Public Contract Law Journal

The Fly America Act Controversy: An Analysis of GSA Contracts Involving Foreign Carriers and Important Considerations

by David Kelly

David Kelly (dkelly@law.gwu.edu) is a government contracts attorney at Puget Sound Naval Shipyard in Bremerton, Washington. In May 2017, he graduated from The George Washington University Law School with a LL.M. in Government Procurement Law. The author thanks Professor Steven Schooner for his helpful guidance and Professor Karen Thornton for her constructive feedback and instruction. The author would also like to thank his parents for all that they have done for him. Finally, the author wishes to thank his wonderful wife Kiersten for her loving support and encouragement.


I. Introduction

The General Services Administration (GSA) is tasked with organizing and contracting for the flight needs of the U.S. government.1 For Fiscal Year (FY) 2016, the agency received 21,167 proposals from eight different airlines and made thousands of route awards with a total estimated value of $1.74 billion.2 For FY 2017, the government contracted with multiple airlines in awarding approximately 9,000 different routes.3 While the government seeks best value for these flights, it is also bound by the Fly America Act.4 The Fly America Act aims to help domestic carriers compete against foreign carriers by requiring that foreign transportation of persons or property funded by the U.S. government be furnished by U.S. air carriers.5

A controversy has developed within the United States’ airline industry over the awarding of government contracts to JetBlue Airways. The issue is whether these awards violate the letter and spirit of the Fly America Act.6 The awards at issue involve routes from the United States to Europe and the Middle East.7 Delta, American, and United Airlines (Big Three) are the three largest airlines in the United States and have complained about losing government awarded routes to JetBlue.8 JetBlue, although a domestic carrier, will not operate the awarded routes; instead Emirates Airlines, one of JetBlue’s codeshare partners, will perform the route.9 Emirates is one of three Persian Gulf (Gulf) carriers that the Big Three alleged receive massive and unfair subsidies from their governments.10 The government makes awards to JetBlue under the so-called “codeshare exception,” which provides compliance can be achieved in codeshare agreements as long as the airline ticket includes a U.S. flag carrier’s code.11

The Big Three argue that awarding these routes to JetBlue violates the letter and purpose of the Fly America Act.12 The Big Three’s arguments center on the Fly America Act, but a closer look at their GSA awards shows a double standard. The Big Three, like JetBlue, receive government contract awards using foreign codeshare partners that are subsidized.13 This is strong evidence their argument is not motivated by a concern for the Fly America Act; rather, their real motivation is protectionism. These disputes achieved greater significance given the Trump administration’s “America First” policy.14 As this article explains, the administration should not assume putting America first means putting the Big Three first.

While there is strong evidence the Big Three are pushing a double standard motivated by protectionism, it is understandable why an airline would be confused over GSA regulations and the Fly America Act. The current regulations do not meaningfully support the Act’s purpose.

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