FAA ISSUES NEW POLICY ON AIR CARRIER INCENTIVE PROGRAMS
March 17, 2023
On February 3, 2023, FAA announced a proposed policy statement related to the incentives offered by airport sponsors to air carriers under Air Carrier Incentive Programs (“ACIP”). The policy includes revised general guiding principles aimed at giving airport sponsors more flexibility to design incentive programs while remaining in compliance with federal obligations on economic discrimination, reasonable fees, and the use of airport revenue. If adopted, the policy would also supersede FAA’s “Air Carrier Incentive Program Guidebook” that was issued in 2010. The proposed policy includes the following proposals:
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A new definition for “new service.”
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A definition for “seasonal service,” which would be a service offered for less than 6 months, and a proposal to permit incentives for seasonal service for three seasons, up to three years from the start of service.
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Continuation of the policy prohibiting an incentive based on the type or size of an aircraft.
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Clarification that an ACIP may be offered for new cargo service, separate from any ACIP offered for new passenger service.
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Authorization for airport sponsors to offer per passenger and per seat-mile incentives to reward the success of new service and longer routes as long as the incentives comply with certain requirements.
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A disclosure requirement for proposed ACIPs and incentives to promote transparency among all carriers and airport users.
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Authorization for airport sponsors to participate in the use of non-airport funds for an ACIP with certain limitations.
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A clarification that payments to a carrier will be considered a prohibited diversion of airport revenue, and that payments of airport revenue for marketing must be provided to only the marketing services.
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Elimination of the distinction between airports based on size in relation to budgets for ACIPs.
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Grant of discretion to airport sponsors on the use of incentives to restart service previously subject to an incentive but canceled in response to a service cancellation, such as because of the COVID-19 pandemic.
The policy would allow FAA-compliant carrier incentives initiated prior to the issue date of a new final FAA policy to continue as implemented until they expire, but incentives initiated on or immediately after the issuance date of a final policy must comply with the guidance included in FAA’s policy statement for compliance with sponsor Grant Assurances.
FAA is accepting comments on the proposed policy until April 4, 2023, in the relevant docket, available here. If you are interested in filing a comment and need assistance, please feel free to contact us and we would be happy to assist you.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com 202-659-6622) or Drew Derco (dderco@eckertseamans.com 202-659-6665).
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