area remains, for better or worse, slim.
Monday, April 16, 2012
Virgin Atlantic Airways indicated it plans to appeal the European Commission's decision to approve IAG's purchase of bmi. See Sir Richard Branson, Why Virgin Will Continue to Fight BA's Anti-competitive Purchase of BMI, The Telegraph, April 14, 2012 (available here). Virgin will need to file its appeal quickly as the sale is expected to take effect later this week. See Virgin Atlantic to Appeal Against BMI Sale to BA, BBC, April 15, 2012 (available here). Should the appeal happen, it would be heard by the Court of Justice for the European Union.
Friday, April 13, 2012
The Indian Cabinet Committee on Economic Affairs (CCEA) has approved a turnaround plan for flag carrier Air India. See Govt Approves Restructuring Plan for Air India, Times of India, April 12, 2012 (available here). Under the plan, the government will provide Air India with $5.85 billion worth of support between now and 2020. See Nikhil Gulati and Santanu Choudhury, India Approves Restructuring Plan for Air India, Wall St. J., April 12, 2012 (available here). The cabinet is expected to decide next week whether to allow foreign carriers to invest in Indian airlines.
Thursday, April 12, 2012
Earlier today, former U.S. Department of Transportation Undersecretary of Transportation for Policy Jeffrey N. Shane was the International Aviation Law Institute's guest for the latest recorded interview in our "Conversations With Aviation Leaders" Oral History Program. Shane, who has also served as DOT Assistant Secretary for Policy and International Affairs and Deputy Assistant Secretary of State for Transportation Affairs, spent time as the chief U.S. aviation negotiator and was integral in the formulation of the United States' Open Skies policy. Institute Director Brian F. Havel served as interlocutor for the interview. This is the sixth interview in the program, the first five of which are available for viewing here. It is expected that a transcript of Shane's interview will be included in next winter's special edition of the Institute's journal, Issues in Aviation Law and Policy. Transcripts of the first three interviews, Michael Levine, Alfred Kahn and Robert Crandall, can be found in this year's special edition which can be ordered through the Institute website here.
Tuesday, April 10, 2012
The United States and Brazil have announced a unique partnership as Brazil attempts to expand and modernize its aviation infrastructure and accompanying services in advance of the 2014 World Cup and 2016 Olympics. See Press Release, U.S. Trade and Development Agency, USTDA Launches U.S.-Brazil Aviation Partnership, April 9, 2012 (available here). Announced as a public-private partnership, it appears U.S. government agencies, including the U.S. Trade and Development Agency (USTDA), the U.S. Department of State, the FAA, and the Transportation Security Administration (TSA), will exchange information with their Brazilian counterparts on regulatory and technical issues related to airport modernization, airspace management, safety and security while U.S. private companies hope to contribute to and capitalize on the rapid development of Brazil's aviation sector through contracting, investment and export opportunities. In conjunction with the partnership, Boeing and Embraer have signed an agreement to cooperate on aircraft safety, operational efficiency and manufacturing productivity. See Press Release, Boeing, Boeing and Embraer Sign Agreement for Broad Business Cooperation to Benefit Customers and Support Industry Growth, April 9, 2012 (available here). The U.S.-Brazil Open Skies agreement, signed in December 2010, will not be fully operational until 2015.
Monday, April 9, 2012
The Chilean Supreme Court has rejected LAN Airlines' appeal of three of the 14 mitigation measures Chile's antitrust authority attached to its approval of the merger between LAN and Brazilian carrier TAM. See Carolna Pica, Chile's LAN Clears Final TAM Merger Hurdle After High Court Ruling, Wall St. J., April 5, 2012 (available here). LAN will comply with the measures in question and the two airlines are expected to combine under the name LATAM Airlines in May. The carriers have yet to determine whether the merged entity will belong to oneworld or the Star Alliance.
Thursday, April 5, 2012
The UK Department for Transportation's draft aviation policy, which had been scheduled for a March release, is no longer expected to be made public before late summer. The hope among industry representatives is that the delay increases the likelihood that the policy will include a serious proposal to increase airport capacity. See Tom Allett, BAR - "Delay on UK Aviation Policy May Help Industry", Airports International, March 23, 2012 (available here).
Wednesday, April 4, 2012
The German Federal Administrative Court (Bundesverwaltungsgericht) has upheld a lower court's ruling prohibiting flights from landing at Frankfurt Airport between 11pm and 5am. See Chris Bryant, Night Flight Ruling Hits Lufthansa, Financial Times, April 4, 2012 (available here). The court also lowered the cap on flights permitted during the hours immediately before and after the night time no-fly period. These restrictions provide neighboring residents a respite from the noise created by landing aircraft, but do so at the expense of Lufthansa's profitability. The Federal Administrative Court is the highest German court with jurisdiction over this dispute, so the ruling will not be appealed. The text of the ruling is available (in German) here.
Tuesday, April 3, 2012
DePaul University College of Law's International Aviation Law Institute is hosting former U.S. Deputy Assistant Secretary of State for Transportation John Byerly this week. Byerly is guest lecturing for the Spring semester international trade law and public aviation law courses. Later this month he will be receiving the L. Welch Pogue Award from Aviation Week and the International Aviation Club of Washington. See Press Release, Aviation Week, March 15, 2012 (available here). Readers interested in Byerly's career and perspective on international aviation developments can view Byerly's 2010 interview for the Institute's Conversations with Aviation Leaders Oral History Project here.
Monday, April 2, 2012
Pinnacle Airlines Corporation has become the latest U.S. carrier to resort to the Chapter 11 process in the hopes of reorganizing a business model that has produced shortfalls in liquidity and profitability. See Jeremy Lemer, Pinnacle Files for Bankruptcy Protection, Financial Times, April 2, 2012 (available here). The U.S. regional carrier market, which operates short-haul routes primarily for the purpose of feeding the larger airlines, has struggled in recent years with high oil prices and reduced payments from major carriers. Pinnacle, which acquired Colgan Air in 2007 and Mesaba Aviation in 2010, apparently intends to wind down its Colgan operations, which serve United, and focus on its contracts with Delta. See Jerry Zremski, Colgan Parent Company Pinnacle Airlines Files for Bankruptcy, Buffalo News, April 2, 2012 (available here). Delta has agreed to provide financing to help Pinnacle restructure.