Monthly Archives: July 2014

HOUSE APPROVES TRANSPARENT AIRFARES ACT

The U.S. House of Representatives overwhelmingly approved the Transparent Airfares Act of 2014 (H.R. 4156) with a voice vote.  The bipartisan legislation next goes to the Senate for a vote and, if approved, to President Obama for signature.  The Bill would return transparency to U.S. airfare advertising and provide greater clarity for consumers by permitting carriers to separately disclose the base airfare and any government-imposed taxes and fees in advertisements for passenger air travel.

The Bill was introduced in the House by Transportation and Infrastructure Committee Chairman Bill Shuster (R-PA), senior Committee Member Peter DeFazio (D-OR), U.S. Rep. Tom Graves (R-GA), Transportation Committee Ranking Member Nick J. Rahall, II (D-WV), Aviation Subcommittee Chairman Frank LoBiondo (R-NJ), and Aviation Subcommittee Ranking Member Rick Larsen (D-WA).

As we previously reported, passage of the bill could void the U.S. Department of Transportation’s (DOT) full fare advertising rule.  Understandably, airlines and consumer rights groups are split.  Currently, DOT’s full fare advertising rule requires airlines and ticket agents to disclose the full price to be paid by the consumer in all advertisements.  This approach has been widely supported by consumer groups and passengers.  Air carriers, on the other hand, generally support the Transparent Airfares Act and argue the full fare advertising rule allows the government to bury tax hikes in ticket prices.

FINES UPDATE

The following fine has recently been issued by DOT:

Southwest Airlines Co. – $200,000

Southwest Airlines Co. (Southwest) was fined $200,000 for violating the Department’s advertising rules, 14 C.F.R. Part 399.84(a) and 49 U.S.C. § 41712, and Order 2013-7-20.  According to DOT’s Enforcement Office, during a period of time in October 2013, Southwest ran television advertisements in the Atlanta area for $59 sale fares to destinations such as New York, Los Angeles and Chicago.  The investigation concluded that Southwest did not have any seats available for $59 between Atlanta and any of the advertised destinations on any of the advertised dates.  By advertising fares for seats that were not available, Southwest violated 14 C.F.R. Part 399.84(a) and 49 U.S.C. § 41712.  Additionally, Southwest was fined for violating a previous Consent Order, Order 2013-7-20.

FAA PROHIBITS U.S. CARRIER OPERATIONS TO ISRAEL

On July 22, the U.S. Federal Aviation Administration (FAA) issued a Notice to Airmen (NOTAM) that prohibits U.S. airlines from operating to or from Israel’s Ben Gurion International Airport (TLV) for a period of up to 24 hours.  The notice was issued in response to a rocket strike that resulted in ordinance landing approximately one mile from the airport.  The NOTAM applies to U.S. carriers only.  Foreign carriers are free to continue operations to TLV unless prohibited to do so by their home country government.

The FAA will continue to monitor and evaluate the situation.  Updated instructions will be provided to U.S. airlines as the situation develops, but no later than 24 hours from the NOTAM’s issuance.

We will continue to keep you appraised of new developments.  If you have any questions please contact Evelyn Sahr at (202-659-6622; esahr@eckertseamans.com) or Drew Derco at (202-659-6665; dderco@eckertseamans.com).

NTSB TRAINING OFFERED FOR FAMILY ASSISTANCE PLAN COMPLIANCE

The National Transportation Safety Board’s (NTSB) Transportation Disaster Assistance Division is hosting a training program for carriers on Family Assistance Plan compliance.  The goal of the training program is to “train the trainers” so that carriers can begin to standardize procedures for responding to emergency situations.  The course will be held on July 29 & 30, 2014 in San Francisco, CA at Virgin America’s Headquarters in Burlingame, CA and is limited to 40 attendees.

Carriers are also encouraged to attend the NTSB’s Transportation Disaster Assistance Division 301 Family Assistance course, as it is a prerequisite for upcoming the “Train the Trainer” class.  The 301 course is offered by NTSB twice a year.  Information on this course can be found through the following link:  http://www.ntsb.gov/trainingcenter/CourseInfo/2014/TDA301.html.

DOT TENTATIVELY APPROVES IATA RESOLUTION 787

On May 21, 2014 DOT issued an Order to Show Cause in Docket OST-2013-0048, in which it tentatively approved IATA’s controversial Resolution 787.

DOT noted two broad categories of public benefit in approving the resolution: (1) that Resolution 787 would create modern, industry-wide technical standards and protocols for data transmission throughout the distribution chain, which would subsequently promote efficiency, cost savings, and innovation for consumers; and (2) that the use of common technical standards would make it easier for consumers to compare competing carriers’ fares and ancillary products across multiple distribution channels, which would in turn increase transparency, efficiency, and competition among airlines.

