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WASHINGTON AVIATION SUMMARY November 2018 EDITION

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WASHINGTON AVIATION SUMMARY November 2018 EDITION WASHINGTON AVIATION SUMMARY November 2018 EDITION CONTENTS I. REGULATORY NEWS .............................................................................................. 1 II. AIRPORTS ................................................................................................................ 4 III. SECURITY AND DATA PRIVACY ............................................................................ 7 IV. E-COMMERCE AND TECHNOLOGY ....................................................................... 9 V. ENERGY AND ENVIRONMENT .............................................................................. 11 VI. U.S. CONGRESS .................................................................................................... 13 VII. BILATERAL AND STATE DEPARTMENT NEWS ................................................... 14 VIII. EUROPE/AFRICA ................................................................................................... 15 IX. ASIA/PACIFIC/MIDDLE EAST ................................................................................ 18 X. AMERICAS ............................................................................................................. 20 For further information, including documents referenced, contact: Joanne W. Young Kirstein & Young PLLC 1750 K Street NW Suite 200 Washington, D.C. 20006 Telephone: (202) 331-3348 Fax: (202) 331-3933 Email: [email protected] http://www.yklaw.com The Kirstein & Young law firm specializes in representing U.S. and foreign airlines, airports, leasing companies, financial institutions and aviation-related companies before U.S. Government agencies, Congress, the courts and in commercial and financing matters. ©2018 Kirstein & Young PLLC. Washington Aviation Summary I. REGULATORY NEWS 1. Long-Term FAA Reauthorization Act Signed into Law. The FAA Reauthorization Act of 2018 was signed into law, providing up to $96.7 billion through 2023, the longest funding period for Federal Aviation Administration programs since the 1982 reauthorization bill. The bipartisan bill also reauthorizes the National Transportation Safety Board and is the first ever reauthorization of the Transportation Security Administration. FAA has operated under 45 mini-appropriations cycles, some lasting only a few days; 28 authorization cycles; sequestration; and two government shutdowns,” said Acting Administrator Daniel Elwell. And while H.R. 302 “gives us the authority to exist the next five years, it doesn’t give us the money to keep the lights on.” Elwell said he is “in a rob-Peter-to-pay-Paul scenario, a never-ending loop in which the vagaries of the political winds hamstring our chances of planning with certainty.” A sense of urgency is fueled by the need to find a path for new entrants to be safely integrated into the National Airspace System— commercial spacecraft and drones “are here, in no uncertain terms, to stay.” 2. Airline Deregulation At 40. To mark the anniversary of the Airline Deregulation Act of 1978, the National Taxpayers Union (NTU) issued a report applauding “a policy success story.” With government’s role greatly diminished, said NTU, “and fares more than 40% lower than they were at the outset of deregulation, it is no surprise that nearly 90% of Americans report having flown in their lifetimes.” Airlines for America said the law “opened the doors to innovation, competition and consumer choice for the traveling and shipping public,” adding that “in real terms average domestic airfare was $349 in the second quarter of 2018—the lowest second quarter on record.” But former American Airlines CEO Bob Crandall, who opposed deregulation, believes rules are needed to moderate industry behavior. In recent remarks, the industry icon bemoaned seats so tight you can't move your arms and legs, among other indignities, and advised industry executives to pay attention to customers. 3. IATA: Passenger Load Factor Hits 28-Year High in August. Passenger load factor reached a 28-year high in August, reports the International Air Transport Association (IATA), indicating “that airlines were ‘maximizing’ their assets despite difficulties arising from an increase in costs including fuel prices.” Demand, measured in total revenue passenger kilometers, grew by 6.4% year-on-year, while capacity, measured in available seat kilometers, increased by 5.5%. Load factor climbed by 0.7% to 85.3%, a Kirstein & Young PLLC / Attorneys at Law November 2018 — Page 1 Washington Aviation Summary figure not achieved since at least 1990. International passenger demand rose 5.6%, with an increase in all regions, led by Asia-Pacific; capacity climbed by 5.1%, with load factor up by 0.4% to 85.0%. Domestic travel demand rose by 7.7%, with capacity up 6.2% and load factor improving 1.2% to 85.7%. India and China had the best domestic results, due to rising living standards and large increases in number of flight choices. In China, domestic traffic increased by 14.9%, and Indian airlines achieved a record 48th consecutive month of double-digit growth as demand soared by 22.6%. 