888 Seventeenth St. N.W., Suite 700
Washington, D.C. 20006
Phone: (202) 298-8660
Fax: (202) 342-0683
This page conveys information of interest to the aviation community. Any views expressed herein do not constitute legal advice and should not be used as such. Zuckert Scoutt & Rasenberger LLP is not responsible for content on other Web sites linked from this page.
In Wake of Jury Verdict, GDS “Full Content” Clash Likely to Continue. Following extended antitrust litigation between US Airways, Inc. and Sabre Holdings Corp. (a Global Distribution System or GDS operator that distributes airline fare, flight and availability information to travel agencies) that culminated in a December 2016 jury verdict against Sabre, a federal trial court on March 21, 2017 rejected a second attempt by US Airways (and its successor in interest, American Airlines) to secure a declaratory judgment deeming “full content” and “no charge” provisions—that Sabre allegedly has insisted upon including in certain of its airline contracts—illegal. US Airways and other third party airlines supporting its request as amici argued that such provisions, which reportedly prevent airlines from offering lower fares through non-Sabre channels or imposing surcharges on travel agencies that issue tickets through Sabre instead of other distribution channels, operated as unlawful restraints on competition in violation of Section 1 of the Sherman Act. In denying the request, which was stylized as a motion to reconsider an earlier court order (from September 15, 2015) denying such declaratory relief, Judge Lorna G. Schofield of the United States District Court for the Southern District of New York found that the request (i) was not timely filed, and, even had it been timely filed, (ii) failed to demonstrate grounds for the court to grant relief, such as a change in controlling law, new evidence or the need to correct clear error. As a consequence, such provisions will continue to factor heavily into contract negotiations between Sabre and its airline customers, and possibly form the basis of future litigation. The case is US Airways Inc. for American Airlines, Inc. as Successor and Real Party in Interest v. Sabre Holdings Corp., et al., 11 Civ. 2725 (LGS) (S.D.N.Y.).
Eleventh Circuit Upholds Dismissal of RICO suit. On March 13, 2017, the U.S. Court of Appeals for the Eleventh Circuit in Almanza et al. v. United Airlines Inc. et al. upheld a district court’s dismissal of a proposed class action lawsuit by a group of Mexican nationals who alleged that several airlines (United Airlines, Delta Air Lines, American Airlines, US Airways, Aeromexico, Volaris and Interjet) violated the Racketeer Influenced and Corrupt Organizations Act (RICO). More specifically, the plaintiffs alleged the airlines had acted as an enterprise to collect a Mexico tourism tax from individuals who otherwise were exempt from the tax, and, further, developed a scheme not to refund the taxes to the affected individuals, but rather to keep the collected taxes. At the time of the complaint, all of the airlines were members of a trade group, CANAERO, and had agreed by contract to procedures for the collection and remission of the tax to the appropriate Mexican authority. By collecting the tax from exempt persons and keeping the tax, the airlines breached the agreement that they signed as part of CANAERO. The Eleventh Circuit rejected the plaintiffs’ arguments that the existence of the CANAERO contract and the breach of that contract by each airline was enough to establish an enterprise under RICO, noting that parallel conduct does not constitute evidence of a RICO “enterprise” or “pattern of racketeering activity.” The Court stated that each airline independently may have decided to collect and keep the tax (absent a consumer request for a refund) because it made economic sense to do so. Ultimately, the Court concluded that although the airlines may not have acted honorably in the collection of the tax from exempt persons, the plaintiffs failed to meet the test for RICO claims and the case was properly dismissed by the district court. Significantly, in suing the airlines, the plaintiffs had asserted that they were left with no private civil remedy other than RICO, in light of the Airline Deregulation Act (ADA), which (i) vests the Department of Transportation with authority to regulate airfares and (ii) the Eleventh Circuit had previously held preempted state laws but not RICO claims based on allegedly fraudulent airfares.
FAA Extends Prohibition Against Certain Flights Within the Vicinity of Tripoli, Libya. On March 21, 2017, the Federal Aviation Administration (FAA) extended Special Federal Regulation (SFAR) No. 112 for two years until March 20, 2019. Under this SFAR, the FAA restricts, for safety reasons, flight operations in the Tripoli (HLLL) Flight Information Region (FIR). SFAR No. 112 extends to: (a) all U.S. carriers and commercial operators, (b) all persons exercising privileges of an FAA airman certificate (except persons operating U.S.-registered aircraft for foreign carriers), and (c) all operators of aircraft registered in the United States (except foreign carriers). SFAR No. 112 exempts (i) aircraft experiencing emergency situations and (ii) flight operations conducted under a contract with a U.S. government agency and with FAA approval.
DHS/TSA Implement Heightened Security Measures for Select Inbound International Flights. On March 21, 2017, the U.S. Department of Homeland Security (DHS) and Transportation Security Administration (TSA) announced enhanced civil aviation security measures applicable to passengers traveling from 10 foreign airports serving as the last point of departure for U.S.-bound flights. The measures, to be implemented through mandatory security directives and emergency amendments to TSA-issued carrier security programs, will require all personal electronic devices (PEDs) larger than a smart phone, such as laptops, tablets/e-readers, digital cameras and portable DVDs/game units, to be secured in checked luggage. Impacted flights include non-stop U.S.-bound flights departing from the following foreign airports: Queen Alia International Airport (AMM), Cairo International Airport (CAI), Ataturk International Airport (IST), King Abdul-Aziz International Airport (JED), King Khalid International Airport (RUH), Kuwait International Airport (KWI), Mohammed V Airport (CMN), Hamad International Airport (DOH), Dubai International Airport (DXB), and Abu Dhabi International Airport (AUH). The measures will remain in place indefinitely, and airlines have until Saturday, March 25, 2017 to ensure successful implementation. The measures do not apply at this time to U.S. domestic flights or international flights departing U.S. points. The DHS/TSA announcement was followed by a similar electronics cabin ban announced by the British Government with respect to commercial passenger flights to the U.K. from Turkey, Lebanon, Jordan, Egypt, Tunisia and Saudi Arabia. Unlike the U.S. ban, the British measures do not at this time encompass flights departing airports from Morocco, Kuwait or the United Arab Emirates.
President Trump Issues Preliminary 2018 Budget Proposal. On March 16, 2017, President Trump’s administration issued a preliminary 2018 budget proposal. This budget proposes significant increases in defense spending, border security, and other measures, while cutting funding for a number of executive branch agencies, including DOT. DOT’s funding would be decreased by $2.4 billion (a 13% reduction), and in a major change, air traffic control would be privatized. Among other things, funding for Essential Air Service (subsidized air service to small communities) would be eliminated.
DOT Fines Delta for Tarmac Delay Rule Violation. On March 9, 2017, DOT issued a consent order assessing a $90,000 fine against Delta Air Lines (Delta), based on Delta’s alleged failure to provide adequate food on four separate flights during lengthy tarmac delays in 2016. DOT’s tarmac delay regulation requires carriers to provide adequate food and potable water within two hours of the start of a tarmac delay (i.e., within two hours after the aircraft pushes back in the case of departing flights or within two hours of landing in the case of arriving/diverted flights). In all of the flights, DOT found that while water was provided to passengers, either little or no food was provided to affected passengers. DOT also found, for one flight, that Delta failed to ensure that it had adequate resources to adhere to its tarmac delay plan because it failed to have enough food stocked on the affected flight.
