All posts by Evelyn Sahr

DOJ SUES TO PREVENT UNITED-DELTA SLOT SWAP

Days after the five low-cost carriers sent the above letter complaining about the lack of slot access at New York City airports, the U.S. Department of Justice (DOJ) filed a lawsuit seeking to block a slot-swap agreement between Delta and United.  DOJ claimed that the deal, which would involve United acquiring 24 slots from Delta at EWR, would further contribute to United’s dominant position at the airport and lead to higher airfares and fewer choices for the 35 million passenger a year who use EWR.  DOJ also alleged that United does not use as many as 82 slots a day that could otherwise be used by competitors.  DOJ chose not to challenge a related deal that involves Delta acquiring a similar number of slot pairs from United at JFK; DOJ noted a different competitive environment at JFK to explain its enforcement posture.

If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com, 202-659-6622), Drew Derco (dderco@eckertseamans.com, 202-659-6665), or Reese Davidson (rdavidson@eckertseamans.com, 202-659-6633).

LOW-COST CARRIERS URGE GREATER SLOT ACCESS

Representatives of five low-cost carriers (Alaska, Allegiant, Frontier, Spirit and Virgin America) wrote a letter to the U.S. Department of Transportation on November 3rd urging the Department to reform the slot allocation process at slot-restricted airports around New York City.  The Department recently sought public comment on a Notice of Proposed Rulemaking (NPRM) that would alter the slot allocation procedures at JFK, LGA and EWR airports.  The letter from the five carriers urged the Department to implement the rule in order to maximize opportunities for new-carrier entry.  They noted that New York City is the largest and most important travel market in the country and that each of the carriers had been unsuccessful in obtaining slots to expand service at those airports.  Specifically, the five carriers urged the Department to: tighten the slot utilization rule, allocate unused slots to new entrants, establish a robust secondary market for slots, review slot transactions for anti-competitive effects, allocate slots via statutory exemption and evaluate proposals for a minimum average seat requirement.

If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com, 202-659-6622), Drew Derco (dderco@eckertseamans.com, 202-659-6665), or Reese Davidson (rdavidson@eckertseamans.com, 202-659-6633).

New DOT Enforcement Policy on Damage to Baggage

On November 25, DOT’s Office of Aviation Enforcement and Proceedings issued a notice reminding U.S. and foreign carriers of their obligation to compensate passengers under DOT’s regulations and, in the case of international transportation, the Montreal Convention, for damage claims relating to luggage components such as wheels, straps, zippers, handles and protruding parts. According to DOT, a recent investigation revealed that U.S. and foreign carriers operating at 16 U.S. airports routinely refused to compensate passengers for damage claims involving specific parts of checked baggage, such as wheels, straps, zippers, handles, and protruding parts.  DOT further alleges that certain carriers have posted notices disclaiming liability for damage to luggage components and have discouraged agents from accepting reports of damage to baggage.

Under DOT’s regulations governing damage to baggage transported on U.S. domestic flights, carriers may not impose arbitrary limits on their liability “for provable direct or consequential damages resulting from the disappearance of, or damage to, or delay in delivery of a passenger’s personal property, including baggage, in its custody to an amount less than $3,500 for each passenger” (14 CFR 254.4).  For international flights governed by the Montreal Convention, carriers are liable for damaged or lost baggage if “the destruction, loss or damage” occurred while the checked baggage was within the custody of the carrier and, according to DOT, the Convention also prohibits lower limits on reimbursement for damage to baggage components.

In sum, DOT’s position is that its own regulations governing damage to bags in domestic transportation together with the Montreal Convention’s provisions on damage to baggage during international transportationeach prohibit carriers from refusing to compensate passengers when specific components of a traveler’s luggage are damaged but the passenger’s luggage has neither been lost or destroyed in its entirety.

In addition, DOT announced a new enforcement policy in the November 25 notice intended to address the alleged reluctance of U.S. and foreign carriers to fully compensate passengers for damaged luggage.  Specifically, beginning January 9, 2016, DOT will treat any refusal by a carrier to accept a baggage damage claim as an unfair and deceptive trade practice violating 49 U.S.C. § 41712.  Furthermore, DOT is placing carriers on notice that they must remove or modify any signage purporting to limit liability for damage to baggage wheels, straps, handles, and protruding parts by January 9.

If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com, 202-659-6622), Drew Derco (dderco@eckertseamans.com, 202-659-6665), or Reese Davidson (rdavidson@eckertseamans.com, 202-659-6633)

DOJ EMPHASIZES INDIVIDUAL ACCOUNTABILITY FOR CORPORATE MISCONDUCT

The DOJ has issued a memorandum (the Yates memorandum) announcing its intention to target individuals for corporate misconduct.  The memo with the new rules was issued to prosecutors across the country and states that fighting corporate fraud and other misconduct is a top priority for the DOJ.  In order to carry out its mission, DOJ noted that one of the most effective ways to fight corporate misconduct is to seek accountability from the individuals who perpetrated the misconduct.  The new policy is designed to make sure all attorneys across the DOJ are consistent in efforts to hold individuals responsible for illegal corporate actions and is in response to criticism that DOJ often targets corporations but does not hold individuals accountable for corporate malfeasance.

If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com, 202-659-6622), Drew Derco (dderco@eckertseamans.com, 202-659-6665), or Reese Davidson (rdavidson@eckertseamans.com, 202-659-6633).

FAA PROPOSES CIVIL PENALTY AGAINST UAS OPERATOR

The FAA has proposed a civil penalty of $1.9 million against UAS operator SkyPan International for endangering airspace safety.  This is the largest civil penalty the FAA has proposed against an Unmanned Aircraft Systems (UAS) operator to date.

