Special Edition #3  
October 26, 2001      

The DOT has released its final procedures for direct compensation for air carriers under the Air Transportation Safety and System Stabilization Act. Approximately $2.6 billion of the original $5 billion remains available for distribution. The procedures are published as a final rule, although the DOT will accept comments received on or before November 13. The full text of the procedures and forms is available at www.dot.gov/accomp.doc.

This is distinct from the $10 billion loan guarantee program to be administered by the Air Transportation Stabilization Board.

Mandatory Filing Dates And Procedures For All Applicants, Past and Present.

The procedures apply to all air carriers who sought compensation in the first tranche (and even if they do not intend to seek further compensation) or who intend to seek additional or initial compensation in the second tranche. The filing dates are mandatory, and failure to comply with these dates or the other procedures could result in disqualification:

• November 13 - all air carriers other than air taxis.

• November 26 - air taxis.

The applications and other materials filed on those dates must comply with the format and forms prescribed in the procedures. Please note that the above dates are the latest dates the applications must be received by the DOT in hard copy form. The DOT recommends hand-delivery of applications given the current security procedures at the agency.

Some Definitional Issues Are Clarified.

The procedures address a number of definitional issues raised during the initial application process:

• Indirect air carriers are not eligible.

• Air taxis operating under Part 298 and FARs 121 or 135 are eligible, although the DOT cautions that "the statutory formula may result in very small amounts of compensation being payable to companies that fly relatively few ASMs."

• Combination passenger/cargo flights are eligible based on the ASM formula (and not the RTM formula).

• In a wet lease arrangement, the wet lessee reports traffic so it is the wet lessee that is eligible.

• Losses may be calculated on the basis of pre-tax data.

Timing of Further Distributions.

The DOT intends to distribute the balance of the funds in two additional tranches. The second tranche will be paid before the end of the calendar year and will permit carriers to receive up to 85% of their estimated compensation. However, the DOT reserves the right to pay all of the estimated compensation to any carrier who can demonstrate that it has already suffered actual losses that exceed the formula amount of compensation (as verified by an independent audit).

The third tranche apparently will not be distributed until after the end of the year. The DOT will announce procedures for that distribution at a later date.

The AVIATION ADVISOR is published by Zuckert, Scoutt & Rasenberger, L.L.P., a Washington, D.C. law firm.  For further information regarding any of the developments discussed in this issue, please contact a member of the firm’s Aviation Group:

Back to Index.

Firm Profile  |  Practice Areas | Attorneys & Government Affairs Staff  |  Consulting Services |
Publications | Recruiting  |  Community Involvement  |  ZSRnet Links  |   ZSR Home 

888 Seventeenth St. N.W., Washington, D.C. 20006 g Tel. 202/298-8660 g Fax 202/342-0683
© 1999-2006 Zuckert, Scoutt & Rasenberger, L.L.P.   All rights reserved.