DOT Suspends Two Aviation Consumer Protection Regulatory Initiatives; Extends Compliance Deadlines for Recently Issued Final Rules. On March 2, 2017, DOT announced that it had suspended “indefinitely” the public comment periods for its (i) pending airline ancillary fee transparency proposed rule and (b) information request regarding airline industry practices in connection with the distribution and display of fare, schedule and availability information. The comment periods were suspended to provide President Trump’s appointees at DOT an opportunity to review and consider moving forward with the regulatory initiatives, and followed the issuance of a January 20, 2017 White House regulatory freeze memorandum. DOT further announced on March 2 that it was extending the compliance deadline for its final rule on reporting data for mishandled baggage and wheelchairs in aircraft cargo compartments, from January 1, 2018 to January 1, 2019. The March 2 announcements came after separate action taken by DOT in February 2017, extending the compliance deadline for its recently amended code-share disclosure regulations and a new prohibition on undisclosed display biasing on electronic airline information systems, from February 15, 2017 to March 17, 2017.
European Union Parliament Passes Travel Visa Reciprocity Resolution. On March 2, 2017, the European Union (EU) Parliament passed a resolution (i) calling for full visa reciprocity with the United States and (ii) asking the EU Commission to adopt measures that would require U.S. citizens to obtain visas to enter EU countries. Currently, citizens of most EU countries are eligible to travel to the U.S. for stays of 90 days or less without first obtaining a visa, further to the U.S. Visa Waiver Program (VWP). However, citizens of five EU countries—Bulgaria, Croatia, Cyprus, Poland, and Romania—are not eligible to participate in the VWP due to high nonimmigrant visa refusal rates, and thus must obtain a U.S. visa, while U.S. citizens traveling to those five countries may enter visa-free for stays of 90 days or less. As a consequence, the EU Parliament is urging the Commission to take temporary measures that would require visas for U.S. citizens to visit any EU country until such time as citizens from the five EU countries may travel to the United States visa-free for stays of 90 days or less. The resolution obligates the EU Commission to take action within two months; however, no action is expected on the measure until summer 2017.
DOT Fines Air India for Tarmac Delay Rule Violation. On February 24, 2017, DOT issued a consent order assessing a $115,000 fine against Air India for violations of DOT’s tarmac delay rule. In July 2014, an Air India flight experienced a mechanical delay at Newark Liberty International Airport. During the delay, the aircraft door remained open but the flight crew did not advise passengers that they had an opportunity to deplane. DOT’s tarmac delay regulation, 14 C.F.R. § 259.4, requires carriers to inform passengers that they may deplane, if the opportunity actually exists. In the Air India case, even though passengers asking to deplane would have been allowed to do so, DOT found that the crew’s failure to make announcements constituted a violation of the tarmac delay regulation.
Airport Users and Trade Associations Challenge Agreement to Close Santa Monica Airport. In January 2017, the Federal Aviation Administration announced that it had entered into an agreement with the City of Santa Monica, California that would allow the City to immediately reduce the length of the runway at Santa Monica Municipal Airport (SMO) from 5,000 feet to 3,500 feet, and allow the City to close the airport entirely at the end of 2028. A coalition of airport users and trade associations – including the National Business Aviation Association and the Santa Monica Airport Association – subsequently filed a petition in the U.S. Court of Appeals for the District of Columbia Circuit on February 13, 2017, challenging the legality of the agreement. FAA replied by filing a motion to dismiss the case, arguing that it was procedurally improper. The petitioners responded that the case not only was procedurally proper but that they were at risk of irreparable harm if the City truncated the runway, and requested that the court enjoin both the agency and the City from taking any action to do so. The petitioners also set forth specific arguments as to why the agreement exceeded the FAA’s authority, including that the agency had failed to provide public notice and solicit public comment; that the agency had failed to establish that the agreement would benefit aviation; and that the agency had failed to comply with statutory procedural requirements, including the National Environmental Policy Act and the Airport Noise and Capacity Act. Zuckert, Scoutt & Rasenberger is lead counsel for the petitioners in the case – NBAA, et al. v. Huerta, no. 17-1054 (D.C.Cir.).
Chao Confirmed as 18th U.S. Secretary of Transportation. On January 31, 2017, the U.S. Senate, by a vote of 93-6, confirmed the nomination of Elaine L. Chao as U.S. Secretary of Transportation. Secretary Chao previously served as Deputy Secretary of Transportation and, thereafter, Director of the Peace Corps, under President George H.W. Bush, and as Secretary of Labor under President George W. Bush.
DOT Issues Airline Ancillary Service Fee Proposal. On January 17, 2017, three days before the change in presidential administrations, DOT released a supplemental notice of proposed rulemaking (SNPRM), entitled “Transparency of Airline Ancillary Service Fees.” The SNPRM, if finalized as proposed, would require: (i) airlines to provide “useable, current, and accurate” fee information for “basic ancillary services,” to include first- and second- checked bags and one carry-on bag, to all ticket agents that receive and distribute the airline’s schedule and fare information (including GDS operators); and (ii) airlines and ticket agents to disclose fees charged for such basic ancillary services at the first point in an online search process where a fare is listed in connection with a specific flight itinerary, adjacent to the fare, as well as upon request during telephone transactions. Importantly, GDS operators would be prohibited from imposing new fees on airlines for the distribution of the required ancillary fee information under contracts in place when any final rule becomes effective. As DOT has explained in the SNPRM, the proposed restriction “would only impact contracts for their current term at the time a final rule is issued in order to reflect the changed regulatory environment; future negotiations will enable all parties to negotiate based on the regulatory changes.” The SNPRM, for which comments are due by March 20, 2017, follows a similar proposal on airline ancillary service fees issued by DOT in 2014.
FAA and SkyPan International Reach Settlement on Unapproved UAS Operations. On January 17, 2017, the FAA announced that it had entered into a settlement agreement with Chicago-based SkyPan International, Inc., stemming from a $1.9 million notice of proposed civil penalty issued against SkyPan in October 2015, following 65 allegedly unauthorized commercial drone flights involving aerial photography, including 43 of which were allegedly conducted in highly restricted Class B New York airspace. Under the terms of the settlement agreement, SkyPan will pay a civil penalty of $200,000 and, if it violates Federal Aviation Regulations in the next year, a further $150,000. SkyPan also has agreed to release public service announcements over the next year “to support the FAA’s public outreach campaigns that encourage drone operators to learn and comply with UAS regulations.” The final civil penalty assessed against SkyPan is the largest FAA fine levied against a UAS operator.
Switzerland Added to CBP Global Entry Program. On January 13, 2017, CBP announced that, effective February 1, 2017, citizens of Switzerland will be eligible to apply for participation in Global Entry, a CBP Trusted Traveler Program that allows for expedited clearance of pre-approved, low-risk travelers at 52 U.S. airports and 15 foreign preclearance locations throughout Canada, the Caribbean, Ireland and the United Arab Emirates. With the addition of Switzerland, there are now nine (9) foreign countries whose citizens are eligible to enroll in Global Entry.
FAA Proposes $201,250 Civil Penalty Against Automotive Parts and Supplies Company. On January 12, 2017, the FAA announced it had proposed a $201,250 civil penalty against Ohio-based Jegs Automotive Inc. for violations of the U.S. Hazardous Materials Regulations. The proposed penalty stems from an undeclared shipment of three 32-ounce metal cans of Race Gas Fuel Concentrate, a flammable and toxic liquid, that the FAA alleges Jegs Automotive offered to FedEx for shipment by air in March 2016.
