US Airlines Likely Both To Win And Lose As FAA Reauthorisation Legislation Progresses

As the FAA reauthorisation continues, Chris Kjelgaard looks at how US airlines may both benefit and lose out once it is rubberstamped.

US airlines will feel both relieved and dismayed about the progress made by the US Senate Commerce, Science and Transportation Committee on March 16 towards having legislation passed by the US Congress to provide funding for all Federal Aviation Administration operations and activities until October 1, 2017.

In a voice vote, the committee quickly passed the FAA Reauthorisation Bill proposed by senators John Thune (a Republican representing South Dakota) and Bill Nelson (a Democrat representing Florida), respectively the chairman and the ranking Democrat on the committee.

This suggests the bill will be approved by a formal US Senate floor vote, a vote Thune is targeting for early April. If the Senate does approve the committee’s bill, members of Transportation committees in the Senate and House of Representatives will then meet in a Congressional conference committee to iron out differences in their separate FAA reauthorisation bills.

Once they have reached a mutually acceptable compromise on the FAA Reauthorisation Bill, the legislation will go to President Obama to be signed into law to take effect.

What US airlines will like about the Senate Commerce, Science and Transportation Committee’s bill is that Senator Thune and his fellow Republicans on the committee managed to resist – just – a provision that Senator Edward Markey (a Democrat representing Massachusetts) and the other Democratic senators on the committee tried to add.

A 12-12 tied vote of the Senate committee meant that the provision failed to obtain the majority required for it to be added to the committee’s FAA Reauthorisation Bill. Had it been added, the provision would have prohibited airlines from setting fee levels officially deemed unreasonable for checked baggage, booking changes (for which several US airlines now charge $200 a time), and advance seat allocation.

Instead, the provision would have directed the US Department of Transportation (DOT) to set standard levels for those airline fees.

Thune and his fellow Republicans blocked adoption of the provision on the grounds that it went too far in attempting to re-regulate the US airline industry, which was deregulated in 1978. Consumers, not government officials, should set the limits of US airline fee excesses by voting with their wallets, Thune argued.

However, even the Republicans on the Senate Commerce, Science and Transportation Committee recognised that US airlines are gouging their customers in terms of fee levels.

The problem is largely a result of the over-consolidation of the US airline industry allowed by the DOT in the past decade. Today, four US airlines fly 80 per cent of all US domestic passengers and at dozens of US airports – even at some very large ones – one carrier is so dominant that customers have virtually no choice over which airline to fly.

As a result, the Senate committee’s FAA reauthorisation bill does include several consumer-protection provisions. One has the DOT define a standard way for airlines and booking agents to disclose fees for basic services, so that when passengers compare the prices of flights on different airlines they can easily see the full ticket cost for each flight they are comparing.

Another provision is that airlines would have to return baggage fees for checked bags they lost, or delayed for more than six hours after a domestic flight arrived and for more than 12 hours after an international flight arrived.

Airlines would also be required to provide automatic fee refunds for services purchased by customers but not provided, for instance if passengers were denied early-boarding privileges and advance seat assignments they had paid for.

Playing with a poker face, Airlines for America (A4A, the Washington, DC-based trade association which lobbies US politicians on behalf of all US carriers except Delta Air Lines, which recently resigned from the organisation), didn’t sound pleased that the Senate committee’s bill wasn’t as bad as it could have been in terms of consumer protections.

Nicholas Calio, A4A’s president, a highly experienced Washington lobbyist and a former senior adviser on legislative matters to both President George H.W. Bush and Gorge W. Bush, characterised the Senate committee’s bill as “taking steps backward toward re-regulation”.

But beyond A4A’s residual dismay that the Senate committee’s bill contains some consumer-protection measures, it also doesn’t like the Senate FAA bill for another, entirely different reason.

This is that the Senate committee’s bill deliberately made no provision for a highly controversial move which had been approved in February by the House Transportation and Infrastructure Committee in its version of the FAA Reauthorisation Bill, in a way that delighted A4A.

The move in question was the proposed privatisation of all US air traffic management (ATM) activities, a plan which would remove ATM services from the FAA and hand them to a non-profit body to run.

A4A is strongly in favour of this idea. The US airlines feel they pay the vast bulk of the user fees the FAA charges for providing ATM services in US domestic and international airspace but don’t get anything like a proportional share of the airspace-usage benefits.

In the proposal put forward by the House committee in its February 12 version of the FAA Reauthorisation Bill, the make-up of the 11-member board of this organisation would benefit the major US airlines far more than any other aviation constituency.

Not surprisingly, the US National Business Aviation Association and the Aircraft Owners and Pilots Association (which represents most US general-aviation interests) find the ATM-privatisation idea anathema, saying their members would practically be shut out of US airspace.

The House committee’s bill, put forward by committee chairman Bill Shuster, a Republican Representative from Pennsylvania, proposed extending the FAA’s reauthorisation until 2021. However, in a 32-26 vote, it also called for privatisation of US ATM services.

In a heavily Republican-controlled House of Representatives, the relative closeness of this vote argued that the House might not approve the bill in a full floor vote. Also, the ATM-privatisation provision probably wouldn’t survive conference-committee negotiations.

Meanwhile, Shuster’s close association with A4A has increasingly come under scrutiny. A4A openly admits Shuster has known Calio for decades. Additionally, the news website revealed last April that Shuster’s girlfriend is Shelley Rubino, A4A’s VP for Global Government Affairs.

A4A and Shuster say their business relationship is on an entirely professional level.

However, revealed on February 23 that, less than a week after the February 12 House vote by Shuster’s committee on the FAA Reauthorisation Bill, Calio, Rubino and Shuster were in Miami Beach lounging by a hotel pool together and dining together, during a weekend fund-raising trip organised by a Republican Representative from Florida.

So it might not come as a great surprise that in 2015 Shuster revived a stalled  A4A initiative to try to revoke legislation which required US airlines to include government (and some airline) fees and taxes when advertising ticket prices. It also might not be surprising that Shuster is working so hard to give A4A US ATM privatisation.

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