Washington Aviation Summary – October 2009

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Washington Aviation Summary – October 2009 WASHINGTON AVIATION SUMMARY October 2009 EDITION CONTENTS I. REGULATORY NEWS................................................................................................ 1 II. AIRPORTS.................................................................................................................. 5 III. SECURITY AND DATA PRIVACY ……………………… ……………………….……...7 IV. E-COMMERCE AND TECHNOLOGY......................................................................... 8 V. ENERGY AND ENVIRONMENT................................................................................. 9 VI. U.S. CONGRESS...................................................................................................... 12 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. ©2009 Kirstein & Young PLLC. Washington Aviation Summary I. REGULATORY NEWS 1. Traffic Volumes Improve in August. International scheduled passenger demand declined by 1.1% in August, an improvement on the 2.9% decline in July, reports the International Air Transport Association (IATA). Compared to the low point of March 2009, seasonally adjusted passenger demand improved by 6%, but traffic levels remain 5% below May 2008 when the fall in demand began. Freight demand fell by 9.6% in August, an improvement over the 11.3% drop in July. Compared to the December 2008 low point, seasonally adjusted freight demand improved by 12%, but remains exceptionally weak at 16% below April 2008 levels when the fall in demand began. Average fares continue to be depressed (-22% for premium seats and -18% for economy). To match capacity with demand, airlines have reduced daily aircraft utilization, said IATA. Average daily hours for the global Boeing 777 fleet dropped by 2.7% to 11.1 hours per day through the first eight months of the year. Lower utilization helps load factors, but spreading fixed asset costs over fewer hours in the air pushes up unit costs. IATA predicts airline losses will reach $11 billion in 2009, after earlier loss projections of -$9 billion. Revenues for the year are expected to fall by $80 billion (15%) to $455 billion, compared with 2008 levels. IATA also revised 2008 estimates from a loss of $10.4 billion to a loss of $16.8 billion. For 2010, IATA anticipates average international passenger growth of just over 4%, compared to an expected full-year decline in 2009 of almost 5%. 2. Airlines Oppose Higher APHIS Fees On September 28, 2009, the U.S. Department of Agriculture issued an emergency notice that it is raising the Animal and Plant Health Inspection Service (APHIS) fee imposed on arriving international passengers from $5 to $5.50 per passenger. Commercial aircraft user fees will increase from $70.75 to $78.00 per international arrival. APHIS last raised the AQI user fees on January 1, 2005. The agency stated the new fees are needed to ensure adequate funding to adjust for heightened security needs and falling passenger volumes. USDA expects these new fees to generate $523 million in revenues in FY 2010. Following objections continue these important inspection activities that help prevent the introduction of plant and animal pests and diseases into the United States. Following objections from the U.S. Air Transport Association (ATA) and IATA, USDA announced that it would postpone the start date for collection of the new fees from October 1, 2009 until November 1, 2009. However, the agency is accepting comments on the change until November 27, 2009. Both IATA and ATA oppose the new rule and urged USDA to withdraw the emergency notice and conduct a proper rulemaking procedure. Kirstein & Young PLLC / Attorneys at Law October 2009 — Page 1 Washington Aviation Summary 3. Global Airline Capacity Shows Positive Growth . Global airline capacity for September 2009 showed positive growth for the second consecutive month, reported OAG, with 296.9 million seats scheduled, a 1.4% increase (4,130,744 more seats) over September 2008 levels. Frequencies were marginally down compared to September 2008, with 2.4 million flights scheduled, down by 0.6% (14,321 fewer flights) compared with the same month last year. The August year on year global frequency figure was down by 2% and capacity was up by 0.2%. OAG is a provider of global airline data. 4. OAG Releases Prototype for Pandemic Disease Management. OAG has developed a prototype to assist health organizations and government agencies in preparing strategies to combat the spread of pandemic diseases, including the H1N1 virus and other flu strains. The tool allows organizations to visualize and model in elapsed time: how a disease can spread from any single airport in the world, on any day within the future schedules time-frame; which cities and airports could be alerted of potential impact as elapsed time from original departure time increases; which carriers should be alerted at down-line connection points; which carriers may already be impacted; and how many (maximum) passengers could be exposed to a disease as time passes. The product will contain schedule data for all direct flights and connections for every airport around the globe. In other flu news, USA Today reports that more airports than ever are offering seasonal flu shots. In 2008, more than 40,000 flu vaccines were administered by FLUEase, a Chicago-based company that organizes and staffs flu shot kiosks at many airports, and 125,000 shots are planned for this year. 5. New FAA Efforts Address Safety Concerns. The Federal Aviation Administration (FAA) announced new efforts to respond to safety concerns. An Office of Audit and Evaluation will handle all public safety complaints and whistleblower contributions, and serve as the focal point for the U.S. Office of Special Counsel, Government Accountability Office, and the Department of Transportation (DOT) Inspector General. A new Accident Investigation and Prevention Service integrates work of the Offices of Accident Investigation and Safety Analytical Services, allowing FAA to better understand current and emerging risks through use of data from accident and incident investigations, historical accidents and incidents, and voluntarily submitted information from industry programs such as Aviation Safety Action and Flight Operational Quality Assurance programs. An airworthiness Directive (AD) compliance plan aims to minimize disruptions to passengers; each year FAA issues about 250 ADs requiring carriers to correct potentially Kirstein & Young PLLC / Attorneys at Law October 2009 — Page 2 Washington Aviation Summary unsafe conditions, with implementation sometimes resulting in large numbers of cancelled flights. 6. FAA Approves Plan for Southwest to Replace Unapproved Parts. FAA approved a plan that required Southwest to replace unapproved parts installed on about 50 Boeing B-737s. FAA determined on August 21 that the parts, associated with hinge fittings for the exhaust gate assembly, had been installed on a number of Southwest planes and is investigating this issue; FAA and Boeing said the part would not prevent safe operation of the airplanes. Southwest can continue to operate aircraft until the parts are replaced, on condition that each plane is physically inspected for wear and tear every seven days and the affected parts are all replaced with an approved part by December 24, 2009. FAA directed Southwest to locate and dispose of other unapproved parts made by the same vendor and to report inspections results to FAA on a daily basis. 7. DOT Official Recused From Oneworld Antitrust Review. Deputy U.S. Transportation Secretary John Porcari has been recused from examining the pending oneworld antitrust application led by British Airways and American Airlines; Porcari filed a comment on the case last November when he was Maryland Transportation Secretary. DOT Secretary Ray LaHood earlier stepped back from the case, as he supported the application before taking office. In other news, DOT General Counsel Robert Rivkin said the Departments of Transportation and Justice have developed a “harmonized” approach to assessing competition in the airline industry, despite using different methodologies. He referred to speculation about a policy rift when DOT approved the expansion of Star Alliance to include Continental despite Justice Department objections. 8. DOT, Air Canada Reach Agreement on NHL Team Charters. Air Canada agreed to dismiss a lawsuit against U.S. Transportation Secretary Ray LaHood regarding a cabotage dispute. In August, DOT alleged Air Canada broke U.S. cabotage rules last year on charters conducted for some National Hockey League (NHL) teams and disallowed multiple stops. The Air Canada suit called the U.S. action “arbitrary,
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