DOT Grants Antitrust Immunity for Delta Airlines and Aeromexico Joint Venture, with Conditions. On December 14, 2016, DOT issued a Final Order in the Delta – Aeromexico Antitrust Immunity proceeding, largely finalizing its November 4, 2016, Show Cause Order (SCO) that tentatively granted antitrust immunity for the carriers’ alliance agreements to operate a joint venture. In the SCO, DOT determined approval of the alliance agreements was in the public interest, notwithstanding a substantial reduction in competition at New York’s John F. Kennedy International Airport (JFK) and Mexico City’s Benito Juarez International Airport (MEX) due to slot constraints at those airports that limit new entry. Therefore, DOT conditioned approval of and antitrust immunity for the alliance agreements on slot divestitures at JFK and MEX. DOT found this condition would realize the benefits of an expanded transborder alliance between Delta and Aeromexico, while also allowing for new competition at the two airports. DOT affirmed that decision in the Final Order. As a condition on the approval of antitrust immunity, DOT is requiring Delta and Aeromexico to divest twenty-four (24) slot pairs at MEX and four (4) slot pairs at JFK (down from six (6) as proposed in the SCO). The joint applicants and the Mexico City airport authority had objected to the slot divestiture condition, arguing that there were opportunities for new entrants to be awarded slots at each airport. Based in part on these objections, DOT decided that the slot pairs are to be awarded in two phases via a competitive slot allocation proceeding. The first phase will award fourteen (14) slot pairs at MEX and two (2) at JFK as soon as possible in time for the IATA Northern Summer 2017 scheduling season. The second phase will award the remaining ten (10) slot pairs at MEX and the remaining two (2) slot pairs at JFK only after the eligible carriers applying for the slots have exhausted all efforts to receive slots directly from the airport authorities. DOT indicated that the “phase 2” slot pairs are to be awarded in time for the IATA Northern Summer 2018 scheduling season. In the SCO, DOT decided that eligibility for the receipt of divested slots at JFK and MEX should be limited to U.S. and Mexican low-cost carriers (LCCs) that do not have a significant presence at JFK or MEX. While the slot divestiture procedures and timelines described in the Final Order do not specify that the awards will be limited to LCCs, DOT rejected objections to this eligibility limitation and indicated that it intends to enhance competition in the transborder market by awarding slots to LCCs. In addition to the slot divestiture condition, DOT limited its approval of antitrust immunity to five (5) years, at which time Delta and Aermexico would be required to re-apply and obtain a further grant of antitrust immunity to continue their joint venture. This is in contrast to previous antitrust immunity proceedings wherein the grant of antitrust immunity has been indefinite and immunized carriers have only had to resubmit their alliance agreements for non-public review by DOT. Delta and Aeromexico have seven (7) business days to provide DOT with written notice indicating whether they will accept all the conditions and remedies imposed under the Final Order.
DOT Fines Three U.S. Carriers for Violations of Consumer Protection Regulations. On December 9, 2016, DOT announced that it had entered into consent orders with three U.S. carriers for violations of various aviation consumer protection regulations and statutes. DOT fined Delta Airlines $40,000 for failing to file reports related to tarmac delays experienced by Delta flights between August 2015 and March 2016. Under 49 U.S.C. § 42301(h) U.S. carriers that experience an excessive tarmac delay must file a report concerning the delay with DOT’s Aviation Consumer Protection Division within thirty days of the date of the delay. Excessive tarmac delays, as defined by DOT, are tarmac delays of more than three hours for domestic flights and four hours for international flights. DOT found that for the time period covered by the order, Delta failed to file the required report for five flights. DOT fined Frontier Airlines $60,000 for violations of DOT’s full fare advertising regulation, 14 C.F.R. § 399.84(a). Under that regulation, carriers must advertise the total price to be paid by the consumer for air transportation, inclusive of government taxes and fees. While charges included within the total price, such as the base fare, may be listed separately, such charges cannot be false or misleading or be in the same or larger size font as the total price. DOT found that Frontier violated the full-fare advertising rule in various marketing emails, banner advertisements, and social media advertisements when it listed a base fare of $1 in the same size font as the total price inclusive of taxes and fees. DOT found such advertising to be misleading as well because Frontier placed the base fare in the email subject line, without indicating the total price to be paid. Finally, DOT fined JetBlue Airways $40,000 for violations of DOT’s oversales regulation. DOT found that in December 2015, JetBlue had involuntarily denied boarding to twelve passengers and failed to provide compensation to those passengers in accordance with its customer commitment and DOT’s oversales regulation, 14 C.F.R. part 250.
DOT Issues Proposed Rule Addressing Voice Calls on Aircraft. On December 8, 2016, DOT issued a Notice of Proposed Rulemaking (“NPRM”) which, if finalized as proposed, would require U.S. and foreign airlines operating aircraft with a designed seating capacity of more than 60 seats and ticket agents doing business in the United States (other than small business entities) to disclose to consumers if voice calls using mobile wireless devices are permitted on their flights. The disclosure would cover all charter and scheduled flights to, from and within the United States and would be triggered the first time a covered flight is offered or identified to a consumer, with specific notification requirements for flight itineraries and schedules as well as oral communications with prospective customers. The disclosure would not apply in cases where a carrier does not permit voice calls onboard aircraft. The NPRM follows an advance notice issued by DOT in 2014 soliciting views from the public on whether permitting voice calls on aircraft constitutes an unfair or deceptive practice and/or is inconsistent with U.S. carriers’ statutory duty to provide safe and adequate domestic air transportation and, if so, whether such calls should be banned. DOT has not proposed in the NPRM to ban voice calls at this time, although it seeks further comment on that issue. Rather, DOT is proposing that carrier policies should dictate whether voice calls are permitted and, if so, that consumers be made aware of such policies before the time of ticket purchase. In issuing the NPRM, DOT has relied on its authority to prohibit unfair and deceptive practices, reasoning that permitting onboard voice calls without adequate advance notice is (i) an “unfair” practice causing “harm” to consumers “because of the confined environment and the inability of passengers to avoid the hardship and disruption created by voice calls” and (ii) a deceptive practice because consumers have a reasonable expectation that voice calls will not be permitted on flight in the U.S. and consumers “would be unfairly surprised if they learned for the first time, after purchasing the ticket, that their chosen flight permits voice calls.” Comments on the NPRM are due by February 13, 2017.
DOT Proposes to Deny Approval of Antitrust Immunity for American Airlines and Qantas Airways Expanded Joint Business. On November 18, 2016, DOT issued an Order to Show Cause tentatively denying an application filed by American Airlines and Qantas Airways seeking approval of and antitrust immunity for an amended and restated joint business agreement. American and Qantas had previously obtained approval from DOT in 2013 for a non-immunized joint business agreement, and under their proposed expanded partnership would have jointly planned and priced services, and shared revenues and costs, on routes between the United States and Australia/New Zealand. In tentatively denying the application for an expansion of the partnership, DOT concluded that an immunized alliance would substantially reduce competition in the U.S.—Australia air services market. Noting that Qantas is already the largest carrier by passenger traffic in that market, DOT concluded that removing American as a competitor would diminish competition and consumer choice, without producing sufficient countervailing public benefits. DOT observed that the special characteristics of the U.S.—Australia market render entry by new competitors unlikely, reasoning that American was the only remaining U.S. carrier in a position to enter and expand services in the market in a “competitively significant and timely manner” due to its network size and resources. Subsequent to the issuance of the Order to Show Cause, American and Qantas moved to withdraw their joint application, effectively terminating the proceeding.
DOT Announces New Tarmac Delay Enforcement Policy. On November 22, 2016, DOT announced a new enforcement policy related to lengthy onboard delays experienced by flights departing U.S. airports, in response to a statutory amendment under the FAA Extension, Safety and Security Act of 2016 (the Act), signed by President Obama on July 15, 2016. The Act amends 49 U.S.C. § 42301 (“Emergency Contingency Plans”) to state that in the case of departing flights, a tarmac delay begins when the main aircraft door passengers use to enplane is closed in preparation for departure and ends when the aircraft begins to return to a disembarkation point. Although DOT is not amending the tarmac delay regulation (14 C.F.R. § 259.4) at this time, it did state it will not take enforcement action for departure delays so long as the aircraft begins to return to the gate or other disembarkation point no later than three hours into the delay for domestic flights and four hours into the delay for international flights. The policy applies to all departure tarmac delays experienced by flights since July 15, 2016. The new policy does not apply to tarmac delays at U.S. airports experienced by arriving flights or diverted flights, in which case passengers must be deplaned before three hours for domestic flights and four hours for international flights. Additionally, although 49 U.S.C. § 42301 by its terms only applies to U.S. carriers, DOT is extending this policy to foreign carriers as well.