Should an order be issued by DOT the following conditions will be imposed:

Scope of approval

  • Approval of Resolution 787 does not constitute approval of any agreement among IATA member airlines regarding any method or business model of distributing air transportation, nor restrict the use of any channels available for the distribution of air transportation, including indirect distribution by other than airlines.
  • Any future agreement among IATA member airlines regarding business models for the distribution of air  transportation shall not be implemented without prior compliance with any applicable government approval or notification process.

Use of Other Data Transmissions Standards

  • Approval of Resolution 787 does not constitute approval of any agreement among IATA member airlines to require the use of any particular data transmission standard(s).

Backwards Compatibility/Other Standards

  • Any communications or message standards or protocols developed under Resolution 787 shall be open standards, meaning useable by distributors of air transportation and      intermediaries in the distribution of air transportation, including CRSs and other aggregators, on a non-discriminatory basis.
  • Approval of Resolution 787 does not constitute approval of any agreement to prohibit individual IATA member airlines or groups of such airlines from continuing to utilize any communication or message protocol, including existing standards.
  • Nothing in the approval of Resolution 787 shall be deemed to be an approval of either a restriction on backwards compatibility or a restriction on development of a communications or messaging standard that is not backward compatible.  Further, nothing in Resolution 787 shall be construed to inhibit the ability of distributors of air transportation to use other standards, including existing standards, in combination with any standard developed under Resolution 787.   Airlines and technology service providers are free to pursue backward compatibility of esolution 787 communications or message standards or protocols based on their particular business needs.

Privacy and anonymous shopping

  • Approval of Resolution 787 does not constitute approval of any agreement among IATA member airlines to require the disclosure by any passenger of personal information of any kind.  In addition, approval of  Resolution 787 is conditioned on the airline or ticket agent that is requesting and receiving the personal information of the buyer of air transportation following its privacy policy in effect at the time the request is made for the sharing and storage of personal information.

Data ownership

  • Approval of Resolution 787 does not in any way address the issue of data ownership.

INTERLINE BAGGAGE RULES FOR CANADA

The Canadian Transportation Agency (CTA) has decided to align its baggage policy for interline carriers with current rules in place in the U.S., particularly DOT regulation 14 C.F.R. 399.87.  In so doing, the CTA has decided that for international itineraries involving multiple air carriers to and from Canada that are purchased on a single ticket issued on or after October 1, 2014, carriers should:

  • Apply a single set of baggage rules to the entire itinerary; and
  • Disclose the applicable rules on the itinerary receipt or e-ticket.

The carrier whose designator code is identified on the first flight segment of the interline ticket (i.e., the selecting carrier) can apply either its own baggage rules to the entire itinerary or use IATA’s “most significant carrier” approach to determine which rules apply.  Regardless of what the selecting carrier decides, the same baggage rules must be applied throughout the entire itinerary.

The applicable carrier’s baggage rules (allowances for the first and second checked bags and carry-on baggage) should be disclosed on the passenger’s ticket and a comprehensive summary of all the carrier’s baggage rules should be available on the carrier’s website.

Carriers whose automated systems are compliant with 14 C.F.R. 399.87 regarding interline baggage to/from the U.S. and that use the same policy for interline baggage to/from Canada should find themselves in full compliance.  Carriers must also clearly state in tariffs their policies respecting interline baggage and file revised tariffs with the CTA as applicable.  If you have questions or require assistance in ensuring compliance with Canada’s interline baggage rules, please let us know.

CONGRESS WEIGHS IN ON NORWEGIAN AIR INTERNATIONAL

On June 10, 2014, an amendment to HR 4745: Fiscal Year 2015 Transportation, Housing and Urban Development Appropriations bill was adopted by the House of Representatives.  The amendment prohibits government funds from being used to approve “a new foreign air carrier permit under sections 41301 through 41305 of title 49, United States Code, or exemption application under section 40109 of that title of an air carrier already holding an air operator’s certificate issued by a country that is party to the U.S.-E.U.-Iceland-Norway Air Transport Agreement where such approval would contravene United States law or Article 17 bis of the U.S.-E.U.- Iceland-Norway Air Transport Agreement.” The Senate is currently debating a similar amendment.

