News in brief from across the globe... This week, President Trump offers a window into his policy positions on air traffic control privatisation, open skies and next generation infrastructure. Elsewhere, Delta Air Lines plans to increase its stake in Aeroméxico and the UK has eased restrictions on flights to India.
⇒ Delta Air Lines confirmed in a statement on 13 February that it plans to buy an additional 32% stake in Aeroméxico for $590 million. The US airline, which already owns a 4.2% share of the Mexican carrier, originally announced plans to expand its investment in November 2015. That stake could increase to 49% if Delta exercises certain share purchase options. The deal still requires regulatory approval in Mexico and the US. Mexican lawmakers are due to vote on a bill increasing the cap on the foreign ownership of local airlines from 25% to 49% later this month.
⇒ Donald Trump criticised the US Federal Aviation Administration’s attempts to overhaul the nation’s air traffic control system, last Thursday, following a White House meeting with executives at several of the country’s top airlines. He said: “I hear the government contracted for a system that’s the wrong system. I hear we’re spending billions and billions of dollars. It’s a system that’s totally out of whack. It’s way over budget. It’s way behind schedule. And when it’s complete, it’s not going to be a good system.” Although he indicated interest in the privatisation of the US Air Traffic Organization, he stopped short of backing proposals by lawmakers to do so. Airlines for America, a trade group that represents several major US airlines except Delta Air Lines, said Trump was “extraordinarily positive” about the suggested spin-off of air traffic control operations from the FAA. Attendees at the White House meeting included Oscar Munoz, chief executive of United Airlines, Ed Bastian, chief executive of Delta Air Lines, Gary Kelly, chief executive of Southwest Airlines and Brad Tilden, chief executive of Alaska Airlines.
⇒ During the same meeting, Trump reportedly promised to support US carriers as they look to compete with foreign airlines accused of benefiting from unfair state subsidies. According to Bloomberg, he said: “A lot of that competition is subsidized by governments, big league. I’ve heard that complaint from different people in this room. Probably about one hour after I got elected, I was inundated with calls from your industry and many other industries, because it’s a very unfair situation.” A spokesperson for the Partnership for Open and Fair Skies said: “We are particularly gratified that President Trump is focused on longstanding trade violations by the UAE and Qatar that are costing American jobs. We look forward to continued discussions with President Trump and his team.” Ahead of the meeting, a rival lobbying group, US Airlines for Open Skies, which represents Atlas Air Worldwide, FedEx Express, JetBlue Airways and Hawaiian Airlines, sent a letter to the US Secretary of State, confirming their strong support for existing open skies agreements. “Freezing US routes would indisputably breach open skies, harm US airline passengers and endanger US jobs. It would reduce competition not only on international routes, where the legacy carriers and their joint venture partners already predominate, but also in the domestic market by stemming the flow of passengers into the US,” the letter said.
⇒ The first of at least five expected US congressional hearings on the reauthorisation and reform of the FAA took place on Wednesday, discussing the health of the US aviation manufacturing industry and its infrastructure. During the House Transportation Committee hearing, John Hamilton, vice president of commercial airplane engineering at Boeing, called on Congress to streamline the FAA’s certification process as part of the reauthorisation bill, complaining that the current model is inefficient. Meanwhile, aviation subcommittee chairman Frank LoBiondo said: “The United States has always been the gold standard in aviation safety, as well as a world leader in aviation manufacturing... However recently, global competition, as well as redundant, outdated, and inefficient rules and regulatory processes have jeopardized that lead.” He added that the certification process, which ensures US made aircraft comply with US safety regulations and the standards of other jurisdictions, has “its problems” and causes “needless and harmful bureaucratic delays”. He concluded that “it is critical that the FAA certification and regulatory processes adapt and respond” to new technologies and innovations. Committee chairman Bill Shuster said: “As our manufacturers continue to innovate, FAA’s regulations and workforce have to keep pace. It is important that the FAA’s regulations and oversight activities are effective. But it is also important that the FAA’s regulatory processes are efficient and consistent. We shouldn’t have to sacrifice either one for the other.”