DOT Announces a Series of Aviation Consumer Protection Initiatives. On October 18, 2016, the Department of Transportation (DOT) announced the release of four aviation consumer protection documents, including: (i) a Final Rule for Enhancing Airline Passenger Protections #3 (EAPP#3), establishing new regulations addressing, among other issues, code-share disclosures provided by air carriers and tickets agents as well the biasing of flight information on electronic airline information systems displaying multiple airlines’ schedule, fare or availability information, an increase in the number of U.S. certificated carriers required to report airline service quality performance data to DOT’s Bureau of Transportation Statistics (U.S. reporting carriers) and an expansion in the scope of reportable flights to include certain U.S. reporting carriers’ regional domestic code-share partners, for publication in DOT’s monthly Air Travel Consumer Report; (ii) a Final Rule modifying how U.S. reporting carriers must submit service quality data on mishandled baggage and establishing new service quality reporting requirements specifically addressing mishandled wheelchairs/assistive scooters; (iii) an Advanced Notice of Proposed Rulemaking soliciting public comments on the refund of checked baggage fees in cases where the airline fails to deliver to bag in a timely manner, as required by the FAA Extension, Safety and Security Act of 2016; and (iv) a Request for Information “exploring industry practices on distribution and display of airline fare, schedule, and availability information.” A number of the initiatives set forth in these documents, involving final agency rules, will have a wide-ranging impact on carrier and ticket agent operations and marketing activities, while other initiatives may also have such an impact depending on what action DOT takes following the submission of additional public comments.
FAA Bans All Samsung Galaxy Note7 Devices from U.S. Flights. On October 14, 2016, the DOT issued an Emergency Restriction/Prohibition Order (the Emergency Order), banning the carriage of Samsung Galaxy Note7 (Note7) devices on flights to, from and within the United States, effective at 12 noon EDT on October 15, 2016. The Emergency Order, taken in response to reports of Note7 lithium ion batteries overheating and catching fire, followed a recall announced by the U.S. Consumer Product Safety Commission (CPSC) on October 13, 2016 covering all Note7 devices. (A more limited Note7 recall previously was announced by the CPSC on September 15, 2016.) Lithium ion batteries contained in electronic equipment are regulated under the U.S. Hazardous Materials Regulations, and the Emergency Order was issued under 49 U.S.C. § 5121(d), which empowers the Secretary of Transportation to issue emergency restrictions or prohibitions on the transport of hazardous materials—without public notice and comment under the Administrative Procedure Act—upon a determination that an unsafe condition constitutes or is causing an imminent hazard, when necessary to abate the imminent hazard. The ban (i) prohibits persons from transporting by air or offering for air transportation a Note7 device, whether on their person, in carry-on baggage, in checked baggage, or as cargo, (ii) requires airlines to alert passengers to the prohibition, including immediately prior to boarding, and to deny boarding to passengers who do not “divest” themselves and their baggage of the device, (iii) requires, in cases where a Note7 is inadvertently brought onto a flight, that the passenger and air carrier flight crew members take immediate remedial steps in-flight to reduce hazards. Persons failing to comply with the Emergency Order are subject to civil penalties of up to $179,933 per violation or, in cases of willful or reckless violations, criminal prosecution, fines and imprisonment of up to five years (or 10 years in the case of release of hazardous material resulting in death or bodily injury to any person).
DOT’s Pipeline and Hazardous Materials Safety Administration (PHMSA) Issues Proposal to Harmonize HMR with International Standards, Including Lithium Battery Requirements. On September 7, 2016, PHMSA published a notice of proposed rulemaking that would amend the U.S. Hazardous Materials Regulations (HMR) to ensure further harmonization with international standards. The proposed amendments would mirror recent changes to the International Maritime Dangerous Goods Code, the International Civil Aviation Organization’s Technical Instructions for the Safe Transport of Dangerous Goods by Air, and the U.N. Model Regulations for the Transport of Dangerous Goods, including incorporating such international standards by reference into the HMR. Proposed changes include updating the Hazardous Materials Table at 49 C.F.R. § 172.101 to further align proper shipping names, hazard classes, packing groups, packing authorizations, packing requirements, and passenger and cargo aircraft quantity limits with the international standards. Specifically, PHMSA is proposing to update the requirements for lithium ion battery shipments, including updating the label and marking requirements for shipments containing small lithium ion batteries and shipments that do not meet the small lithium ion battery exceptions in the HMR. These label and marking requirements would apply to equipment containing lithium ion batteries as well battery shipments. The comment period for the proposed rulemaking closes on November 7, 2016.
DOT Fines Air Canada for Inadequate Disability Responses and Improper Information Concerning Service Animals. On August 26, 2016, DOT announced that it had entered into a consent order with Air Canada for violations of DOT’s regulations concerning accommodations for passengers with disabilities. In an August 2013 on-site compliance audit, DOT learned that Air Canada did not comply with DOT requirements governing responses to written passenger complaints that concern disability-related issues. DOT stated in the consent order that Air Canada consistently failed to adhere to two regulatory requirements when responding to disability complaints: Air Canada (i) did not inform passengers who complained about disability accommodations of their right to pursue DOT enforcement action and (ii) did not specifically admit or deny a violation of the DOT disability regulation. Also, as part of the on-site compliance audit, DOT reviewed Air Canada’s website and personnel training manuals. DOT found that Air Canada stated in these materials that service animals must be harnessed and specifically trained by a professional training institution. These statements are contrary to DOT’s disability regulation. Air Canada had previously applied for a conflict of law waiver request with DOT concerning the harnessing and training of service animals, but DOT denied the request two times. Despite the denials, Air Canada continued to display the wrong information on its website and in its training materials. The consent order entered into with Air Canada fines the carrier $225,000 for the violations.
DOT Fines Four U.S. Carriers for Failure to Provide Accurate Information related to Denied Boarding Compensation and Baggage Liability. On August 26, 2016, DOT announced that it had entered into consent orders with four (4) U.S. carriers (Alaska Airlines, American Airlines, Southwest Airlines and United Airlines) for failure to provide accurate information related to involuntary denied boarding compensation and/or domestic baggage liability limits at the carriers’ U.S. airport stations. DOT stated that the violations were uncovered as part of a series of nationwide airport inspections to determine whether carriers are adhering to the regulatory obligations to provide certain notices to passengers at the airport. Alaska Airlines was assessed a penalty of $40,000 for failing to provide the required denied boarding compensation notice to DOT inspectors upon request and for having outdated information in denied boarding compensation notices and baggage liability notices. American Airlines was assessed a penalty of $45,000 for failing to provide the required denied boarding compensation notice to DOT inspectors upon request and for having outdated information on denied boarding compensation notices and on ticket notices and airport signage concerning baggage liability. Southwest Airlines was assessed a penalty of $40,000 for failing to provide the required denied boarding compensation notice to DOT inspectors upon request at airport stations in San Antonio and Oakland and for having outdated compensation information on baggage liability notices and baggage liability signage at Salt Lake City and Charleston. Finally, United Airlines was fined $35,000 for failing to provide the required denied boarding compensation notice to DOT inspectors upon request at “several” U.S. airports and for having outdated information on denied boarding compensation notices.
