DOT TO CURTAIL EUROPEAN CARRIER WET LEASES BEYOND 14 MONTHS
March 1, 2019
The United States Department of Transportation has issued a Show Cause Order, Order 2019-2-17, proposing limitations on certain current and future statements of authorization for long-term wet-leasing. The Order applies to wet-leases by foreign air carriers of the EU, Iceland, Norway, and Switzerland to other such carriers. Interested parties have until March 7, 2019 to file objections, and answers are due seven days thereafter.
If finalized, DOT will take the following actions with regard to EU-to-EU carrier statements of authorization under 14 CFR Part 212:
- Effective immediately, it will terminate the effectiveness of all applicable statements of authorization held by the affected carriers that currently have exceeded 14 months in duration and remain in effect subject to a pending timely filed renewal application under the APA. Affected carriers have until March 30, 2019, to end these operations.
- Effective immediately, it will terminate the effectiveness of all applicable statements of authorization held by the affected carriers that were granted for an indefinite duration and currently have exceeded 14 months in duration. Affected carriers have until March 30, 2019, to end these operations.
- Effective immediately, DOT intends to limit all authorizations for applicable wet-lease operations by the affected carriers to a total collective duration of 14 months. These limitations would apply to any past applicable operations for which the Department has granted authorizations effective October 3, 2012 or later, all ongoing applicable operations for which the Department has granted authorizations that have not yet reached 14 months in duration, and all future applications from affected carriers for applicable operations.
The Department’s proposal comes in response to European Commission Regulation No. 1008/2008, which limits non-EU carriers’ wet-leases to EU carriers to a duration of seven months plus one possible extension of seven more months, notwithstanding U.S.-EU Open Skies provisions that call for liberal wet-leasing. DOT regulations contain no equivalent restrictions, so U.S. carriers have pressed for time limits to be imposed to balance their alleged competitive disadvantage. The U.S. government has imposed limits on a case-by-case basis and has been raising the issue with EU regulators since 2012. However, action by the Europeans has yet to occur. Interestingly, in what appears to be an attempt by DOT to push the EU to resolve the issue, the Show Cause Order states that the Department is prepared to vacate the order or not finalize the proposed tentative decision if the EU Commission “takes the necessary steps to proceed to the provisional application of the standalone Wet-Lease Agreement negotiated in February 2018.”
If you have any questions or would like to consider responding to the Order to Show Cause, please contact us.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com or 202-659-6622); Drew Derco (dderco@eckertseamans.com or 202-659-6665), or Alexander Matthews (amatthews@eckertseamans.com or 202-659-6633).
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