WASHINGTON AVIATION SUMMARY November 2012 EDITION
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WASHINGTON AVIATION SUMMARY November 2012 EDITION CONTENTS I. REGULATORY NEWS .............................................................................................. 1 II. AIRPORTS ................................................................................................................ 3 III. SECURITY AND DATA PRIVACY ……………………..................................................5 IV. E-COMMERCE AND TECHNOLOGY ....................................................................... 6 V. ENERGY AND ENVIRONMENT ................................................................................ 8 VI. U.S. CONGRESS ...................................................................................................... 9 VII. BILATERAL AND STATE DEPARTMENT NEWS ................................................... 10 VIII. EUROPE/AFRICA ................................................................................................... 11 IX. ASIA/PACIFIC/MIDDLE EAST ................................................................................ 13 X. AMERICAS ............................................................................................................. 17 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. ©2012 Kirstein & Young PLLC. Washington Aviation Summary I. REGULATORY NEWS 1. East Coast Storm Causes Thousands of Flight Cancellations. Federal offices in Washington closed for two days and airlines canceled some 20,000 flights at month’s end, as a devastating storm struck the U.S. East Coast. In the New York area, flooding and high winds forced closure of Kennedy, Newark and LaGuardia airports, which account for one-quarter of U.S. daily air traffic. Air traffic control towers shut down at many regional airports. Financial impact due to disruptions and damage to equipment and infrastructure was unknown at press time. The event affected passenger and cargo flights around the globe. 2. IATA: Global Airlines to Earn $4.1 Billion in 2012. Global airlines will earn $4.1 billion in 2012, up $1.1 billion from the June forecast of $3 billion, reports the International Air Transport Association (IATA). Net profit margins will fall from 1.4% in 2011 to 0.6%. Regionally, European airlines will post the largest loss at $1.2 billion. North American carriers will see largest improvement among regions, due primarily to tight capacity management, with profits of $1.9 billion, compared to $1.3 billion in 2011. Asia-Pacific airlines will post a $2.3 billion profit. With 40% of the global cargo market, Asia-Pacific carriers are more exposed to weak cargo demand, though they see relatively robust performance in passenger markets. Middle East carriers will post a $0.7 billion profit, with strongest passenger traffic growth and the majority of cargo growth. Latin American airlines will post profit of $0.4 billion. African airlines will break even. IATA predicts 2013 global profits will rise to $7.5 billion, due to slightly lower oil prices and predicted global gross domestic product (GDP) growth of 2.5%, up from 2.1% in 2012. 3. DOT Fines Airlines. The U.S. Department of Transportation (DOT) fined British Airways $250,000 for violating DOT full-fare advertising rules, as well as the Montreal Convention on reimbursements for mishandled baggage. DOT fined Qantas $100,000 for violating DOT’s new rule requiring carriers, including foreign carriers, to “clearly and prominently disclose on the first screen that offers a fare for a consumer’s specific itinerary that additional fees for baggage may apply, as well as show consumers where they can view the baggage fees.” . Xtra Airways was fined $300,000 for violating rules protecting charter passengers when flights it operated for Direct Air were suddenly canceled when Direct Air ceased operating in March. In July, the Department assessed a $180,000 Kirstein & Young PLLC / Attorneys at Law November 2012 — Page 1 Washington Aviation Summary penalty against World Atlantic Airlines, another carrier operating flights for Direct Air; DOT is investigating the Direct Air shutdown. 4. FAA Proposes Fines. The Federal Aviation Administration (FAA) is proposing a $354,500 civil penalty against US Airways for operating a noncompliant Boeing 757 on 916 revenue flights between August and December 2010. FAA alleges US Airways removed and replaced a leaking engine fuel pump on the aircraft and failed to carry out required tests and inspections before returning the aircraft to revenue service. FAA is fining aircraft repair stations for violating drug and alcohol testing regulations: Santa Clarita, Calif.