DOT Divides Proposed Aviation Consumer Protection Rules into Three Separate Rulemakings. On August 15, 2016, DOT’s Office of Regulation published its monthly report on significant rulemakings (the August 2016 Report), in which it disclosed that it has divided its pending 2014 Notice of Proposed Rulemaking entitled Airline Pricing Transparency and Other Consumer Protection Issues (the 2014 NPRM) into three separate rulemakings to prevent delay in issuing final rules on a variety of topics. In the 2014 NPRM, DOT proposed rules in a variety of areas including: defining “ticket agent” to include “meta-search” sites; requiring carriers and ticket agents to disclose certain ancillary fees at all points of sale; expanding the pool of carriers required to report service quality data to DOT, including enhanced reporting for mainline carriers with domestic codeshare partners; requiring large ticket agents to adopt minimum customer service standards; requiring certain codeshare disclosures; prohibiting undisclosed biasing in the display of carrier fare and schedule information; modifying the regulatory prohibition on post-purchase price increases and addressing “mistaken fares”; requiring ticket agents to disclose which carrier’s tickets the agent sells; and correcting drafting errors from the second final rule on Enhancing Airline Passenger Protections issued in 2011. DOT received over 750 public comments in response to the 2014 NPRM. The August 2016 Report states the following topics from the 2014 NPRM now will be addressed in a final rule entitled Enhancing Airline Passenger Protections #3 (EAPP #3), with a projected publication date of November 15, 2016: expanding the pool of reporting carriers, including enhanced reporting for mainline carriers; requiring certain codeshare disclosures; prohibiting undisclosed display biasing; requiring ticket agents to disclose which carrier’s tickets the agent sells; and correcting drafting errors from the second rule on Enhancing Airline Passenger Protections. The two other rulemakings established by DOT to address the remaining issues under the 2014 NPRM are as follows: Transparency of Airline Ancillary Service Fees (the Transparency Proposal) and Enhancing Airline Passenger Protections IV (EAPP#4). The Transparency Proposal will deal with the disclosure by airlines and ticket agents of certain ancillary fees at all points of sale, as identified in the 2014 NPRM. EAPP#4 will address all remaining topics from the 2014 NPRM not covered under EAPP#3 or the Transparency Proposal. DOT has not yet published projected publication dates for the Transparency Proposal or EAPP#4.
Indonesia Upgraded to Category 1 Status Under FAA's IASA Program. On August 15, 2016, the FAA upgraded Indonesia to Category 1 Status under the International Aviation Safety Assessment (IASA) rating system, finding that Indonesia complies with International Civil Aviation Organization (ICAO) safety standards based on an assessment conducted by the FAA in March 2016. Prior to the upgrade, and since April 2007, Indonesia was assigned a Category 2 status, which prevented Indonesian carriers from initiating new service to the United States. With the upgraded status to Category 1, carriers of Indonesia will be permitted to establish new air services to the United States, subject to requisite FAA and DOT approval, and display the code of U.S. carriers under code sharing arrangements.
Transportation Agencies Increase Maximum Civil Penalty Amounts. On August 10, 2016, the Department of Transportation published an Interim Final Rule (IFR) increasing the maximum civil penalty for violations of aviation economic statutes and rules from $27,500 per violation, per day, to $32,140 per violation, per day. The effective date of the new penalty amount is August 10, 2016, the date of publication of the IFR in the Federal Register. This action was mandated by the Federal Civil Penalties Inflation Adjustment Act Improvements Act (the Act) of 2015. The Act required all federal agencies to issue a “catch up” adjustment for maximum civil penalties and sets the method by which federal agencies determine the inflation adjustment for civil penalty amounts. The Act also requires federal agencies to make annual adjustments based on the method outlined in the Act. This action follows similar actions by other federal agencies regulating transportation providers. Effective August 1, 2016, the maximum civil penalty for violations of the Transportation Security Administration’s statutes and regulations increased from $27,500 to $32,140. On that same day, maximum civil penalties for violations of various Customs and Border Protection (CBP) statutes and regulations also increased. Most CBP maximum fines, for example, for violations related to transporting aliens without proper documentation, increased from $4,300 to $5,345. Maximum civil penalties for noncompliance with landing requirements and for violations of removal orders increased to $3,563 and $3,005, respectively. Effective August 5, 2016, the maximum civil penalty amounts for violations of Federal Aviation Administration statutes and regulations increased as well. More specifically, penalties for violations of the hazardous materials transportation law increased from a maximum of $75,000 to a maximum of $77,144, and for violations of the hazardous materials transportation law resulting in death, serious illness, severe injury, or substantial property destruction, the maximum civil penalty increased from $175,000 to $179,933. For other aviation-related statutes the maximum civil penalty increased from $25,000 to $32,140. The fines listed above are for regulated entities who are not classified as an individual or a small business concern, as defined by the Small Business Act.
GAO Report Finds “Fuel Fraud” Law Has Diverted $1-2 Billion from Aviation Trust Fund. A Government Accountability Office (GAO) report dated August 8, 2016 has found that a decade-old law requiring non-commercial aviation fuel to be taxed at the same rate as highway diesel fuel, enacted as part of an effort to discourage truck drivers from buying jet fuel that was taxed at lower rates, has in turn had the incidental effect of significantly diverting funding from the Airport and Airways Trust Fund (the Aviation Trust Fund). The Aviation Trust Fund, which is financed by fuel taxes and excise taxes on the aviation industry, helps pay for airport and airway investments, including upgrades to the air traffic control system. More specifically, the law requires that taxes on non-commercial aviation fuel go into the Highway Trust Fund, rather than the Aviation Trust Fund, unless fuel vendors satisfy the burden of proving that the fuel was actually used for aviation. According to GAO, over the last 10 years between $1 billion and $2 billion – more than half of tax receipts for sales of non-commercial jet fuel – have not been deposited in the Aviation Trust Fund. Apparently, this is due to the fuel vendors not applying for a credit for the sale of non-commercial aviation jet fuel, such credit being the trigger for the transfer of funds from the Highway Trust Fund to the Aviation Trust Fund.
Petitioners Take Warning: Federal Appeals Court Dismisses Challenge to DOT Final Rule After Suit Filed in Wrong Forum. 49 U.S.C. § 46110(a), a “direct review” statute, vests exclusive jurisdiction in the federal courts of appeal to review any “order” issued by the Department of Transportation. While seemingly clear on its face, this statute recently triggered some not unreasonable confusion as to whether a final DOT rulemaking constitutes an “order.” In Nat’l Federation of the Blind v. D.O.T., 78 F.Supp.3d 307 (D.D.C. 2015), the National Federation of the Blind (NFB) challenged in federal district court a final DOT rule mandating phased-in accessibility of automated kiosks at U.S. airports for persons with visual impairments. Reasoning that the final rule was an “order” under § 46110(a), the district court found that it lacked jurisdiction and transferred the case to the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit). The NFB challenged that jurisdictional decision, with the D.C. Circuit affirming the district court on June 28, 2016. See National Federation of the Blind v. D.O.T., -- F.3d -- (D.C. Cir. 2016). The D.C. Circuit, while acknowledging that it had previously relied on the definition of “order” in the Administrative Procedure Act (APA) (under which plaintiffs may bring suit in federal district courts) to interpret other aspects of “order” as used in 49 U.S.C. § 46110(a), declined to follow the APA’s definition of “order” as excluding a final agency rule, instead siding with cases interpreting other direct review statutes to the contrary, i.e., as including a final agency rule. Thus, the D.C. Circuit could “easily conclude” that the federal courts of appeal had exclusive judicial review over the final DOT rule at issue. See id. at *3. Furthermore, even though the case had been transferred from district court to an appeals court, the D.C. Circuit held that, under the 60 day review window imposed by 49 U.S.C. § 46110(a), the appeal was untimely because NFB had filed suit 71 days after DOT issued its final rule – 11 days too late. The D.C. Circuit further disallowed NFB to fall back on the good cause exception to the 60 day window, based on NFB’s initial belief that jurisdiction was proper in the federal district court. According to the D.C. Circuit: “If any doubt as to the proper forum exists, careful counsel should file suit in both the court of appeals and the district court, or . . . bring suit only in the court of appeals.” Id. at *5.
