ANTITRUST IMMUNITY & JOINT VENTURES

The Department of Transportation (DOT) has been negotiating open skies air service agreements with other countries for nearly twenty years. These open skies agreements set liberal ground rules for international aviation markets, minimize government intervention, and have allowed airlines to enter into cooperative marketing arrangements (code shares). In conjunction with this open skies policy, the DOT has also granted antitrust immunity to alliance agreements between U.S. carriers and airlines that have their home in an open skies partner country.

U.S. antitrust laws prohibit competitors, including rival airlines, from agreeing between themselves on issues including airfares, the allocation/limitation of capacity, the assignment of routes and dealings with third parties. To avoid this potential conflict, the U.S. Department of Transportation (DOT) has the authority to grant exemptions (or “immunity”) from antitrust prohibitions.

Once antitrust immunity is granted the airlines involved are removed as competitors. Antitrust immunity has allowed the immunized carriers to conduct their route and schedule coordination, marketing, sales, pricing, product development and other customer services as if they were a single carrier.

The United States and Japan have reached agreement on the text of an Open Skies agreement, which has prompted United, Continental and All Nippon Airways (UAL/CAL/ANA) to apply for antitrust immunity with the U.S. Department of Transportation. These three alliance partners plan to implement a metal-neutral joint venture arrangement. “Metal neutrality” is a scheme by which there is virtually no difference on the part of the carriers’ marketing staffs as to which one of the alliance partners actually does the flying.

While a grant of antitrust immunity has allowed alliance partners greater international cooperation, one-sided agreements and metal-neutral schemes can have a detrimental impact on our jobs. We have serious concerns regarding this expansive application for antitrust immunity across the Pacific and specifically its lack of provisions insuring against any loss of existing jobs. The broadening scope of airline alliances and overly broad grants of antitrust immunity threaten our long-term job security, and potentially skirt U.S. airline ownership and citizenship rules.

The U.S. Department of Transportation’s review of requests for antitrust immunity is part of a public proceeding in which interested parties have the opportunity to comment. The DOT carefully considers all requests for antitrust immunity beginning with a review of the record to assess whether there is sufficient information to make a reasoned decision that satisfies all statutory requirements.

United Airlines is aggressive lobbying for Congressional, State and Local officials’ support of the United/Continental/All Nippon Airways joint application for antitrust immunity and an expedited handling of this process. United’s lobbyists have been asking elected officials – everyone from Senators to mayors – in key “hub” locations, to sign or send a letter to the U.S. Secretary of Transportation in support of the UAL/CAL/ANA joint application for antitrust immunity.

Our Objections

MEC President Greg Davidowitch has detailed our concerns in a letter that has been sent to every member of the U.S. Senate and U.S. House of Representatives. The United MEC strongly opposes the UAL/CAL/ANA joint application of antitrust immunity for its lack of provisions insuring against any loss of existing jobs. The AFA-CWA United MEC Government Affairs Committee is working with the ALPA United MEC Legislative Affairs Committee in asking Congressional representatives from endorsing this application for antitrust immunity.

Legislative Language To Review Airline Alliances and Antitrust Immunity Grants

Congressman James Oberstar (D-MN), Chair of the House Transportation and Infrastructure Committee, also has serious concerns about airline alliances and grants of antitrust immunity. He has introduced legislation that would reassess the benefit of antitrust immunity for airline alliances

Congressman Oberstar’s bill would direct the Comptroller General to study the legal requirements and policies followed by the Department of Transportation in deciding whether to approve international alliances and exempt such alliances from antitrust laws. The Comptroller General would also be required to share the findings of this study with Congress and the Secretary of Transportation, along with any recommendation for changes in the decision making process. The bill would also require that existing grants of antitrust immunity expire in three years unless specifically approved again by the Department of Transportation, under any new policies that have been implemented.

The language in the bill has also been included in the House passed FAA Reauthorization. The U.S. airline industry is adamantly opposed to this language, especially the sunset provisions.

Joint Ventures

The use of joint ventures and metal neutral arrangements, that increase an airlines competitive advantage and maximize their revenue with little regard as to which airlines employees actually do the flying, is a direct threat to our jobs and our flying. United is able to partner with Aer Lingus on a route between Dulles and Madrid as a result of the Open Skies (Phase I) agreement between the United States (US) and the European Union (EU) which has liberalized air travel on routes between the US and the EU. (The second phase of US-EU Open Skies talks began last year, and threatens further liberalization of the aviation industry.) AFA-CWA opposed the U.S. – E.U. Open Skies agreement, negotiated under the Bush Administration. We strongly objected to many of the provisions in this Open Skies agreement, including proposals to ease restrictions on foreign ownership and cabotage.

While there is no formal role for Congress in the approval process of open skies agreements negotiated by the U.S. Department of State, Congress should take appropriate action to protect the jobs of aviation workers as U.S. carriers use international joint venture arrangements to offshore U.S. aviation jobs. Congress should require that revenue sharing arrangements between U.S. and foreign carriers be approved by the Department of Transportation before they are implemented.

AFA-CWA and ALPA are working together to fight this most recent threat to our jobs. We have been meeting with various Congressional offices about potential legislation that would help protect our jobs in joint venture arrangements.