The amendment is aimed at a proposed subsidiary of Norwegian Air Shuttle, Norwegian Air International (“NAI”), which has applied for permit and exemption authority from DOT to engage in scheduled and charter operations between the U.S. and EU, the U.S. and the ECAA and the U.S. and Norway.  NAI’s application has been pending since December 2013.  Critics argue that NAI applied for an Air Operator Certificate in Ireland in order to avoid Norway’s social laws and evade collective bargaining agreements with its Norwegian pilots and flight attendants.  NAI’s pilots are currently based in Thailand and employed under contracts that are covered by Singapore law which prevent collective bargaining.  Article 17 bis of the U.S.-EU-Iceland-Norway Open Skies Agreement states that “The Parties recognize the importance of the social dimension of the Agreement and the benefits that arise when open markets are accompanied by high labour standards. The opportunities created by the Agreement are not intended to undermine labour standards or the labour-related rights and principles contained in the Parties’ respective laws.” Sponsors of the amendment argue that NAI’s application is in violation of Article 17 bis.

FOKKER SERVICES B.V. SETTLES WITH TREASURY FOR $21 MILLION FOR OFAC VIOLATIONS

Fokker Services B.V. (Fokker), a Dutch aerospace services provider, settled with the U.S. Departments of Commerce, Justice, and Treasury on June 5, 2014 for a total monetary penalty of $21 million for engaging in illegal transactions with customers in Iran, Sudan, and Burma.  According to the U.S. government, Fokker used “work-arounds” to circumvent trade laws and export aircraft parts, technology, and services to these jurisdictions.  It also allegedly falsified documents, deleted references to transactions with Iran and avoided working with U.S. companies with strong export law compliance programs.

In forfeiting the $21 million, Fokker took responsibility for willingly and knowingly committing criminal conduct including over 1,150 violations committed between 2005 and 2010.  As a result of the investigation and settlement, Fokker has implemented a new compliance program in hopes of avoiding these kinds of issues in the future and has ceased all business with the sanctioned countries.  Fokker has also closed its Iranian office and made changes to its contractual language and user agreements with customers.

DOT CONSIDERING EXTENSION OF TIME TO FILE COMMENTS ON ITS PROPOSED CONSUMER RULE 3

On June 13, 2014, Airlines for America, the International Air Transport Association and the Regional Airline Association, on behalf of their members, requested a 90-day extension for submitting comments on DOT’s Notice of Proposed Rulemaking (NPRM) entitled “Transparency of Airline Ancillary Fees and Other Consumer Protection Issues” (i.e., Consumer Rule 3).  The rule proposes, among other things, to: (1) require carriers to disseminate certain ancillary service fee information to ticket agents; (2) require carriers to modify their websites to display (as specific charges) certain basic ancillary service fees; (3) modify the Department’s post-purchase price increase rule with respect to ancillary fees; and (4) amend the tarmac delay rule to clarify that the Department may impose penalties for tarmac delay violations on a per passenger basis (up to $27,500 per passenger).

All carriers should consider submitting comments to this latest attempt by DOT to over-regulate the industry.  Currently, comments are due by August 21, 2014.  If the extension is granted, comments will be due by November 19, 2014.

TSA FEE INCREASE SET TO TAKE EFFECT IN JULY

The Transportation Security Administration’s (TSA) Civil Aviation Security Service Fee will be increased beginning July 21, 2014, following a Congressional budget deal that was passed in December 2013.  TSA published an Interim Final Rule in the Federal Register on June 20, 2014 in which the Administration detailed its plan to restructure the Security Service fee.  The Bipartisan Budget Act of 2013, which provides for the fee increase, simplifies the structure under which fees are collected by (1) requiring the Security Service Fee be imposed on a one-way trip basis, as opposed to a per-enplanement basis; and (2) eliminating the cap on the amount of fees that can be collected.

Under the new scenario, TSA Civil Aviation Security Service Fees will be raised from $2.50 for a non-stop flight or $5.00 for a trip with a connection to a flat fee of $5.60 each way.  However, the TSA, in implementing Congress’ mandate as it applies to the Security Service Fee, also plans to change the definition of a “trip”.  Instead of charging each passenger $5.60 each way, TSA is proposing to instead charge a separate $5.60 fee for each leg of a flight in which a connection between domestic flights is more than 4 hours, or between domestic flights in Alaska or Hawaii and international destinations with layovers of more than 12 hours.

Section 601(d) of the Budget Act provides for implementation of the fee increase by July 1, 2014 through publication of notice of the fee in the Federal Register.  While not required by the Statute, TSA has chosen to issue the subject rulemaking as an Interim Final Rule in order to allow interested parties the opportunity to comment before the rule is finalized and the new fee takes effect.  Interested parties may file comments beyond the rule’s effective date, to August 19, 2014.  The Interim Final Rule is available at:

http://www.gpo.gov/fdsys/pkg/FR-2014-06-20/pdf/2014-14488.pdf.  If you are interested in filing a comment please let us know.