The International Who’s Who of Aviation Lawyers brings together three of the leading practitioners in the world to discuss key issues facing lawyers today.
Holland & Knight LLP
The aviation industry remains heavily regulated but liberalisation of aviation services has been steady. How has the open skies policy affected your practice?
Anita Mosner: While the proliferation of open skies agreements has reduced the volume of routine airline licensing work, it has not appreciably reduced the overall volume of regulatory work. In the US in particular, the government has tied their approval of airline joint ventures and grants of antitrust immunity to the existence of an open skies arrangement between the US and the homeland governments of the carriers involved. Thus, we have seen a heavy volume of JVs submitted to the US Department of Transportation for approval and grants of ATI. Indeed, countries that heretofore have restricted access to their home markets (such as Japan and the UK) now have open skies arrangements with the US, and have their carriers participating in immunised JV relationships.
It also is essential to note that open skies agreements do not necessarily eradicate “doing business” disputes and fights over alleged competitive distortions. For example, certain carriers have launched challenges to the exercise of “open skies” privileges by carriers which allegedly receive financial support from their homeland governments, arguing that the exercise of these rights should be tempered by the application of “fair competition” language. While there is no consensus at all on the application of such language, the dialogue will continue.
Catherine Erkelens: Open skies impacts the whole industry: not only the airline sector, but also the airports, the airport services providers, the ATC and ATM services and technology providers, the global distribution services and technology providers.
For positioning themselves in this new global world, the air carriers need assistance not only with market access issues and their mutual relationships such as code sharing and involved competition issues, but also with their relationship with governments and airport operators. Air carriers have shown an increased need for fully understanding local regulations concerning the use of airport infrastructure and the cost thereof. The liberalisation at the same time involves an increase of regulation in the EU, sometimes with contradictions between regulatory instruments. The practice saw an increased need for assistance with interpretation and understanding of such regulation.
The new opportunities for the air carriers triggered an era of disputes in relation to access to the airport infrastructure and the cost thereof. Airports, which themselves started to be privatised, had to reassess their economic approaches, within a framework of new airport economic regulation. We assisted air carriers and their associations with disputes in relation to airport charges, the use of airport infrastructure. New parameters had to be set where room is left for some negotiation between airport users and airport operators, and where courts had to play a role for ensuring that the new local approaches stayed in line with the basic principles of the Chicago Convention.
The increasing interest of Asian clients in EU and US market access furthermore increasingly forced our aviation practice to operate in a cross-border, international way.
Open skies also triggered some bankruptcies: airline creditors need assistance with debt recovery but also with fully understanding the impact of an airline bankruptcy on their own activity (for example, impact on interlining arrangements).
Finally, even the ATC reform can be said to be indirectly related to the open skies policy. This policy indeed does not only require the maximum level of safety, but also a need for increased efficiency. Our involvement in legal assistance with the deployment of new technologies in this area can thus also be considered to flow indirectly from the open skies policy.
Carlos Sierra: In Mexico adopting an open skies policy is still a project. The intention of the government is to liberalise air traffic gradually, albeit substantially, commencing in 2014. The pace and extent of this liberalisation is still being discussed and has not been announced formally. The government is discussing the design of this policy with all local airlines through the National Air Transport Chamber.
Air traffic by foreign and local airlines to and from different destinations in Mexico has increased significantly during the past few years. In addition to numerous additional frequencies and flights operated by existing operators, several carriers have initiated service to Mexico during the year in course. Applications have been filed by several Asian carriers to open cargo routes and flights into Mexican airports. Passenger traffic has also increased substantially to destinations like CUN, MEX and others.
In terms of our practice, I cannot name any significant changes at this point and do not expect any of these to occur until the open skies policy is implemented.
Environmental concerns and sustainability are gaining importance. How are your clients addressing these challenges?
Anita Mosner: Our airline clients are investing a great deal of time and resources on environmental initiatives, including developing biofuels, optimising the efficiency and performance of their airplanes, and striving for operational efficiencies that will reduce their overall fuel reduction. In the United States, efforts to implement NextGen have taken centre stage, since the optimised use of US airspace will yield both operational and financial benefits to users of our system. Of course, programmes such as these are not implemented in a vacuum, and carriers are pushing for an accelerated rollout and enhanced government commitment to the programme. The government shutdown that occurred in the US this fall was an unfortunate setback to those initiatives.