⇒ According to several press reports, Harrison Ford, an experienced pilot both on and off the silver screen, was involved in an incident at John Wayne Airport in Orange County on 13 February, after he landed his single engine private plane on a taxiway instead of the runway, narrowly missing a Boeing 737, and in doing so, potentially violating Federal Aviation Administration safety rules. The FAA has not disclosed the name of the individual involved, but confirmed it is investigating the incident.
⇒ Argentina’s National Civil Aviation Administration on 13 February granted permission to five airlines – including FB Líneas Aéreas, Andes Líneas Aéreas, American Jet, Alas del Sur and Avian Líneas Aéreas, run by Avianca – to fly 135 new domestic routes, according to Reuters.
⇒ New rules obliging airlines and their staff to identify and report ill passengers who may require quarantining to federal authorities have been proposed by the US Centers for Disease Control and Prevention, according to the National Law Journal. The new rules, which were published on 19 January, were expected to take effect next week, but have been postponed to late March at the earliest, due to a 60-day delay for review by the Trump administration. US carriers have reportedly criticised the new rules, warning that they place too onerous a burden on airlines and their staff.
⇒ Budget carrier Viva Air Peru has obtained an operating permit from the Peruvian Ministry of Transport and Communications, according to press reports. The carrier has been granted approval to run nearly 50 flights a week on several internal routes to and from Lima.
⇒ The European Commission’s Directorate-General for Competition is set to issue a new air cargo cartel decision within the next few months, according to GTDT Aviation Law News sister publication Global Competition Review. DG Comp sent questionnaires to airlines involved in the case over the last month, sources close to the case say, which signal that the enforcer is preparing to submit a new air cargo decision to the European Commission’s college of commissioners. Observers expect any new decision to be issued within the next three months. The development comes after the EU’s General Court knocked out DG Comp’s original 2010 air cargo decision in late 2015. Of the €799 million in fines DG Comp ordered, the court quashed €790 million; the fines against Qantas remain in force, after the airline declined to appeal against the 2010 decision.
⇒ The UK has confirmed the easing of restrictions on the number of scheduled flights between it and India, the UK’s aviation minister, Lord Ahmad of Wimbledon, said in a speech on 9 February. The agreement will scrap limits on flights between the UK and several Indian cities, including Chennai and Kolkata.
Middle East and Africa
⇒ South Africa’s High Court has granted over 1.1 billion rand ($84.8 million) in damages to Comair, bringing a long-running competition claim against South African Airways to a close. The South African flag carrier was accused of putting pressure on travel agents not to sell domestic airline tickets to its rivals. Martin Versfeld at Webber Wentzel advised Comair, while Cliffe Dekker Hofmeyr partner Willie van Wyk was instructed by SAA. Look out for more in next week’s briefing.
⇒ Nigeria’s government has taken over Arik Air, the country’s largest airline, after it went into receivership. State-owned bank Asset Management Corporation of Nigeria will take control of the airline, which has now suspended long-haul flights to London and Johannesburg. Michael Arumemi-Ikhide, who founded the airline, said the move was politically motivated, in order to create a state-owned national carrier, according to Reuters.
⇒ Meanwhile, Botswana’s government plans to privatise Air Botswana, according to press reports. The Ministry of Transport & Communications recently published a call for expressions of interest, asking members of the private sector to submit takeover proposals.
⇒ India’s government has rejected accusations that a recent rise in airfare prices is a result of anticompetitive behaviour or predatory pricing. Jayant Sinha, India’s minister of state for civil aviation, said on 7 February that there had been “no violation”, reiterating that prices are competitive and based on market demand, according to the Indian Express.
⇒ Vietnamese low-cost carrier Vietjet Aviation will float on the Ho Chi Minh Stock Exchange on 28 February, in a capitalisation worth a potential $1.19 billion, according to a statement by the stock exchange on 13 February.