4. IATA Forecasts 8.2 Billion Air Travelers in 2037. Present trends in air transport suggest passenger numbers could double to 8.2 billion in 2037, said IATA, but growth could be curtailed if governments implement protectionist measures. IATA’s 20-Year Air Passenger Forecast shows an increasing shift eastward. Routes to, from and within Asia-Pacific will add 2.35 billion annual passengers by 2037, to total 3.9 billion, a compound annual growth rate (CAGR) of 4.8%. China will displace the United States as the world’s largest aviation market in mid-2020s; India will take third place, surpassing the UK in 2024; Indonesia will rank fourth by 2030; and Thailand will enter the top 10 markets in 2030. By 2037, passenger numbers will be 1.4 billion in North America (CAGR 2.4%); 1.9 billion in Europe (2%); 731 million in Latin American (3.6%); 501 million in the Middle East (4.4%); and 334 million in Africa (4.6%). 5. NTSB Recommends Extended Duration CVRs. New National Transportation Safety Board (NTSB) recommendations urge FAA to require cockpit voice recorders (CVRs) with a minimum 25-hour recording capability on newly manufactured airplanes required to have a CVR, and to require retrofit, by January 1, 2024, of CVRs on airplanes required to carry both a CVR and a flight data recorder with a CVR. The current standard recording duration is two hours, and NTSB said recent safety investigations have been hampered because relevant portions of the recordings were overwritten. The recommendations exceed ICAO’s standard, which applies only to airplanes engaged in commercial transport that weigh more than 27,000 kg, “but the risk of lost CVR data is equal in accidents and incidents involving airplanes with a maximum takeoff weight under 27,000 kg, which include many regional airplane models,” said NTSB. 6. Southwest Awarded Tampa–Havana Saturday-Only Service. The Department of Transportation (DOT) finalized its allocation of one weekly Havana frequency to Southwest for Saturday-only service from Tampa, effective immediately. American requested route flexibility to move its daily Charlotte–Havana flight to Miami, citing average load factor of under 55% for Kirstein & Young PLLC / Attorneys at Law November 2018 — Page 2 Washington Aviation Summary first half 2018. American asked DOT to relax rules governing allocation of U.S.–Cuba traffic rights, since “new restrictions on individual people-to-people travel, which became effective on November 9, 2017, reduced demand by non-Cuban-American travelers and caused U.S.–Cuba traffic at many gateways to drop significantly.” Southwest and JetBlue oppose American’s motion stating if American no longer wishes to serve Charlotte, it should return the frequencies to DOT for reallocation. 7. Airlines Fined for Rules Violations. FAA proposed a $474,000 civil penalty against Frontier Airlines, for allegedly operating aircraft that lacked required medical supplies on hundreds of flights in June and July 2017. DOT fined Allegiant $225,000 for violating tarmac delay rules in 2016 and 2017. 8. DOT Air Travel Consumer Report for August. Based on data filed by reporting carriers. Aug. July 2017 2016 2015 2014 2013 ’18 / ’17 ‘18 On-time arrivals % 75.6 / 77.1 75.9 80.2 81.4 79.9 76.2 78.34 Cancellations % 1.9 / 2.2 1.7 1.5 1.2 1.5 2.2 1.51 Mishandled baggage* 3.08 / 2.45 3.11 2.46 2.70 3.13 3.61 3.22 Consumer complaints: Airline service 1,725 / 1,908 1,655 18,148 17,908 20,175 15,539 13,176 Disability-related 90 / 99 83 851 865 944 784 683 Discrimination** 4 / 11 14 98 95 65 68 79 Note: In August, airlines reported 42 tarmac delays of more than three hours on domestic flights, and three of more than four hours on international flights. * Reports per 1,000 passengers. **I.e., race, religion, national origin or sex. Kirstein & Young PLLC / Attorneys at Law November 2018 — Page 3 Washington Aviation Summary II. AIRPORTS 1. Plans Released for Two International Terminals at JFK. Plans for two new international terminals were unveiled following selection of a master planning team for redevelopment of New York Kennedy, led by Mott MacDonald and Grimshaw Architects. The proposed $7 billion, 2.9 million square foot terminal on the airport's south side will be developed by Terminal One Group, a consortium of Lufthansa, Air France, Japan Airlines and Korean Air Lines. The plans call for replacing Terminal 1, which the group currently operates, and Terminal 2, and the area left vacant when Terminal 3 was demolished in 2014. The
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