September 18 - The International Air Transportation Fair Competitive Practices Act

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The International Air Transportation Fair Competitive Practices Act:

The Protectionists Protest Too Much, Methinks 


By Kevin Mitchell

For nearly three years, Delta Air Lines, American Airlines and United Airlines (Big Three) have mounted a historically expensive political campaign urging the US Government to abandon longstanding bipartisan Open Skies policy. They claim they have an ironclad legal case supported by uncontestable and overwhelming facts that irrefutably show Emirates Airline, Etihad Airways and Qatar Airways (Gulf Carriers) and their governments have breached the US-United Arab Emirates and US-Qatar Open Skies agreements. Accordingly, they argue, the US Government should take the unprecedented step of tearing-up those Open Skies agreements, abandoning its 25 year old one-size-fits-all international aviation policy and replacing those agreements with competition-limiting ones tailored solely to the UAE and Qatar that pander to the profit-maximizing whims of the Big Three. 

Increasingly, Trump Administration officials and industry observers have quite appropriately noted the gaping disconnect between the confident claims of the Big Three and their cowardice to stand behind them. Specifically, if the Big Three are as confident in their alleged unfair competition case as they tout, why are they so afraid to put it to the test by filing an International Air Transportation Fair Competitive Practices Act (IATFCPA) complaint? For over 40 years, the Big Three and their corporate predecessor airlines confidently relied on this Congressionally approved process for evaluating and addressing international aviation-related competitive concerns. Yet that proven statutory process is suddenly no longer sufficient or appropriate. 

What is IATFCPA and why does it fit the Big Three’s Gulf Carrier allegations hand-in-glove? The US Department of Transportation (DOT) has an excellent summary on its website – According to DOT, in enacting IATFCPA, Congress authorized it to “take action in response to anti-competitive, discriminatory, predatory or unjustifiable activities by a foreign government or foreign airlines against a U.S. airline.” Congress intended that any action deemed warranted after a thorough fact-based evaluation be expeditiously undertaken. According to DOT, “the Department has up to 180 days from the date that the complaint is filed to take action to resolve the issues raised, dismiss the complaint, or resolve it through diplomatic.”

So, why have the Big Three wasted nearly three years – nearly 30 months more than an IATFCPA complaint would have taken from start to finish – and tens of millions of shareholder dollars on a hugely unsuccessful political campaign when the well-established IATFCPA complaint process was available to them? 

There is a tipping point where one objects so much it cries out that there is a mortal weakness in their position and they lose any semblance of credibility to argue the point. That is the precise position the Big Three find themselves in today. The clumsy, totally unconvincing and embarrassingly false explanations by the Big Three for their failure to file an IATFCPA complaint would have prompted Hamlet to observe, “the protectionists protest too much, methinks!”

How has the Big Three tried to explain away its failure to file an IATFCPA complaint?

First, in an impertinent slap at both Congress and DOT they dismissively branded the four decade-old, Congressionally-approved IATFCPA process as nothing more than a “ridiculous acronym.”  A statutory process Congress enacted in 1974 to protect US airlines from unfair international competitive practices, and one that has consistently delivered as Congress intended due to the expertise and professionalism of DOT, is nothing more than a “ridiculous acronym?”  Up to now, the Big Three and their corporate predecessor airlines never seemed to think so as they consistently relied on IATFCPA.    

Second, according to the Big Three in an anti-IATFCPA propaganda paper, an IATFCPA case would be “quite possibly lengthy.” There are two explanations: either Fair Skies - the Big Three’s public relations arm on this issue - does not have internet access and therefore has not read the DOT IATFCPA complaint overview page noted above which makes clear there is a 6 month statutory clock or it is a knowingly false argument. Perhaps it is a case of new math but, I think, 6 months is shorter than the nearly 36 months the Big Three’s failed political campaign has taken thus far. The argument IATFCPA would take too long is embarrassing and takes disingenuousness to soaring heights.

Finally, the Big Three makes the tortured and false argument that Open Skies and IATFCPA are completely separate. In other words, since 1992 when our first Open Skies agreement was signed, IATFCPA became a legal nullity. The Big Three clearly didn’t think so as recently as 2013 when they relied on IATFCPA to address discriminatory user charges at Italian airports. The US signed an Open Skies agreement with Italy in 1998, and that Open Skies relationship continues under the US-EU agreement signed in 2007. Enforcing Open Skies rights and the IATFCPA process are not mutually exclusive as the Big Three feebly claim, and the pathway those airlines chose to take in the recent Italian airport discriminatory fee matter convincingly shows that is so.

So what is the explanation? As I have written before, the answer is that the Big Three have IATFCPA-phobia – an acute fear of having the experts at DOT undertake a rigorous, apolitical and fact-based evaluation of the legal merits of their allegations. DOT’s professional staff would not be fooled by political sound bites and hollow advocacy. Delta’s headquarters knows and fears that. That is why it has unleashed Fair Skies to falsely attack and disparage the IATFCPA process to attempt to explain away the reality that Delta and its oligopoly partners American and United have long known they do not have a legal case so they have mounted a political campaign instead of filing an IATFCPA complaint.

It is time for the Trump Administration to tell the Big Three to either have the confidence and courage to file an IATFCPA complaint or to stop beating their protectionist war drum and instead focus on investing their record-setting profits in improving their product so they can compete more effectively.

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