June 25 - BTC Letter to Chairman Shuster Re H.R. 2150


The Honorable Bill Shuster

Chairman

Committee on Transportation and Infrastructure

U.S. House of RepresentativesWashington, D.C. 20515

Dear Chairman Shuster,

As you are aware, Representative Peter DeFazio recently introduced H.R. 2150 to forbid the Secretary of the US Department of Transportation (DOT) to issue a permit or exemption authorizing a foreign air carrier under the 2007 US-EU Open Skies agreement - and all other aviation agreements - if an interested party objects to the foreign carrier’s labor standards. This proposed legislation will likely be offered as an amendment during the markup of the Federal Aviation Administration (FAA) authorization bill (H.R. 2997) in your Committee this Tuesday. We strongly urge that you reject this special-interest amendment and avoid unnecessary controversy surrounding the FAA bill.

Under this vaguely written proposal an “interested party” such as an airline or a labor union at an established carrier would have the ability to erect costly and time-consuming procedural hurdles for a foreign carrier seeking to enter the US market under a grant of rights contained in a freely negotiated and binding air services agreement. 

An incumbent airline or airline union would simply need to raise an objection and the DOT Secretary would be bound to conduct a wide-ranging "public interest” review of a foreign carrier’s labor practices and foreign country’s labor laws. There is no provision for such a unilateral review in any of the Open Skies agreements that the US has negotiated and signed in good faith with over 120 countries. 

Moreover, the language in H.R. 2150 appears to authorize and even encourage the DOT Secretary to ignore our country's international obligations and, in doing so, invite foreign governments to behave accordingly with restrictions on US carriers. Congress would be unilaterally rewriting US Open Skies policy for the benefit of special interests and at the expense of all other stakeholders, including US consumers, communities and manufacturers. 

Key problems with this proposal include:

Commercial Protectionism This proposal would represent a political-influence force multiplier for airline special interests at DOT where, with a simple request, a foreign carrier seeking a permit could be blocked by an interminable review and approval process. Those special interests are keen to block competition as most recently evidenced by the scorched-earth political war on the Gulf Carriers, Norwegian Air International and Norwegian UK.

Chilling Effect On New Entry At a time when the largest US airlines have secured antitrust immunized global alliances - with what had been powerful foreign competitors - and have massively consolidated the domestic US industry, new domestic and international competition is needed more than ever before. The language in H.R. 2150, however, would have precisely the opposite effect. 

By subordinating the exercise of rights in air services agreements to wholly discretionary "public interest findings" at DOT - and by requiring new entrants to run a gauntlet of spending millions of dollars in a years-long regulatory proceeding with no guarantee of a favorable outcome - the new language would be a huge disincentive to new entry. 

These airlines could well decide to fly to other countries that continue to respect the rule of law by obeying their international agreements. They might also be forced to cancel or delay orders at US manufacturers like Boeing, GE and Pratt & Whitney costing many thousands of high-paying jobs. Our country's pro-consumer, pro-competition and pro-growth Open Skies policy would be reduced to shambles. 

Retaliation If the US were to one-sidedly rewrite Open Skies policy agreements, and block or delay entry by duly licensed foreign airlines, the door would be swung wide open for retaliation, unraveling the global Open Skies regime. US cargo carriers’ business models depend on Open Skies as do US airports and their communities. Among others, JetBlue could be stymied in efforts to enter foreign markets.

This proposed legislation is blatantly anti-competitive and anti-consumer and is 100% for the benefit of special interests. The Business Travel Coalition (BTC) has been carefully studying your transformational proposal for fundamental reform and improvement of Air Traffic Control and has reached a positive preliminary assessment that could lead us to lend our active support to your initiative. However, BTC would never be able to endorse an FAA authorization bill containing language such as that proposed in H.R. 2150. 

I hope that you appreciate our central objections to this pernicious language and will reject efforts to insert any such anti-Open Skies, anti-consumer provisions at the Committee hearing on Tuesday.

Sincerely,

Kevin Mitchell

Chairman

Business Travel Coalition

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