Of course, the overarching issue has been the efforts of the world’s aviation interests to come to terms on a reasonable aviation emissions scheme. Everyone in the industry is hoping that the deliberations of the recent ICAO Assembly will yield a framework that creates incentives for carriers to reduce their emissions, but does not give rise to serious competitive distortions.
Catherine Erkelens: Different stakeholders are involved in new technological developments that address the environmental concerns: aircraft manufacturing developments, and the new developments in relation to ATC and ATM.
From the perspective of environmental regulation, it is important for the industry that environmental concerns are addressed in a coherent global way. A coherent global approach, on the basis of international aviation law, will ensure legal certainty and fair competition.
Our clients condemn unilateral local initiatives that may create distortion at a global level. The aviation business is an international business, requiring a global approach and global understanding. The role of the ICAO is still considered as being important; the international standards being set for global application are also being considered as important.
Whereas clients are happy to comply with internationally set noise and emission standards, and with the balanced approach, they disagree with unilateral local regulations that create a distortion at the global level.
An example is the former EU Hushkit Regulation, which triggered a lot of reactions – especially from US carriers. The issue was finally resolved in the framework of the setting of new international noise standards at ICAO level. In the same way, clients consider that the EU emissions trading system for the airline industry and environmental taxes are an infringement of international aviation law as contained in the Chicago Convention.
Aircraft manufacturers, and also the air carriers, want to contribute to environmental measures but legal certainty at an international level is considered as a conditio sine qua non for a sustainable industry.
Environmental regulation sometimes contradicts aviation economic regulation. The issues, related to the Brussels noise standards affecting flights to and from Brussels Airport, are an example thereof: the Belgian federal government, in charge of aviation regulation, is confronted by the regional competence of the Brussels Region, in charge of environmental issues. Such conflicts can render sound economic operation to and from an airport difficult. Carriers fail to fully understand why they are being fined by the Brussels Region for trespassing Brussels noise standards whereas they fully comply with the ICAO standards and follow the routes that the air traffic controller and the federal government are imposing.
In different areas there is a tendency towards increased local regulatory initiatives whereas for an international activity such as aviation the international perspective should always be the starting point, for any regulatory measure.
Carlos Sierra: Environmental compliance rules are certainly applicable to all airlines operating in Mexico, particularly in relation to noise emissions, under the General Law of Ecologic Equilibrium and Environmental Protection and under the Mexican Official Norm (NOM) 036-SCT3-2000 effective since 19 February 2001. Compliance with these rules however is only required to be demonstrated by all permit holder operators of aircraft as a requirement for approval of the validation of their operations specifications. We have not been required to address these requirements in any different or more specific form.
Lawyers reported an increasing focus from regulators on airports. Have you noticed this in your jurisdiction? Have any new requirements been imposed on airports?
Anita Mosner: Airports were not a focal point for US aviation regulators this year. However, there were some major developments relating to the FAA’s Airport Privatization Pilot programme, with the FAA granting approval to the investment by Aerostar Airport Holdings in San Juan’s Luis Munoz Marin International Airport, and with the suspension of the bidding process for Chicago’s Midway Airport after certain key bidders withdrew. With state, county and municipal governments under increasing financial strain, we can expect parties to continue to explore public-private partnerships as a means of both raising cash and finding new channels for airport and other infrastructure investment. However, the fact that relatively few of the airport privatisation proposals in the US have made it to closing suggests that the FAA should consider making amendments to the programme to make it more palatable to private investors.
Airport security remains a hot topic in the US, with the TSA, airport operators and air carriers continually skirmishing about the allocation (and funding) of various security functions.
Catherine Erkelens: Regulators are indeed required to adapt the regulations to new airport environments and airport economics.
Brussels Airport was privatised; the state presently holds a minority share of 25 per cent. New airport regulations consequently had to be developed, whereby the government provided a licence for operating the airport.
The governments, with such airport regulation, need to make strategic choices of economic importance (eg, single till system or dual till or something in between). Economic regulation is a necessity with privatised airports. The concept of “public service” has evolved. Airport operators have evolved from public entities in charge of a public service to commercial enterprises that must behave as an economic partner of the airport users. For example, whereas the air carriers previously were not involved in the setting of the airport charges at Brussels Airport, they now need to be consulted by the airport operator, which leads to five-year agreements on the tariff formula and tariff system.