The FAA alleged that SkyPan conducted 65 commercial unauthorized UAS flights involving aerial photography between March 2012 and December 2014.  The flights took place in New York City and Chicago.  The company flew 43 of the 65 flights in restricted New York Class B airspace without receiving air traffic control clearance to access the airspace.

The FAA further alleged that the aircraft used in all 65 flights lacked an airworthiness certificate, effective registration and that SkyPan did not have a Certificate of Waiver or Authorization for the flights.

If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com, 202-659-6622), Drew Derco (dderco@eckertseamans.com, 202-659-6665), or Reese Davidson (rdavidson@eckertseamans.com, 202-659-6633).

DOT ISSUES INTERIM FINAL RULE ON E-CIGARETTES

On October 23, 2015, DOT issued an interim rule prohibiting passengers and crewmembers from carrying battery-powered portable electronic smoking devices (e.g., e-cigarettes, e-cigs, e-cigars, e-pipes, e-hookahs, personal vaporizers and electronic nicotine delivery systems) in checked baggage and also prohibits passengers and crewmembers from charging the devices and/or the batteries while on board the aircraft.  However, these devices may continue to be carried in carry-on baggage.

If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com, 202-659-6622), Drew Derco (dderco@eckertseamans.com, 202-659-6665), or Reese Davidson (rdavidson@eckertseamans.com, 202-659-6633).

CBP ISSUES INTERIM FINAL RULE ON ACS REPLACEMENT

On November 1, 2015, the Automated Commercial Environment (ACE) will be a CBP-authorized Electronic Data Interchange (EDI) System.  CBP’s Automated Commercial System (ACS) is being phased out as an authorized EDI System for the processing of electronic entry and entry summary filings.  ACE will replace the ACS as the authorized EDI system for processing commercial trade data.

The ACS is currently used by CBP to track, control, and process all goods imported into the United States.  By the end of 2016, ACE will become the primary system through which the trade community will report imports and exports and the government will determine admissibility.

If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com, 202-659-6622), Drew Derco (dderco@eckertseamans.com, 202-659-6665), or Reese Davidson (rdavidson@eckertseamans.com, 202-659-6633).

FAA ISSUES COMPLIANCE PHILOSOPHY DE-EMPHASIZING ENFORCEMENT

On October 15, 2015, Administrator Michael Huerta announced a new FAA “Compliance Philosophy” that aims to de-emphasize enforcement as a means of ensuring compliance in favor of a more collaborative approach that is intended to identify and resolve problems before they result in an accident.

The new policy recognizes that “most operators voluntarily comply with both the rules and the core principles” and that even the most compliance-oriented operators will make unintentional errors.  The agency will now rely to a greater extent on training or documented improvements to the extent a deviation from the rules results from flawed procedures, simple mistakes, a lack of understanding, or diminished skills.  “We don’t want operators who might inadvertently make a mistake to hide it because they have a fear of being punished …. [i]f there is a failing, whether human or mechanical, we need to know about it, to learn from it and make the changes necessary to prevent it from happening again.”

Huerta emphasized that FAA will continue to have a zero-tolerance policy for intentionally reckless behavior and inappropriate risk taking and will take enforcement action in cases of “willful or flagrant violations, or for refusal to cooperate in corrective action.”  The FAA will train all employees on the new Compliance Policy, will use “data, not calendar dates” to guide its surveillance and inspection programs, and has emphasized to its inspectors that they must work with operators to identify risks and the most appropriate tools needed to permanently fix the problems.

If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com, 202-659-6622), Drew Derco (dderco@eckertseamans.com, 202-659-6665), or Reese Davidson (rdavidson@eckertseamans.com, 202-659-6633).

FAA BACKS BAN ON SHIPPING LITHIUM BATTERIES ON PASSENGER PLANES

U.S. officials will support a proposed international ban on shipping rechargeable lithium batteries as cargo on passenger airlines.  The U.S. will back the proposed ban at an International Civil Aviation Organization (ICAO) meeting on the safety of lithium battery shipments and is the first time that the U.S. has taken an official position on the issue.

Pursuant to a 2012 Congressional statute, the FAA cannot act on its own to bar lithium battery shipments unless ICAO issues more stringent regulations.  The passenger airline ban could mean that some places will not receive battery shipments because cargo airlines often pay passenger airlines to transport shipments to destinations they do not serve.  The ban would not apply to cargo airlines or to lithium-ion batteries that are packed inside equipment.  There is no firm timeline for when ICAO might adopt the proposed ban.

If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com, 202-659-6622), Drew Derco (dderco@eckertseamans.com, 202-659-6665), or Reese Davidson (rdavidson@eckertseamans.com, 202-659-6633).

DELTA FILES LAWSUIT AGAINST REGIONAL PARTNER

Delta has filed a lawsuit against regional partner Republic Airways alleging that Republic has failed to fly certain Delta Connection flights as required under the parties’ contract.  Republic has been facing a pilot shortage that has forced it to curtail certain flying.  In a state court filing in Atlanta, Delta alleged that it has suffered millions in lost profits because of Republic’s inability to operate all of the flights promised in the two airlines’ contract.  The dispute comes at a time of great uncertainty as the regional airline industry faces new FAA requirements for minimum number of hours of flight experience before regional airlines can hire pilots.  This has in turn exacerbated a pilot shortage.

If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com, 202-659-6622), Drew Derco (dderco@eckertseamans.com, 202-659-6665), or Reese Davidson (rdavidson@eckertseamans.com, 202-659-6633).