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Order 2020-3-10 Served: March 31, 2020 UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C. Issued by the Department of Transportation on the 31st day of March, 2020 CONTINUATION OF CERTAIN AIR SERVICE Docket DOT-OST-2020-0037 Under Public Law 116-136 §§ 4005 and 4114(b) ORDER TO SHOW CAUSE I. SUMMARY By this Order, the U.S. Department of Transportation (the Department) is proposing parameters for initially implementing the authority granted to the Secretary of Transportation (the Secretary) by Sections 4005 and 4114(b) of the Coronavirus Aid, Recovery, and Economic Security Act (the CARES Act). As detailed further below, the order proposes that air carriers receiving financial assistance under the CARES Act maintain minimum air services on a nationwide basis, with some exceptions. II. BACKGROUND On March 27, 2020, the President signed the CARES Act into law. Sections 4005 and 4114(b) of that act authorize the Secretary to require, “to the extent reasonable and practicable,” an air carrier receiving financial assistance under the CARES Act to maintain scheduled air transportation service as the Secretary deems necessary to ensure services to any point served by that carrier before March 1, 2020 (Service Obligation). The Department here is proposing parameters for how it will implement the Service Obligation initially. The parameters include provisions for extending the Service Obligation or imposing a new or different Service Obligation in the future, if the Secretary deems it to be necessary. The Department invites comments on this proposal. III. COVERED CARRIERS Passenger air carriers and all-cargo carriers are eligible for financial assistance under the CARES Act.1 The Department tentatively determines that the Service Obligation under Sections 4005 and 4114(b) will apply to a subset of air carriers under 49 U.S.C. 40102, which is the definition cited in the CARES Act. The Department proposes that the Service Obligation will apply to 1 Public Law No. 116-XX, §§ 4003(b)(1)-(2), and 4112(a)(1)-(2). direct air carriers accepting financial assistance under the CARES Act that hold certificates of public convenience and necessity for scheduled passenger air transportation pursuant to 49 U.S.C. §§ 41101 - 41102 or that hold a Commuter Air Carrier Authorization pursuant to 14 C.F.R. Part 298 (covered carriers). Because they operate largely on an on-demand basis, the Department has tentatively decided to exclude carriers with certificates of public convenience and necessity for charter operations and air taxi operators registered under 14 C.F.R. Part 298 from Service Obligation under Sections 4005 and 4114(b). The Department also tentatively determines that all-cargo operators that hold certificates of public convenience and necessity to provide air transportation pursuant to 49 U.S.C. § 41101 and 41103 accepting financial assistance under the CARES Act are also subject to the Service Obligation under Sections 4005 and 4114(b), but will enforce that obligation differently as described below. IV. COVERED POINTS The Department tentatively determines that the Service Obligation under Sections 4005 and 4114(b) will pertain to only U.S. points. On March 19, 2020, the U.S. Department of State issued a global Level 4 Health Advisory urging all U.S. citizens to avoid all international travel.2 The Department, therefore, tentatively determines not to require covered carriers to serve international points, at least during the duration of the Health Advisory. In addition, because Sections 4005 and 4114(b) refer to “services to any point” as distinguished from “airports,” the Department has determined that, in cases where multiple airports serve the same point, carriers would not need to maintain service to all such airports, but would be able to consolidate operations at a single airport serving the point. Sections 4005 and 4114(b) also state that the Service Obligation pertains to any point served by covered carriers before March 1, 2020. The Department intends to use Official Airline Guide (OAG) schedule data combined with T100 traffic data as reported to the Department as the primary data sources for determining the points that covered carriers served prior to March 1, 2020. The Department tentatively determines that it will use week-ended February 29, 2020 OAG schedule data as the primary source and year-ended December 31, 2019 T100 data combined with year-ended December 31, 2019 OAG data as a supplementary source to determine the list of points served by covered carriers.3 The Department has attached, as Appendix A, a description of the methodology used, and, as Appendix B, a tentative list of points served by each potentially covered carrier. If any interested party believes there are discrepancies in this list, they are invited to advise the Department in response to this Order. V. SERVICE LEVELS The Department recognizes that demand for air travel has significantly declined as a result of the COVID-19 public health emergency and that requiring covered carriers to operate their full 2 See https://travel.state.gov/content/travel/en/traveladvisories/ea/travel-advisory-alert-global-level-4-health- advisory-issue.html (Accessed March 26, 2020). 