Aviation Regulatory Update
April 1, 2019
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BOEING 737 MAX SAFETY INVESTIGATION
Following the crashes of Lion Air flight 610 on October 28, 2018, and Ethiopian Air flight 302 on March 10, 2019, Boeing’s best-selling 737 MAX 8 passenger jets were grounded around the world earlier this month. On March 27, 2019, Boeing announced that it had completed work on the software fix for the Maneuvering Characteristics Augmentation System (MCAS), the aircraft’s autopilot system suspected to be linked to both crashes. The software must now be approved by the FAA.
On March 25, 2019, DOT announced the creation of a Safety Oversight and Certification Advisory Committee (SOCAC), which had previously been mandated by Section 202 of the FAA Reauthorization Act of 2018. The SOCAC will be comprised of industry stake holder experts and provide recommendations on safety oversight. Within the SOCAC will also be an established “Special Committee to Review FAA’s Aircraft Certification Process.” The Special Committee will present its findings directly to the Secretary of Transportation and the FAA Administrator. DOT’s reform actions were not without controversy, however: on March 26, 2019, Representative Peter DeFazio (D-OR), Chairman of the House Transportation Committee, criticized DOT for not constituting the SOCAC sooner, within a statutory deadline, and suggested the committee might be a “rush job” that lacks the expertise and credibility to investigate the MAX issues.
DOT SUSPENDS PROPOSED TIME LIMITS ON EUROPEAN CARRIER CHARTERS
Last month the Department of Transportation (DOT or Department) issued Show Cause Order No. 2019-2-17 (Docket OST-2019-0031), under which the terms of long-term wet-leases by European carriers would be curtailed to match similar EU restrictions on U.S. carriers. The Order was set to take effect on March 30, 2019, however, DOT urged European regulators to move forward with a draft wet-lease understanding between the governments that would resolve the discrepancy between U.S. and EU carriers in access to European wet-lease opportunities.
On March 8, 2019, the U.S., EU, Iceland, and Norway (the Parties) conferred at a U.S.-EU Joint Committee Meeting in Washington and initialized their draft wet-lease understanding, clearing the way for the document to be reviewed and implemented as EU law. In response, on March 13, 2019, DOT suspended its Order 2019-2-17 until August 30, 2019. DOT reiterated that its goal in issuing the Order had been to stimulate a final fix to the wet-leasing issue, thus the Parties’ agreement eliminated the need to move ahead unilaterally by the March 30, 2019 deadline.
We expect the Parties’ agreement will be implemented in the coming months. No further comments are required at this time, but if you have questions, please let us know.
DOT PROPOSES UPDATE TO DENIED BOARDING COMPENSATION RULES
On March 28, 2019, the Department of Transportation published a Notice of Proposed Rulemaking (NPRM), Modernizing Payment of Denied Boarding Compensation, which would allow airlines to use electronic payment methods that are equivalent to cash to distribute involuntary denied boarding compensation (DBC). Interested parties can comment on the proposed rules through May 28, 2019. If you have questions about this rule or would like help preparing a comment, please let us know.
DOT’s DBC rules require “prompt, adequate, and effective” compensation to be distributed by cash or check immediately at the airport or by mail when a passenger is bumped. DOT is updating its rules in response to observations that modern payment technologies, such as prepaid cards or electronic funds transfers (e.g., PayPal), could make distribution of DBC more efficient. The NPRM focuses on ensuring fully cash or check-equivalent compensation. Since certain prepaid cards are valid for less than 90 days (the validity period of a check), while others involve ancillary usage fees (e.g., ATM withdrawal or activation fees), DOT seeks comments about how airlines can best configure electronic systems to ensure that DBC payments account for such issues.
The proposed rule would also allow airlines to provide their mandatory written denied boarding disclosure by electronic means with a passenger’s consent, in lieu of a paper copy. This eliminates the need for stacks of denied boarding pamphlets to be on hand at the gate, and reprinted each time DBC limits are adjusted for inflation. The rule does not change the substance of this disclosure, nor the existing calculations for DBC, and a passenger can still request a printed disclosure if they wish.
CANADIAN TRANSPORT AUTHORITY PROPOSES NEW ACCESSIBLE TRANSPORTATION REGULATIONS FOR PERSONS WITH DISABILITIES
On March 9, 2019, the Government of Canada proposed the Accessible Transportation for Persons with Disabilities Regulations (ATPDR). For large non-Canadian air carriers flying to, from, or within Canada, the rules will make mandatory a variety of service-level obligations for passengers with disabilities. Large air carriers are defined as those who transported at least 1 million passengers globally in each of the past two years, as well as carriers operating flights on a large carrier’s behalf. Also, code share partners who do not fly directly to Canada but partner with a large carrier will be subject to the regulations.
