FAA FINALIZES NEW POLICY ON AIR CARRIER INCENTIVE PROGRAMS
January 15, 2024
On December 7, 2023, the FAA issued a final policy statement regarding the agency’s Air Carrier Incentive Program (“ACIP”). In addition to offering incentives to new entrant carriers to begin service at an airport, the FAA policy also incentivizes incumbent carriers at an airport to add new routes. The new policy supersedes the FAA’s “Air Carrier Incentive Program Guidebook” which was first issued in 2010. Due to the development of ACIPs since the guidebook’s first publication, the new policy aims to provide greater flexibility for airport sponsors to design incentive programs while obeying federal obligations regarding economic discrimination, reasonable fees, and use of airport revenue.
More specifically, the new policy modified the definition of new service to include “a significant increase in capacity on preexisting service to a specific airport destination.” While airport sponsors have leeway to define “significant” in an ACIP based on local circumstances, the FAA encourages airport sponsors offering incentives for frequency increases to consider identifying a specific threshold percentage increase to qualify for incentives. The new policy also outlines the agency’s position that it is not unjustly discriminatory for an ACIP to distinguish between passenger and cargo carriers. Even after receiving public comments opposing the proposed policy’s view that a waiver or assumption of costs that would ordinarily be charged to a third-party would be considered impermissible for an ACIP, the FAA did not change its position. The final policy notes that the FAA is concerned that permitting waivers of charges because doing so “would cross a line into subsides prohibited by the requirements for use of airport revenue.”
The policy permits FAA-compliant carrier incentives initiated prior to the December 7, 2023, issuance date and up to 60 days thereafter to continue as implemented until they expire. Any incentives initiated 60 days after the issuance date must comply with the guidance included in FAA’s final policy statement.
If you have any questions, please contact Evelyn Sahr at 202.659.6622 or esahr@eckertseamans.com; Drew Derco at 202-659-6665 or dderco@eckertseamans.com; Jay Julien at 202.659.6648 or jjulien@eckertseamans.com, or any other attorney at Eckert Seamans with whom you have been working.
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