ACI-NA Wekly Legal Briefing--Issue 7

ACI-NA’s Weekly Legal Briefing

Volume 2012, Issue 7

Week of April 2 – 6, 2012

Legal Affairs Committee Members:

The following matters are highlighted for your review and information.

  • FAA Issues Determination on Clark County Department of Aviation’s Air Service Incentive Petition

In February of 2011, the Clark County Department of Aviation submitted a petition with the Federal Aviation Administration seeking a review of its proposed air service incentives program for Las Vegas McCarran International Airport.  More specifically, Clark County requested the FAA to revisit its definition of “new air service” under its Air Carrier Incentive Program Guidebook.  Clark County’s petition pointed out that under the FAA’s prior interpretation, an airport operator was not permitted to offer an incentive program that provides discounts based on increased aircraft weight or offering increase seats in a service market by upgauging of aircraft.  Clark County asked the FAA to revisit its interpretation of “new service” to include flights that increase landed weights and/or that result in additional seats and/or service in a market due to the size of aircraft used, or “upgauging”.

Following the filing of the petition by Clark County, the FAA issued a Notice in the Federal Register seeking public comments on the matter.  Airlines for America (“A4A”) and a citizen filed comments opposing the petition.  British Airways filed comments supporting the petition, as did the Wayne County Airport Authority (operator of Detroit Metro Airport), the City of St. Louis (operator of Lambert-St. Louis International Airport) and Airports Council International-North America (“ACI-NA”), the latter of which also encouraged the FAA to increase flexibility in air service incentive programs generally.  The American Association of Airport Executives (“AAAE”) filed comments stating that airports should have maximum flexibility to structure incentive plans to attract and retain air service, but did not specifically state that it supported the Clark County petition.

The FAA’s notice of its review of the Clark County petition is scheduled to be issued in the Federal Register on Monday, April 9.  The preliminary notice is attached for your review and information.  The FAA grant the petition of Clark County, in part.  With respect to Clark County’s request that its interpretation of “new service” be broadened so that air carriers would be eligible for incentives solely based on increased in landed weight of an aircraft, the FAA determined that such an interpretation could actually undermine one of the two goals of the incentive program allotted under the FAA’s current Incentive Policy, inasmuch as an air carrier could increase landed weight yet reduce the number of flights and number of seats available in a particular market.  The FAA determined, however, that the definition of “new service” should include upgauging of individual flights to the extent that additional passenger seats would be designated in a particular market or in an airline’s overall operation, resulting in an increase in the use of the airport.  The FAA expressed a concern that an airline could alternatively consolidate schedules by upgauging and simultaneously reduce services offered to the flying public or limit travel options available in particular markets or from an airport.

Thus, the FAA restricted the extension of the definition of “new service” to include upgauging unless certain conditions are met.  Those conditions include:

  • A condition permitting an airport sponsor to use airport revenue as part of a

comprehensive incentive program to encourage air carriers to increases seats on

existing flights though upgauging must preclude upgauging from being the only

component of the incentive program. In other words, upgauging cannot be the

stand alone piece of the incentive program. The program must also include

offering similarly formulated incentives for adding new flights.

 

  • A condition permitting an airport sponsor to use airport revenue as part of a

comprehensive incentive program includes prohibiting air carriers participating in

the incentive program from cancelling existing service on the route(s) for which

the airport sponsors is offering incentives. To be eligible for incentives to

upgauge, an air carrier must demonstrate an increase in service above and beyond the baseline set by the market(s) targeted by the incentive program.

 

  • A condition prohibiting air carriers from receiving incentives for “new” flights to

other markets targeted under the incentive program when it reduces service in

other markets targeted. The goal is for airport sponsors to increase use of the

airport, thus incentivizing carriers for swapping service to extend incentives is not congruent with the airport sponsor’s goal.

 

Upcoming Conferences and Events

  • REGISTRATION FOR THE  2012 ACI-NA SPRING LEGAL AFFAIRS CONFERENCE IS NOW OPEN-----“The ABCs of RFPs and Airport Procurement---Lessons from those who’ve been there and back.” The Conference will take place from April 25-28, 2012 at the Double Tree Hotel, Charleston, SC.  

 

Spring Legal Affairs Conference Offers Real Life Guidance on Airport Procurement Issues

This year’s Spring Legal Affairs Conference will focus on airport procurement issues during its sessions on Wednesday and Thursday.  The opening session will provide three recent airport procurement scenarios arising in three different airport contexts, all of which experienced award protests.  Throughout the sessions, the emphasis will be on identifying best practices in different airport contracting/procurement areas.

Other topics to be covered will include a review of the things to consider during the competitive selection process, including drafting RFPs, developing evaluation criteria, selection panels, vetting of panel members, responsible proposers and responsiveness of bids, handling questions from proposers, issuing addenda and granting extensions of time.  Another session will examine open records laws in different states and provide first-hand experience on what has to be handed over and when.  There will also be a session devoted to awards and protests, examining various protest procedures as well as issues of waiving errors, rejecting bids, “Best and Final Proposals”, how the ward is made and when, negotiations after the award and handling protest from disappointed bidders.  There will also be sessions devoted to: airport construction RFPs and competitive selection of design/build and CM/GC contractors [speakers were recently identified for this session]; concessions RFPs and procurement processes; the award of professional services contracts [a new speaker has been identified for this session], including the selection of architects and engineers, local rules on whether competitive selection is required, processes for the selection of outside counsel and bond counsel; and “sole source” situations and other exceptions to the competitive selection requirements.

The traditional sessions for this conference have been retained, including the Litigation Update Session, a Transactions Update Session and federal regulatory developments in aviation security from Francine Kerner, Chief Counsel of the Transportation Security Administration.  There is also a panel including Supriya Raman, the FAA’s Program Manager of the Airport Disability Compliance Program, and Rebecca Springer of Crowell & Morning, which will provide information on recently implemented government regulations affecting airports with respect to the accommodation of disabled travelers and hiring and employment practices associated with disabled persons.  And there’s even more; see the conference agenda for further details.

Registration is only a click away:  https://www.aci-na.com/scriptcontent/custom/Meetings/registrationLogin.cfm?meeting_where_to_next=http://www.aci-na.com/source/Meetings/cMeetingFunctionDetail.cfm?section=unknown&product_major=12412&functionstartdisplayrow=1

OTHER ACI-NA CONFERENCES OF INTEREST:

 

 

If you have information of interest to share, forward it to me by COB on Thursday of each week.

  Send it to:  mhargrove@aci-na.org

Have a great weekend!

Monica

Monica R. Hargrove
General Counsel

Direct: (202) 861-8088