-based Woodward, Inc. subsidiary HRT ($246,450), El Cajon, Calif.-based GKN Aerospace Chem-Tronics ($359,350); and Sylmar, Calif.-based Circor Aerospace ($205,250). 5. DOT Air Travel Consumer Report for August. Based on data filed by largest U.S. airlines. August July Full Year ‘12/‘11 ‘12 2011 2010 2009 2008 2007 On-time arrivals % 79.1 / 79.3 76 79.6 79.8 79.5 76 73.4 Cancellations % 1.3 / 2.5 1.4 1.91 1.76 1.39 1.96 2.16 Mishandled baggage* 3.38 / 3.45 3.52 3.39 3.51 3.91 5.26 7.05 Consumer complaints: Airline service 1,886 / 1,416 2,466 11,545 10,988 8,821 10,648 13,180 Disability-related 73 / 48 97 630 572 519 477 488 Discrimination** 9 / 12 16 127 143 131 115 99 Note: Airlines reported no tarmac delays of more than three hours on domestic flights in August and one of more than four hours on an international flight. * Reports per 1,000 passengers. **I.e., race, religion, national origin or sex. Kirstein & Young PLLC / Attorneys at Law November 2012 — Page 2 Washington Aviation Summary II. AIRPORTS 1. O’Hare Terminal 5 Plans Unveiled. Redevelopment plans for Chicago O’Hare Terminal 5 were unveiled by the Chicago Department of Aviation. Scheduled for completion next fall, the project repositions dining and retail options previously located pre-security. Westfield Concession Management and tenants are investing $26 million in the renovation. Currently, 24 air carriers operate from 21 common-use gates at Terminal 5, which was built in 1993. 2. JetBlue Breaks Ground on JFK International Arrivals Terminal. JetBlue broke ground for a new international arrivals facility at New York Kennedy. The 150,000 sq. ft. extension to its Terminal 5 hub will open in 2015. 3. Pittsburgh Rate Rise Approved. Allegheny County Airport Authority approved a per passenger increase of 38 cents to $14.66 at Pittsburgh International in 2013, following two years of rate cuts. The increase will fund debt service on a $50 million bond issued for facility improvements, and offset an expected drop in enplanements. 4. BAA Airports Now Operate Under Their Own Names. Heathrow, Glasgow, Aberdeen Southampton and Stansted now operate under their stand-alone brands, rather than as BAA. Since we sold our stakes in Gatwick and Edinburgh and are in the process of selling Stansted, noted Heathrow CEO Colin Matthews, “we do not represent all British airports; we are not a public authority; and practically speaking the company is no longer a group as Heathrow will account for more than 95% of the business.” The British Airports Authority was established in 1965 and in 1986 moved to become a private company, BAA, which in 2006 was acquired by Ferrovial. 5. Ryanair Withdraws From Stansted Sale Process. Ferrovial excluded Ryanair and any Ryanair-related consortium from the Stansted sale process and Ryanair withdrew from participation. 6. Quieter, Four-Runway Heathrow Promoted. The UK needs a four-runway airport either at Heathrow or Luton if it wants to compete with other European hubs, says a Policy Exchange report. The study rules out a proposed Thames estuary airport and a four runway airport at Gatwick or Stansted. Kirstein & Young PLLC / Attorneys at Law November 2012 — Page 3 Washington Aviation Summary 7. Prague International Renamed Vaclav Havel. Prague International has been renamed to honor the late President Vaclav Havel. The playwright who led the 1989 revolution that ended communist rule of Czechoslovakia died in 2011. 8. EC Clears Financing of Munich Terminal 2. European Commission (EC) competition regulators cleared public loans granted to Lufthansa and Munich Airport in 1998 for construction and operation of a second terminal, after an investigation found that the financing was granted on market terms and therefore did not involve state aid; before 2000, EU state aid rules did not apply to the financing of airport infrastructure. The decision is among some 60 on-going state aid investigations in the aviation sector; new guidelines are expected next year. 9. Hong Kong to Continue New-Destination Incentive. Hong Kong Airport Authority will extend the existing new-destination incentive arrangement to December 31, 2014, to encourage airlines to continue to launch new routes. Airlines receive a 75% rebate on landing charges for flights between Hong Kong and a new destination for the first six months after the route is launched, and a 25% rebate for the next six months. 10. India to Eliminate Some Airport Fees. India’s Civil Aviation Ministry is eliminating development fees at some airports.