WASHINGTON AVIATION SUMMARY June 2013 EDITION CONTENTS I. REGULATORY NEWS .............................................................................................. 1 II. AIRPORTS ................................................................................................................ 5 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 ................................................... 15 VIII. EUROPE/AFRICA ................................................................................................... 16 IX. ASIA/PACIFIC/MIDDLE EAST ................................................................................ 17 X. AMERICAS ............................................................................................................. 19 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. ©2013 Kirstein & Young PLLC. Washington Aviation Summary I. REGULATORY NEWS 1. FAA Ends Employee Furloughs, Keeps Contract Towers Open. The Federal Aviation Administration (FAA) transferred funds to end employee furloughs and keep the 149 low activity contract towers originally slated for closure in June open for the remainder of fiscal year 2013, following enactment of the Reducing Flight Delays Act of 2013 (H.R. 1765). The reductions had been planned to help meet federal sequester demands. FAA also will allocate $10 million toward reducing cuts and delays in core NextGen programs and $11 million to partially restore support of infrastructure in the national airspace system. H.R. 1765, signed by the President on May 1, authorizes the Secretary of Transportation to transfer for FY2013 to any FAA appropriations accounts (such as air traffic control operations) funds otherwise made available for discretionary grants-in-aid under the airport improvement or other FAA program. The legislation makes any transferred amount available immediately for obligation and expenditure as directly appropriated budget authority, and prohibits such transfer of funds unless the Secretary notifies Congress at least five days in advance. The furlough of air traffic controllers between April 21 and 28 caused delays for large numbers of flights, said Airlines for America and Regional Airline Association in a petition to the Department of Transportation (DOT) requesting that April delays be excluded from airline arrival performance accounting. 2. Qatar Withdraws Offer to Serve as ICAO Permanent Seat. The State of Qatar withdrew its offer to become the new permanent seat of the International Civil Aviation Organization (ICAO), when the current Montreal lease expires in 1916. ICAO has been headquartered in Montreal since 1946 and has now extended that lease to 2036. 3. United-Lufthansa-Air Canada JV Wins EU Antitrust Approval. The European Commission (EC) accepted concessions from Star members United, Lufthansa and Air Canada to address concerns that their cooperation under a revenue-sharing joint venture may be in breach of EU antitrust rules and harm premium passengers on the Frankfurt-New York route. The airlines will make slots available at Frankfurt and/or New York airports. They also will enter into agreements allowing competitors to offer tickets on their flights (reducing competitors' frequency disadvantage) and get better access to their connecting traffic. The commitments are legally binding for 10 years. Kirstein & Young PLLC / Attorneys at Law June 2013 — Page 1 Washington Aviation Summary 4. DOT Fines Southwest, Air China. DOT assessed a civil penalty of $150,000 against Southwest for failing to respond in a timely manner to a large number of disability-related and other consumer complaints received from June 2011 through January 2012 because of a problem with its website. The responses also failed to contain information specifically required by DOT rules. DOT gave Southwest a credit of $45,000 against the penalty for refunds made to passengers affected by website problems. Air China was fined $90,000 for failing to announce every 30 minutes to passengers on an aircraft delayed at New York Kennedy that they could leave the plane. DOT fined ticket agent JTB USA $60,000 for violating the code sharing disclosure rule. 5. U.S. Imposes Sanctions on Syrian Arab Airlines. The U.S. Department of the Treasury imposed sanctions on government- owned Syrian Arab Airlines, which it says transports weapons and ammunition to Syria on behalf of Iran’s Islamic Revolutionary Guard Corps-Qods Force. “Hizballah, Iran’s terrorist proxy, helped facilitate the flights. The weapons have been sent to Syria to support the Syrian regime’s violent crackdown against its own people,” said officials. “U.S. persons are generally prohibited from engaging in any transactions with the [airline], and any assets of [the airline] subject to U.S. jurisdiction are frozen.” 6. Audit: FAA Risk-Based Oversight of Repair Stations Lacking. A final report from the DOT Inspector General on FAA risk-based oversight of aircraft repair stations finds that “less than half of inspection elements are evaluated based on risk, and foreign repair stations are not inspected using a risk-based system. In addition, FAA’s oversight of foreign and domestic repair stations lacks effective, standardized processes for identifying deficiencies and verifying that they have been addressed.” Numerous systemic discrepancies were found at repair stations visited during the review. FAA is responsible for overseeing 4,800 repair stations used worldwide by U.S air carriers and plans to implement a new oversight system—the Safety Assurance System—in fiscal year 2015. 7. Supreme Court Rejects United’s Appeal on ADA. The U.S. Supreme Court declined to hear an appeal by United that sought to limit the Americans with Disabilities Act (ADA). A federal appeals court had concluded that an employer generally must offer an open position to a newly disabled worker even if a more-qualified applicant applies for the job. United, backed by the U.S. Chamber of Commerce and other business groups, said the appeals court ruling disregards the unassailable prerogative of employers to select only the best qualified candidates for job vacancies. As a result of the Kirstein & Young PLLC / Attorneys at Law June 2013 — Page 2 Washington Aviation Summary Supreme Court refusal to hear the appeal, the 2009 Equal Employment Opportunity Commission lawsuit against United, which charges that United violates the ADA with its procedures for accommodating disabled employees, can now move ahead. 8. March Airline Employment Down 2.7%. U.S. scheduled passenger airlines employed 380,325 workers in March, DOT reported, 10,436 or 2.7% fewer than in March 2012. Employment at the five network airlines was down 3.3%. The five network airlines employed 67% of the total, the six low-cost carriers employed 18.4% and the 14 regional carriers 13.2%. The most workers were employed by United (82,835) among the network airlines, Southwest (45,791) among low-cost airlines and American Eagle (11,244) among regional airlines. DOT Air Travel Consumer Report for March. Based on data filed by largest U.S. airlines. March Feb. Full Year ‘13/‘12 ‘13 2012 2011 2010 2009 2008 On-time arrivals % 79.8 / 82.2 79.6 81.85 79.6 79.8 79.5 76 Cancellations % 1.6 / 1.0 2.4 1.29 1.91 1.76 1.39 1.96 Mishandled baggage* 3.05 / 3.09 3 3.09 3.35 3.51 3.91 5.26 Consumer complaints: Airline service 943 / 1,117 899 15,335 11,546 10,988 8,821 10,648 Disability-related 42 / 48 38 743 628 572 519 477 Discrimination** 7 / 4 5 99 128 143 131 115 Note: Airlines reported no tarmac delays of more than three hours on domestic flights, but one tarmac delay of more than four hours on an international flight in March. * Reports per 1,000 passengers. **I.e., race, religion, national origin or sex. 9. Boeing 787 Service Resumes. B-787 service resumed as Boeing and the eight operators of all 50 Dreamliners in operation completed retrofits and testing of a redesigned lithium-ion battery system. The worldwide Dreamliner fleet was grounded in mid-January, after battery malfunctions on a Japan Airlines (JAL) 787 at Boston Logan and a smoking battery on an All Nippon (ANA) 787 in the air. FAA approved the new design in April. Ethiopian, with four 787s, was the first Kirstein & Young PLLC / Attorneys at Law June 2013 — Page 3 Washington Aviation Summary airline to put the Dreamliner back in service. United, the only U.S. 787 operator, re-launched domestic flights from Houston Intercontinental, will begin Denver-Tokyo on June 10 and inaugurate 787 service on existing routes this summer, including Houston-London, Los Angeles-Tokyo, Los Angeles- Shanghai and Houston-Lagos. United expects to take delivery of two more Dreamliners this year. ANA modified