Volume 31, Number 3

 

Air & Space

DOT’s Regulation of “Unfair or Deceptive Practices”: Reform Is Urgently Needed

In the fall of 2017, Southwest Airlines was locked in an intense battle for the patronage of California air travelers. The stakes were high: California is the nation’s largest air travel market, generating 134 million domestic passengers annually, more than a quarter of the total U.S. market.1 While the Golden State has long been an airline battleground, Alaska Airlines’ acquisition of Virgin America in 2016 greatly raised the stakes. Alaska Airlines had made no secret of the competitive purpose behind the transaction, stating that the Virgin America acquisition “will position us . . . with an unparalleled ability to serve West Coast travelers,”2 and even claiming on a call with analysts that “Virgin gives us California.”3 Soon after the closing of the Virgin acquisition, Alaska Airlines launched an unprecedented expansion of California service, entering 24 new markets and adding 46 daily flights.

Latin America

Aircraft Lenders Should Provide Financing (Not Advice)

It may seem intuitively obvious that when a bank or leasing company finances a customer’s acquisition of an aircraft, it is strictly engaging in the business of financing (which presumably is its area of business focus and expertise). A reasonable customer, absent representations to the contrary, would not assume that its lender or lessor will also provide business risk, tax, structural, or other advice or assurances. Yet, in a recently decided case, a lender’s arguably ambiguous statements prompted a customer to sue, claiming that the lender breached a duty by failing to protect the customer from a tax liability that resulted in the aircraft’s seizure by a foreign government. Although the bank prevailed against the customer in litigation, the case serves as a cautionary tale for lenders and lessors about the need to disclaim any role or duty to provide ancillary advice or assurances to their customers beyond those specifically memorialized in the loan or lease documentation.

Features

Space

On-Orbit Satellite Servicing Standards Are a Necessity for the Private Space Industry

It is axiomatic that failure to regulate is de facto regulation. Without appropriate structure and predictability, it is difficult to build a new and innovative industry that requires significant private investment. Investors are skeptical of high-risk endeavors that lack consistent government oversight because (in addition to the commercial risks involved) government may react to events in unpredictable ways. The private space industry epitomizes these concerns, particularly with regard to market readiness for on-orbit satellite servicing.

Air & Space

No Good Deed Goes Unpunished: The Recodification of the Airline Deregulation Act’s Preemption Provision

The Airline Deregulation Act (ADA) was enacted in 1978, amending the Federal Aviation Act of 1958.2 Since then, courts and academics have spilled abundant ink about various aspects of the ADA, including the scope of its preemptive effect. Less analyzed, however, has been the effect on the ADA of the 1994 recodification of title 49 of the U.S. Code. More specifically, notwithstanding the recodification law’s assurance that it was “not [to] be construed as making a substantive change in the laws replaced,” the “changes in phraseology” that were nevertheless made to various aviation laws have posed a dilemma for the aviation bar, prompting one member to remark that the pre-recodification version of title 49 “continues to live on, in what might be described as a ‘shadow’ existence—repealed and unpublished, but nevertheless controlling in the event that the terms of the statutes now enacted in subtitle VII substantively depart from those of their predecessors.”

Columns

Air & Space

Chair’s Message

I hope everyone had a good summer with some family, fun, and relaxing. Now we forge ahead to finish up the year. This has been a busy and innovative year for the Forum on Air & Space Law. Our practice committees (Space Law; Consumer Protection; Drones; General, Business and Charter Aviation; and Aviation and Space Finance) are very active, with regular calls and conferences, and will be holding break-out sessions during the Annual Conference in Chicago in September. If you haven’t yet joined one, consider it.

Latin America

Editor’s Column

This issue of The Air & Space Lawyer arrives as we gather in Chicago for the Forum on Air & SpaceLaw’s Annual Conference. Chicago, of course, is a city that enjoys special significance in the history of our industry as the place where civil aviation’s foundational international treaty, the Chicago Convention, was established. This year, however, we are recognizing a milestone regarding another key legal instrument: the fortieth anniversary of enactment of the Airline Deregulation Act (ADA).