Obligations for carriers are defined in Part 2 in terms of service-level obligations toward passengers with disabilities (e.g., “if a meal is served on board to the person, [assist] the person with the meal by opening packages, identifying food items and their location and cutting larger food portions”). The enumerated requirements are very detailed and cover all stages of the passenger’s journey, including check-in, transportation to the aircraft, boarding, safety and comfort onboard, customs and immigration, retrieving baggage, and leaving the airport. Additionally, the regulations specify carrier obligations with respect to mobility aids, service animals, and buffer zones in seating to protect persons with severe allergies.
On Canadian domestic flights, further requirements will apply to provide an extra seat at no extra cost for a person assisting a disabled passenger or for a passenger whose disability requires accommodation with an extra seat. For the moment, these requirements do not apply to international flights.
Affected carriers should review these proposed rules carefully to ensure their accommodations of passengers with disabilities will be compliant. A backgrounder issued by the Canadian Transportation Agency (CTA) can be found here: https://otc-cta.gc.ca/eng/backgrounder-accessible-transportation-persons-disabilities-regulations. The public may submit comments on the proposed regulation until April 8, 2019, and final revised rules are expected this summer. If you have any questions or would like assistance with preparing comments, please let us know.
WOW AIR CESSATION OF SERVICE
On March 28, 2019, Iceland carrier WOW Air announced the cessation of operations and the immediate cancellation of service, leaving thousands of passengers stranded across the globe. The carrier has recommended affected passengers to check available flights with other airlines, and noted that some airlines may offer “rescue” fares at a reduced rate. Passengers have been instructed to direct refund requests to their credit card company. Passengers who purchased a ticket from a European travel agent (within the European Economic Area) as a part of a package tour are protected by the Package Travel Directive. Passengers who purchased a ticket directly from the carrier may also be entitled to compensation in accordance with the European regulation on Air Passenger Rights. We note that there are currently no DOT requirements for other carriers to assist passengers affected by another carrier’s cessation of service.
NEW JERSEY LEGISLATURE ENACTS DATA BREACH BILL
The New Jersey Assembly and Senate recently passed legislation to expand requirements for companies to inform their customers in the state when consumer records have been the subject of a data breach.
While existing law already requires New Jersey businesses to notify customers of breaches, the new law widens the scope of situations that are covered, and specifies appropriate, attention-getting methods for companies to disclose breaches (e.g., conspicuous notices on public websites or when logging into a customer portal). The theory of the expanded disclosure is to ensure that consumers are able to promptly take steps to secure their finances and monitor their situation when data breaches inevitably occur.
New Jersey is among several other U.S. states, most prominent among them California, who have enacted or are considering consumer data privacy legislation. These laws generally impose new compliance requirements on companies holding consumer data. Carriers must ensure that they comply with all applicable data privacy laws, including those in individual U.S. states, in the event of a data breach. If you have questions about data and privacy law or need assistance with any emergent issues, please contact us.
ICAO ANNOUNCES MILESTONE IN CORSIA DEVELOPMENT
The Council of the International Civil Aviation Organization (ICAO) announced this month that it continues on schedule with the development of its Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). The program is set to begin its voluntary pilot phase in January 2021 and will aim to facilitate climate-neutral growth of the aviation sector through market mechanisms.
The ICAO Council reached an agreement to implement CORSIA’s Technical Advisory Board (TAB) and approved the Terms of Reference for TAB, including the Board’s mandate, tasks and working methods. The Council also approved Emissions Units Criteria that will be used to evaluate sustainability programs submitted to the TAB for endorsement. These developments bring the overall CORSIA program one step closer to completion. 78 countries representing three-quarters of international flights have volunteered to participate in this pilot phase, including the U.S., Australia, Canada, Saudi Arabia, Japan, the UK and many other EU countries. Notable absences include China, Brazil and India.
FAA PENALTY IMPOSED ON REDTAIL AIR
On March 8, the FAA announced a proposed $161,500 civil penalty against Redtail Air of Moab, Utah, for allegedly operating an aircraft on more than 100 flights when it was not in an airworthy condition and for allegedly failing to perform maintenance on the damaged area of the aircraft. The FAA stated that a Cessna 207 aircraft operated by Redtail flew numerous times for hire after an FAA inspector noticed damage to the horizontal stabilizer. The company inspected the dented metal and classified the damage as negligible, but an FAA reassessment found the damage was not negligible according to standards in the Cessna Service Manual.
This Aviation Regulatory Update is intended to keep readers current on matters affecting the industry, and is not intended to be legal advice. If you have any questions, please contact Evelyn Sahr at esahr@eckertseamans.com or 202-659-6622; Drew Derco at dderco@eckertseamans.com or 202-659-6665; Alexander Matthews at amatthews@eckertseamans.com or 202.659.6633.
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