DOT Dismisses Discrimination Allegations Against Qatar Airways. On June 3, 2016, DOT issued an order dismissing a complaint and request for the commencement of enforcement proceedings that Eldad Gatt had brought against Qatar Airways. Gatt alleged that Qatar Airways did not allow Israeli passengers to travel, or otherwise restricted such passengers from traveling, on flights operated by the carrier to/from the U.S., in contravention of statutes prohibiting discrimination and unfair practices. Qatar Airways responded that the carrier had no policy prohibiting travel by Israeli passport holders and in fact routinely transported such passengers. DOT dismissed the complaint on the basis that Gatt had not suffered any harm and instead relied on assumptions and unsupported conclusions, as well as the evidence presented by Qatar Airways that his allegations were in fact wrong.
DOT Fines VivaAerobus for U.S. Web Site Practices. On May 5, 2016, the DOT entered into a consent order with VivaAerobus, a foreign air carrier of Mexico, assessing civil penalties of $150,000 for violations of DOT’s aviation consumer protection regulations, including: the full-fare advertising rule, 14 C.F.R. § 399.84(a); the prohibition on opt-out features, 14 C.F.R. § 399.84(c); and DOT’s rule requiring prominent disclosure of optional fees on carrier Web sites, 14 C.F.R. § 399.85(d). The violations were uncovered by DOT during its investigation of VivaAerobus’s U.S. Web site in response to a consumer complaint. More specifically, DOT found that VivaAerobus did not include a mandatory ticket “issuance fee” in initial prices displayed in response to online flight itinerary searches, thereby violating 14 C.F.R. § 399.84(a), which requires that such prices be inclusive of all mandatory taxes, fees, and carrier-imposed charges payable by the consumer to the seller. Additionally, in order to complete a booking on the VivaAerobus U.S. website, consumers had to select a boarding zone, only one of which did not involve an extra charge; when that zone was sold out, consumers were required to select, and pay the extra charge for, another boarding zone. DOT found that the exclusion of the mandatory boarding zone charge from the initially advertised fare constituted a separate violation of 14 C.F.R. § 399.84(a). DOT further found that VivaAerobus added fees for extra, optional services to the total price for a flight after consumers had selected a flight at the advertised price, effectively requiring consumers to “opt out” of the additional service in violation of 14 C.F.R. § 399.84(c), which prohibits sellers from automatically adding optional services if the consumer takes no other action. Finally, DOT separately found that VivaAerobus’s U.S. Web site failed to comply with § 399.85(d), which requires carriers to list all optional services and associated fees prominently on such Web sites.
FAA Policy Change Would Simplify Funding of Airport Rail Projects with Passenger Facility Charges: On May 3, 2016, the FAA issued a notice proposing to revise the agency's policies on the use of Passenger Facility Charges (PFC) for airport rail projects. Currently, the FAA allows PFCs to be used to support rail projects only if they are located on airport property and are for the exclusive use of airport customers and employees. The FAA tentatively has concluded that these criteria are too stringent, and has proposed to modify its policies to allow rail projects under certain circumstances to be funded with PFCs even if they are not solely for airport use, such as if an airport would be a through line and the airport station is not the terminus. Comments on the proposal are due by June 2, 2016.
DOT Establishes Negotiated Rulemaking Committee to Address Three Disability-Related Issues. On April 7, 2016, DOT issued a notice indicating its intent to establish a 25-member Negotiated Rulemaking Committee (the ACCESS Committee) to address three disability-related issues: (i) accessibility of inflight entertainment and inflight communication; (ii) service animal issues, including possibly changing the definition of “service animal”; and, (iii) accessibility of lavatories on single-aisle aircraft. In that Notice, DOT stated it would address three other disability-related issues (carrier-supplied inflight medical oxygen, seating accommodation issues, and reporting of assistance requests) through other regulatory actions. After providing an opportunity for public comment, DOT issued a Notice on April 29, 2016, naming the members of the ACCESS Committee (and increasing the size from 25 members as initially proposed to 27 members) and notifying the public that the first meeting of the ACCESS Committee will be May 17-18, 2016, in Washington, D.C. The 27-member committee includes nine representatives from the airline industry. The ACCESS Committee’s first meeting likely will focus on setting the rules, procedures, and process for the committee. The ACCESS Committee is expected to meet for two days every month from May 2016 through October 2016. The meetings are open to the public. If the ACCESS Committee reaches consensus on any of the disability-related issues it is charged with addressing, the committee will issue a report to DOT with proposed rule text.
DOT Tentatively Issues Foreign Air Carrier Permit to Norwegian Air International. On April 15, 2016, DOT issued a show cause order tentatively finding that Norwegian Air International (NAI) should be issued a foreign air carrier permit. NAI, an air carrier of Ireland and a subsidiary of a Norwegian carrier, Norwegian Air Shuttle, filed an application for a foreign air carrier permit in December 2013. The application was opposed by several air carriers and air carrier labor groups who argued that NAI’s business model to hire pilots and cabin crew from a third-party contractor in Singapore was contrary to Article 17 bis of the U.S.-E.U. Air Transport Agreement, which sates, “The Parties recognise 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.” DOT, in issuing its tentative determination, concluded that Article 17 bis did not provide a standalone basis for denying a foreign air carrier permit. The Office of Legal Counsel and the U.S. Department of State supported DOT’s position regarding Article 17 bis. DOT’s show cause order outlines that NAI meets DOT’s normal standards of operational and financial fitness as applied to carriers under the U.S.-E.U. Air Transport Agreement. Objections to the show cause order were due on May 6, 2016, but DOT, upon motion from labor parties, extended the date for objections to May 16, 2016.
DOT Issues Consent Orders Against Three Large Foreign Airlines for Handling of Disability Complaint Responses. On April 1, 2016, the DOT announced that it had entered into consent orders with Air France, British Airways and Lufthansa, for alleged violations of DOT's disability regulations governing how carriers must respond to disability-related complaints from passengers. Those regulations require, among other things, that carriers provide a "dispositive" response within 30 days' receipt of the complaint from the passenger, with the carrier's response (i) either admitting or denying a violation of DOT's disability accommodation requirements, (ii) summarizing the facts and reasons relied upon by the carrier to reach its conclusion, and (iii) advising the complainant of his or her right to pursue DOT enforcement action. The consent orders entered into with Air France and Lufthansa each involved the assessment of $200,000 in civil penalties, while the consent order entered into with British Airways involved the assessment of $150,000 in civil penalties. The alleged violations were identified during on-site regulatory compliance inspections conducted by DOT at the carriers' North American offices. DOT also visited the carriers' main foreign hub airports in the course of its investigations.
FAA Moves to Eliminate Slots at Newark Liberty International Airport; United Abandons Plans to Acquire Slots from Delta. On April 1, 2016, the FAA announced that Newark Liberty International Airport (EWR) would be re-designated from a Level 3 slot-controlled airport to a Level 2 schedule-facilitated airport under IATA’s Worldwide Slot Guidelines, effective for the Winter 2016 scheduling season beginning October 30, 2016. As a consequence, a 2008 FAA order temporarily limiting scheduled operations at EWR through a system of FAA-issued arrival and departure authorizations (i.e., slots) will expire on October 29, 2016. The FAA plans to publish a notice later in April 2016 (i) announcing a EWR schedule submission deadline for the Winter 2016 scheduling season and (ii) declaring EWR’s runway capacity, with the FAA either approving carrier requests or working with carriers to achieve schedule adjustments as needed to avoid exceeding the declared runway capacity. Shortly after the FAA's re-designation of EWR, the Department of Justice (DOJ) announced that United Airlines had abandoned its planned acquisition of 24 daily EWR slots from Delta Air Lines. The DOJ had challenged the slot acquisition in a complaint filed in federal court on November 10, 2015, alleging that the transaction would violate U.S. antitrust law by increasing United’s dominant share of EWR slots from 73 percent to 75 percent, thereby subjecting EWR passengers “to higher fares and fewer choices.”