The government now not only supervises security measures at Brussels Airport, but equally the application by the airport operator of the economic regulation.
At the present moment, the regulation in relation to the provision of groundhandling services at Brussels Airport, the limitation therein to two suppliers airside, is being challenged by suppliers that do not get access to the market as well as by the airport users.
Separate from the federal regulation in relation to Brussels Airport, the Belgian regional airports are governed by regional regulation; activity at regional airports is increasing especially in the Walloon region where Charleroi Airport serves Ryanair and Liège Airport has an important freight activity.
The federal regulators do not always have the same approach as the regulators for the regions in Belgium (for example, in relation to groundhandling services). A coordinated approach is increasingly necessary to avoid distortions.
Carlos Sierra: The regulatory framework of Mexican airports has not changed since January 2009 when certain amendments to the Airports Law were introduced in respect to foreign investment, financial projections and infrastructure requirements for operators. No new requirements have been imposed to airport concessionaires and operators since then. In recent weeks the slot allocation system at Mexico City International Airport (MEX) has been modified to reorganise the slots of operations at this airport.
The UK’s Civil Aviation Authority recently eased up on restrictions surrounding the use of electronic equipment on planes and the US Federal Aviation Administration has also been looking into allowing wider use of personal electronics on flights. Have there been any new regulatory developments in relation to technology in your jurisdiction? Do you expect these changes to be adopted throughout the world?
Anita Mosner: The FAA has just issued a new policy which permits the use of personal electronic devices during aircraft takeoff and landings, and carriers are now modifying their practices to account for this change.
At this point, some of the more challenging issues relate not to the interference with flight operations themselves, but how the use of these devices may affect the cabin environment. Certainly, there have been studies (and concerns) about the inflight use of mobile phones during flight, and the potential to cause conflict and disturbances among passengers. While these issues need to be addressed, I have no doubt that we will see sweeping changes in the way passengers interact with technology during their flight, just as we have seen these changes in the cockpit, where iPads and satellite technology have revolutionised the ways in which pilots and flight contol have streamlined flight operations.
Catherine Erkelens: Onboard communications and onboard entertainment are indeed increasingly being looked at, not only by technology and system developers but also by the authorities. EASA produced guidance materials to ensure that aviation safety requirements are being fulfilled. Cooperation between the communications supervisory authorities and the aviation supervisory authorities, however, remains necessary.
The local communications authority in Belgium (BIPT/IBPT) has in the past provided authorisations for the concerned spectrum use, though to a limited extent. A recent royal decree provided for a general authorisation for onboard communication services, however this is still subject to a duty of notification, for the communication service providers, to BIPT/IBPT.
Onboard communications, but also communications from the aircraft to the ground, as well as ground-to-ground communications related to the flight, will increasingly become sophisticated.
New products and systems are being developed, also in the framework of the new developments related to ATC and ATM.
Changes in this area indeed undoubtedly will occur on a worldwide basis.
It is important to underline the role of standardisation bodies – not only at a regional level but at an international level also – and the importance of consultation between these bodies. It is important to underline the role of the ICAO in international standardisation and the need for product and system developers to be involved in the standardisation discussions, also to ensure interoperability of systems.
Furthermore, the certification activities of supervisory authorities will also become increasingly important.
Certification will not alleviate liabilities but will add to safety and service continuity guarantees.
Safety regulation accordingly is becoming more detailed and more complex and specialist advice is increasingly being requested.
Carlos Sierra: Interestingly, on 1 September 2009 the Mexican Ministry of Communications and Transport has cancelled the previously existing Mexican Official Norm NOM-019-SCT3-2001 that imposed the restrictions of use of cellular telephones and electronic devices on board aircraft. No new regulation or official norm has been implemented to regulate the use of cellular telephones and electronic devices. The use of electronic devices on board aircraft continues to this date, being restricted by air carriers individually notwithstanding that there is no regulation in effect that actually imposes the applicability of these restrictions.
In that sense, I believe that Mexican carriers are likely to follow and embrace the liberalised use of cellular telephones and electronic equipment on aircraft as such becomes technically possible and permitted in other jurisdictions, particularly in the United States.
I agree that the evolution of technology makes the ease of existing restrictions inevitable around the world in the near future. I agree also that the role of the ICAO will be fundamental in order to standardise the rules, if any, that will be applicable in this area.