3 Due to the time-lag in T100 operational data, this is the most recent period for which complete data is available. 2 schedules and networks as they did before the public health emergency would be counterproductive to the objectives set forth in the CARES Act. Therefore, the Department has tentatively determined to implement covered carriers’ Service Obligation by requiring only minimum service levels for each point served as follows. For points that a covered carrier served with at least one flight at least five days per week, the covered carrier would need to provide at least one flight per day, five days per week, for that point.4 For a point that received service from a covered carrier fewer than five days per week, the covered carrier would only need to serve that point with at least one flight on one day per week. Additionally, if a covered carrier served a point with any degree of scheduled service from more than one other point, it would only need to provide service from that point to one of the previously served points as long as it meets the above frequency requirements. A covered carrier can meet its minimum Service Obligation for a given point by dividing its flights across multiple cities, if it so chooses. If multiple covered carriers served a point, each covered carrier would be required to serve the point in accordance with the above minimum service levels, regardless of the service decisions made by the other covered carriers serving that point. These provisions do not authorize any coordination among air carriers that would violate the antitrust laws. The Department recognizes that even with these reduced service levels, it may not be practicable for covered carriers to serve all points previously served in the prevailing operating environment. Likewise, points that may make practical sense to serve now, may not at a later date. Sections 4005 and 4114(b) also provide the Secretary with discretion to determine whether the Service Obligation is reasonable or practicable. Therefore, the Department tentatively determines to allow covered carriers, at any time for the duration of their Service Obligation, to request that points be exempted from their Service Obligation. Covered carriers should submit a list of points that they believe are not reasonable or practicable to serve and explain why service is not reasonable or practicable.5 The Department will inform covered carriers of its decision in a timely manner. For regional carriers, the Department tentatively determines to interpret any Service Obligation to apply to the marketing carrier. If a regional covered carrier holds out services under its own airline designator code, it will be the marketing carrier and be responsible for maintaining service at the above service levels. Regional operations operating as a franchise of a mainline carrier will be the responsibility of the mainline carrier as the flights of regional carriers operating for mainline carriers are under the commercial control of the mainline affiliate that schedules, prices, sells, and revenue manages the flight. If a regional covered carrier receives assistance under the CARES Act, its Service Obligation will be considered met if it is operating all flights designated by its mainline affiliate, consistent with the mainline carrier’s Service Obligation. This proposal would not alter any flexibility that mainline carriers have in their 4 For example, if a carrier operated seven flights per day, seven days per week to a given point, it would only be required to operate one flight per day, five days per week. 5 Such submissions should be made to the Director, Office of Aviation Analysis. 3 contracts to allocate capacity within their networks. Each mainline carrier may select any regional affiliate that the mainline carrier sees fit to operate flights to covered points. In contrast to passenger demand, all-cargo services appear to be in greater demand as a result of the COVID-19 public health emergency, due in part to the dramatic decline in belly cargo capacity resulting from the cancellation of scheduled passenger flights. We also recognize that all-cargo operators need maximum operational flexibility to respond to changes in cargo flows, especially when responding to the needs of a public health emergency. Most all-cargo carriers do not publish schedules, and many operations occur on an ad-hoc basis. We expect that all- cargo operators will see comparably stronger demand for the duration of the public health emergency. Therefore, the Department tentatively determines not to impose an a priori Service Obligation on all-cargo carriers. However, we tentatively determine that all-cargo carriers receiving assistance under the Act remain covered, and the Department may impose a Service Obligation if it determines it is appropriate, including if it is necessary to maintain well- functioning health care and pharmaceutical supply chains, including for medical devices and supplies, as directed by the CARES Act.

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