NEW SCRUTINY OF DOMESTIC CODE SHARES

A National Transportation Safety Board (NTSB) call for more study of safety issues that may arise in airline code-sharing arrangements has prompted leaders of the House Transportation and Infrastructure Committee to request an investigation by the Department of Transportation.

In a letter to the Department of Transportation Inspector General, Congressman James Oberstar (D-MN), Chair of the House Transportation and Infrastructure Committee and Congressman Jerry Costello (D-IL), Chair of the Aviation Subcommittee, state that “air travelers are unaware when they purchase a ticket from a mainline airline that they may actually fly on a regional airlines,”. They have requested the Inspector General to investigate three main points:

• The DOT and the FAA’s legal authority to review agreements between mainline air carrier and their regional partners;
• How mainline air carriers ensure that their regional partners operate at the same level of safety; and
• Whether the flying public has adequate information about code-sharing arrangements to make informed decisions when purchasing a ticket.

FAA REAUTHORIZATION

The aviation unions of the Transportation Trades Department (TTD), AFL-CIO are calling on the Senate to make reauthorization of the Federal Aviation Administration (FAA) a priority and ensure that the FAA Reauthorization bill is quickly brought to the Senate floor for a vote. The last FAA Reauthorization bill expired in 2007 and the FAA has been operating on a series of eight short-term funding extensions.

The House passed a long-term FAA Reauthorization in May 2009, which included several provisions AFA-CWA was able to secure in the legislation to help make the Flight Attendants workplace safer and healthier. The Senate version of FAA Reauthorization bill has only been approved in committee. The Senate bill includes provisions that require the FAA and OSHA to develop workplace safety and health protections for Flight Attendants, the development of a HIMS program for Flight Attendants, a requirement that the FAA act on recommendations from the Flight Attendant fatigue study conducted by the Civil Aerospace Medical Institute (CAMI) and an English language proficiency standard.

We are now hearing that the Senate may consider breaking up the FAA bill, pulling out the financing piece and roping it into the jobs bill or granting a one-year extension of FAA funding. We are strongly opposed to these approaches, which will in essence kill the policy provisions in the bill, forcing us to start over in the next session of Congress.

TTD’s aviation unions are also contacting the Senate Finance Committee members urging them not to break up the FAA Reauthorization bill by passing only the financing provisions of the bill. In addition, our AFA E-Lines included a link to TTD’s Legislative Action Center, where Flight Attendants could send a letter to their Senators.

COUNTERTERRORISM LEGISLATIVE MEASURES

From AFA INTERACTIVE January 28, 2010

AFA-CWA's counterterrorism strategy consists of four points that we see as the keystones for building an effective counterterrorism strategy for aviation that extends into the aircraft cabin. These include restrictions on passenger use of communications systems in flight; basic and recurrent flight attendant counterterrorism training; enforcement of carry-on bag regulations; and discreet, hands-free wireless communications for flight attendants. The strategy papers can be viewed at www.afanet.org.

Passenger use of communication technologies raises a serious security risk: the potential to facilitate terrorist activities. Wireless or wired access to the Internet, cell phone networks, or onboard in-flight entertainment systems can be used to communicate and coordinate tactics, both within the airplane and to coconspirators on the ground or on other airplanes.

AFA-CWA recommends that government security agencies, in consultation with the communications industry, evaluate potential threats and develop appropriate performance standards for hardware, software and operations and that use of passenger wireless communication systems be restricted during periods of high or severe risk for terrorist attacks.

Counterterrorism training for flight attendants is essential to our ability to protect ourselves, our fellow crewmembers, our passengers and the aircraft from acts of terrorism such as hijack or sabotage. In our recommendations, AFA-CWA outlines the necessary components of basic and recurrent counterterrorism training for flight attendants.

The ability of flight attendants to provide pre-flight security—to carefully observe passengers during the boarding process for suspicious behavior—is severely hampered by the distraction of carry-on baggage chaos. AFA-CWA continues to call for carry-on bag limits and the strict enforcement of the limits through the use of a template at each security check point. Reducing distractions caused by managing the excess carry-on bag situation would allow flight attendants to devote the necessary attention to the important task of observing passenger behavior during the boarding process.

AFA-CWA supports the development of discreet, secure, hands-free, wireless communications systems to facilitate crew communications and coordination. These are critical components in protecting crew members and passengers and in maintaining overall control of the aircraft. Such a device will allow crew members under both general emergency and security threat conditions to use their hands to protect themselves, the cockpit, other crew members, passengers, and the aircraft while continuing to coordinate and communicate with the cockpit, the ground, and the rest of the crew.

As an onboard safety and security professional, every flight attendant knows intuitively that he or she has the potential to play a critically important role in identifying and countering potential terrorist activity in the aircraft cabin. With the implementation of AFA-CWA's four-point strategy, flight attendants will be empowered to utilize our unique positions to the fullest, benefiting our flying partners, our passengers, our aircraft and ourselves.

The AFA-CWA Government Affairs Department has been briefing Senate and House staff from the Homeland Security Committees with our proposals to strengthen aviation security. In addition, AFA-CWA will remain engaged in discussions with key staff at the Department of Homeland Security.

AFA-CWA’s Counterterrorism proposals will remain a priority on our legislative agenda. While several of these measures have already been introduced in the House, the Senate needs to take up these proposals.
If you have any questions about the information in this report or our legislative or political activities, please let me know.