“As Is Where Is” Attempted Warranty Disclaimer Unavailing in Aircraft Transaction Dispute. On March 28, 2016, the U.S. Court of Appeals for the Fifth Circuit (5th Circuit) ruled on a dispute involving the sale of a helicopter, rejecting a purchaser’s counterclaim for breach of contract. Perry J. Luig v. North Bay Enterprises, 817 F.3d. 901 (5th Cir. 2016). Not at issue in that appeal, but addressed by the federal district court below, was the seller’s request for a declaratory judgment. More specifically, in 2012 the seller, Perry J. Luig, contracted to sell a helicopter to the purchaser, North Bay Enterprises. As described by the federal district court, the entire purchase agreement was a mere two pages long, but included two common terms: (i) that the aircraft would be delivered “with all systems in an airworthy condition and a current Certificate of Airworthiness,” and (ii) that “Purchaser agrees to accept the Aircraft in an ‘as is where is’ condition. (NO WARRANTY).” Perry J. Luig v. North Bay Enterprises, 55 F. Supp. 3d 942 (N.D. Tex. 2014). As it turned out, even though the purchaser conducted an inspection and the seller corrected the discrepancies identified therein, at closing the helicopter remained in a non-airworthy condition – the FAA-issued airworthiness certificate was invalid and the helicopter’s records did not demonstrate compliance with all applicable FAA-issued airworthiness directives. After the closing, litigation ensured and the seller, relying on the “as is where is” and “NO WARRANTY” clauses, sought a declaratory judgment from the federal district court that: (i) all warranties had been waived and (ii) he had thus complied with the terms of the purchase agreement. The federal district court ruled that while the “as is” provisions waived any implied warranties (of merchantability or fitness for a particular purpose) the clause was not sufficient, in the court’s eyes, to disclaim any express warranties. While most aviation lawyers take great effort to ensure that any description of the condition of a used aircraft is merely a condition to closing, or a standard by which a condition may be considered a discrepancy, here, the federal district court construed the assurances in the purchase agreement that the aircraft would be delivered “with all systems in an airworthy condition and [with] a current Certificate of Airworthiness” to constitute an express warranty, which was not disclaimed by the “as is where is” or “NO WARRANTY” clauses. The court observed that, under Texas law, “mere use of the two words ‘as is’ has never been held to bar an action on an express warranty,” and attempted to harmonize the terms of the contract by concluding that “the specific ‘airworthiness’ warranty term must control over the more general disclaimer of warranties written in the same contract.” On appeal, the federal appeals court reversed the federal court on a separate issue relating to North Bay’s counterclaim for breach of contract; as noted above, however, the trial court’s declaratory judgment decision was not at issue. The federal district court’s opinion presents several lessons for those engaged in used aircraft transactions. First, be thoughtful about the provisions of your contracts and have them vetted by legal counsel that are expert in aircraft transactions. Do not rely on standard “boilerplate” provisions without thoroughly considering how a court may interpret them. A properly drafted purchase agreement would have prevented this case from ever arising, the holding of which, while beneficial for the buyer at hand, establishes a thorny legal precedent which is, in fact, contrary to the intent of the vast majority of used aircraft transactions. And second, as a buyer, the time to ensure that the aircraft is airworthy and suitable for your operation is DURING the inspection. Both of the airworthiness issues with the helicopter should have been easily discovered and remedied during the inspection, obviating any need to engage with trial lawyers and the court system.
FAA Issues Seven Notices of Proposed Civil Penalty Against DHL. On February 11, 2016, the FAA announced seven proposed civil penalties against DHL, amounting to $455,000 in the aggregate, for alleged violations of the U.S. Hazardous Materials Regulations (HMR). In each case, the FAA alleged that DHL accepted shipments that were not prepared in accordance with the HMR and failed to ensure DHL employees and agents had received hazardous materials training as required under the HMR.
FAA Seeks Civil Penalties Against FedEx for Alleged Faulty Aircraft Repairs. On January 7, 2016, the FAA announced it would seek $417,500 in civil penalties from FedEx for allegedly (i) failing to rebalance a horizontal stabilizer tab control surface on a Boeing 727, rendering the aircraft unairworthy, and (ii) operating the impacted aircraft on at least 133 flights in an unairworthy condition.
FAA and Boeing Enter into Settlement Agreement. On December 22, 2015, the DOT and FAA announced a settlement with Boeing Commercial Airplanes (BCA) entailing commitments by BCA to improve certification processes intended to enhance the continued airworthiness and continued compliance of BCA products, payment by BCA of $12 million and the resolution of two pending FAA enforcement cases and 11 other investigations opened by the FAA. The certification process improvements agreed to between the FAA and BCA cover the following matters: improved management oversight and accountability; internal auditing; enhanced supplier management; more rigorous metrics in the quality and timeliness of BCA's written submissions to the FAA; product specification simplification; first-article verification improvements to ensure conformance to type design (addressing assembly installations impacted by process or design changes); improved accuracy for stampings and other verification records; the development and implementation of corrective actions; and quarterly and annual reports by BCA to the FAA on regulatory compliance activity effectiveness and internal audits. The performance period for the commitments agreed to by BCA will run at least five years, during which time BCA will be subject to as much as $24 million in additional penalties if it fails to implement its obligations under the settlement.
Thailand Downgraded to Category 2 Status Under FAA's IASA Program. On December 1, 2015, the FAA downgraded Thailand to Category 2 Status under the International Aviation Safety Assessment (IASA) rating system, finding that Thailand does not comply with International Civil Aviation Organization (ICAO) safety standards based on an assessment conducted by the FAA in July 2015. So long as Thailand remains in Category 2 status, carriers of Thailand will not be permitted to establish new air services to the United States (although they can continue operating their existing U.S. services). Prior to the downgrade, Thailand had been assigned a Category 1 Status since 1997.
DOT Clarifies Policy on Baggage Liability. On November 25, 2015, DOT issued a notice reminding carriers that they are required to compensate passengers for damage to baggage, apart from fair wear and tear, under the regulations applicable to domestic transportation (14 C.F.R. part 254), including damage to specific parts such as wheels, straps, zippers, and handles. The agency also suggested that the same was true for baggage damaged on international flights for which the Montreal Convention liability regime is applicable. Additionally, DOT reminded carriers that irrespective of liability they are obligated to accept and investigate all claims of mishandled baggage, pursuant to the general prohibition on unfair and deceptive practices contained in 49 U.S.C. § 41712, and advised that carriers should ensure that their practices are compliant by January 9, 2016.
FAA Seeks Civil Penalties Against Detroit's Wayne County Airport Authority. On November 18, 2015, the FAA announced a proposed $200,000 civil penalty against Wayne County Airport Authority (WCAA), the operator of Detroit-Wayne County International Airport (DTW), for an alleged failure to follow its FAA-required snow and ice control plan (SICP) during a November 2014 storm. The proposed penalty follows a warning letter issued by the FAA in May 2014 based on WCAA's non-compliance with its SICP during a February 2014 storm.
IRS Announces 2016 Air Transportation Tax Adjustments. Certain U.S. taxes applicable to the sale of passenger air transportation are adjusted for inflation on an annual basis. On November 2, 2015, the Internal Revenue Service (IRS) announced the following adjustments which will take effect for sales made on or after January 1, 2016: (i) arrival and departure taxes for international flights will be $17.80 instead of $17.70, the rate for 2015; (ii) for domestic U.S. travel, the segment charge will be $4.00, unchanged from 2015; and (iii) for Alaska/Hawaii segments (to which a modified version of the international tax applies), the tax will be $8.90, unchanged from 2015.
APHIS Adjusts Commercial Air Passenger and Commercial Aircraft User Fees. On October 29, 2015, the U.S. Department of Agriculture’s Animal and Plant Health Inspection Service (APHIS) published a final rule that, among other things, adjusted fees charged for certain agricultural quarantine and inspection (AQI) services, including the international air passenger user fee (which covers inspection costs for passenger baggage and the oversight of regulated garbage generated on arriving international aircraft) and the commercial aircraft user fee (which pays for the costs of inspecting aircraft and cargo and monitoring aircraft disinfection, where required). More specifically, the passenger AQI user fee was decreased from $5.00 to $3.96 per arriving passenger and the aircraft AQI user fee was increased from $70.75 to $225.00 per arriving aircraft. These AQI user fee adjustments are effective December 28, 2015.
DOT and FAA Plan to Require Registration for Hobbyist/Recreational Drones. On October 19, 2015, the DOT and FAA announced the formation of a task force, comprised of between 25 and 30 representatives from federal agencies, the unmanned aircraft system (UAS) and manned aircraft industries and other UAS stakeholders, to develop recommendations for a registration process for hobbyist and recreational UAS. The task force has been directed by the Secretary of Transportation to deliver its recommendations by November 20, 2015. DOT and FAA have indicated that they plan to issue a final UAS registration rule before Christmas of 2015. The task force will reportedly examine, among other things, whether (i) certain UAS flown for hobby or recreational purposes should be exempted from any such final registration requirement due to their low safety risk, and (ii) the current registration process for commercial UAS operators that hold exemptions issued under Section 333 of the FAA Modernization and Reform Act of 2012 (pursuant to which the UAS must be registered in accordance with 14 C.F.R. part 47) should be streamlined to render that process “less burdensome.” The task force necessarily will need to consider whether, and to what extent, a registration grace period should be established to allow operators of covered UAS flown for hobby or recreational purposes sufficient time to comply with the new requirements. Importantly, the DOT and FAA have emphasized that any final UAS registration requirement is independent of the FAA’s pending rulemaking project for the safe integration of small commercial UAS into the national airspace system, for which a proposed rule was issued in February of 2015 and for which a final rule is expected to be published in the late Spring of 2016. A video of the DOT/FAA press conference announcing the formation of the task force and contemplated registration requirement is available here.
FAA Warns U.S. Air Carriers on Lithium Batteries in Baggage. In a Safety Alert for Operators (SAFO) dated October 8, 2015, the FAA emphasized to U.S. air carriers restrictions under the U.S. Hazardous Materials Regulations (HMR) pertaining to the carriage of spare lithium batteries in carry-on and checked baggage. These restrictions, among other things, prohibit such batteries from being included in checked baggage (including baggage checked at the gate). Along these lines, the SAFO strongly recommends that U.S. air carriers: (i) inform passengers, at the time of ticket purchase and during the check-in process, of the prohibition and refer passengers to the FAA's Pack Safe Web site (http://www.faa.gov/Go/Packsafe) for additional information; (ii) verbally advise crew members and passengers, prior to accepting any "gate checked" baggage, to remove all spare lithium batteries from such baggage; (iii) evaluate carrier policies and training programs with respect to the acceptance and carriage of lithium batteries, personal and medical electronic devices, and mobility aids; and (iv) ensure carrier operational personnel are aware of their responsibility to promptly report to DOT the occurrence of certain dangerous incidents involving batteries or battery-powered equipment, in accordance with HMR Sections 171.15 and 171.16. The SAFO also urges U.S. air carriers to ensure their personnel understand the HMR's specific requirements applicable to spare lithium batteries in carry-on baggage, as outlined in HMR Section 175.10(a)(18).
FAA Proposes Record Civil Penalty Against Drone Operator. On October 6, 2015, the FAA announced that it was seeking $1.9 million in civil penalties from Chicago-based SkyPan International, Inc. for 65 unauthorized commercial drone flights involving aerial photography, including 43 of which were conducted in highly restricted Class B New York airspace. Currently, commercial unmanned aircraft system (UAS)/drone operations in the National Airspace System require the prior grant of an FAA exemption (issued under Section 333 of the FAA Modernization and Reform Act) and associated certificate of waiver or authorization (COA), which are subject to several conditions, including a prohibition on operations in Class B airspace, which is in place above major urban areas and has the highest volume of manned aircraft operations in the country. The proposed penalty is the largest sought by the FAA thus far against a UAS operator.
FAA Final Rule; Seat Dimension Disclosures (Child Restraint Systems). On September 30, 2015, the FAA published a final rule requiring the disclosure by U.S. flag, domestic and supplemental Part 121 air carriers of seat width information to allow passengers to determine whether a particular child safety seat/child restraint system can be accommodated on the carrier’s aircraft. Under the FAA final rule, such carriers must disclose on their Web sites “the width of the narrowest and widest passenger seats in each class of service for each airplane make, model and series operated by [the] carrier in passenger-carrying operations.” Width is defined as “the distance between the inside of the armrests for that seat.” The FAA has set a compliance deadline of February 29, 2016 for the positing of this information on carrier Web sites. Concurrent with the final rule, the FAA issued an updated version of Advisory Circular 120-87, “Use of Child Restraint Systems on Aircraft,” to serve as a resource for carriers in connection with their standard operating procedures and training programs on the use of child restraint systems as well as the new Web site disclosure requirement.
DOT Alleges Discrimination by Kuwait Airways. On September 30, 2015, the DOT sent a letter to a Kuwait Airways, notifying the airline that its practice of refusing transportation to Israeli passport holders on flights operated by Kuwait Airways between the U.S. and the U.K. (as part of a continuing service to/from Kuwait) violates 49 U.S.C. § 41310, which prohibits "unreasonable discrimination." The immediate effects of the decision may be limited, because it was premised on a fifth-freedom flight and not an itinerary to or via the carrier's homeland or a country which as a matter of law would not admit the passenger. Nevertheless, DOT decisions related to discrimination under Section 41310 are rare, and the letter emphasizes that a foreign carrier must comply with U.S. law, even if it is potentially subject to sanctions under its homeland law.
DOT Consumer Committee Issues Recommendations. The FAA Modernization and Reform Act of 2012 directed DOT to establish an Advisory Committee for Aviation Consumer Protection (ACACP). On September 1, 2015, the committee held its ninth meeting, and issued a set of recommendations based on issues considered at its three prior meetings in 2014-15. Notably, the committee recommended that DOT leave it to airlines to decide whether to allow cell phone calls in flight, rather than setting a national standard, as well as that DOT require reasonable notice of changes to airline frequent flyer loyalty programs. The committee also recommended that the FAA conduct aircraft evacuation tests which reflect current aircraft seat sizes and spacing, and that the FTC require hotels to include mandatory resort fees in their advertised room rates. A recording of the September 1 meeting is available here.
DOT Publishes New Airport Disability Accommodation Requirements. On August 5, 2015, DOT published a final rule in Federal Register amending its regulations at 49 CFR part 27, which prohibit discrimination on the basis of disability in programs or activates receiving federal financial assistance. The final rule is the result of a rulemaking initiative begun in 2011 to establish disability accommodation requirements applicable to airports similar to those applicable to U.S. and foreign air carriers. The final rule requires airports to: (i) coordinate with U.S. and foreign air carriers to establish service animal relief areas in each terminal – usually, in the sterile area of the terminal; (ii) coordinate with U.S. and foreign air carriers to provide high-contrast captioning on audio-visual displays in ticketing, gate, lounge, and other common areas; and (iii) coordinate with foreign air carriers to provide aircraft boarding lifts (such airport coordination previously was required with respect to U.S. air carriers only).