January 6, 2017

Aviation Reform Under the Trump Administration: What to Expect

Holland & Knight Alert
Anita M. Mosner

President-Elect Donald Trump has indicated strong interest in two areas: infrastructure development and regulatory reform. Several potentially important developments in the aviation sector are anticipated in both areas.

In terms of infrastructure development, air traffic control modernization will likely be a high priority for the Trump Administration. The Federal Aviation Administration (FAA) for many years has struggled to secure the funding and support required for the migration to a satellite-based NextGen system, and disputes over the structure of the system have been heated. Rep. Bill Shuster (R-Pa.), chairman of the House Committee on Transportation and Infrastructure, last year proposed the creation of a government-owned corporation to oversee air traffic control functions, an initiative that drew the support of several airlines and industry groups but drew sharp opposition from some labor groups. Expect this initiative to receive early and serious consideration under the new Administration.

Modernization of airports has also been a high priority. Although an airport privatization pilot program is currently in place (49 USC 47134), detractors of the program have claimed that restrictions on the program have been unduly onerous, which has deterred investment and has even caused certain airports that had entered the pilot program to withdraw from the program entirely. See Airport Privatization: Limited Interest despite FAA's Pilot Program, GAO 15-42. Expect the Administration to consider both the expansion of the program and the relaxation of some restrictions imposed upon prospective investors in order to make the program more attractive to private capital.

On numerous occasions during the presidential campaign, Trump indicated his desire to slash burdensome government regulations, and he has nominated a special adviser, Carl Icahn, to oversee the review of various federal regulations. Notably, Icahn is a former owner of Trans World Airlines (TWA) and was a staunch opponent of airline regulation during his tenure.

While it is difficult to offer predictions, it is fair to assume that the Trump Administration (like many previous administrations) will put on hold any pending regulations that have not been issued in final form. While the U.S. Department of Transportation (DOT) recently issued final airline passenger protection regulations, which among other things, concerned the display and disclosure of codeshare services, as well as the expansion of on-time performance and mishandled baggage reporting requirements, several other initiatives in the pipeline have elicited considerable controversy. For example, DOT previously considered whether carriers should be required to provide information concerning their ancillary fees to online travel agents, Global Distribution Systems (GDSs) and metasearch engines, regardless of whether the carrier has contractual relationships with such enterprises, and encountered a firestorm of criticism. Aware of the controversy, the DOT has requested industry comments on whether restricting access to fare and schedule information prevents consumers from comparison-shopping, and is therefore an unfair and deceptive practice. Given the opposition of U.S. carriers to this initiative, we would expect the carriers to lobby the Trump Administration to discontinue this query.

Of course, there are numerous other issues that might prove controversial. Despite reservations raised by certain Republican interests, the United States in 2016 concluded a new air transport service agreement with Cuba, and several U.S. carriers launched scheduled service to Cuba after a 50-year absence from the market. Although there have been some demands to roll back these initiatives and Trump has expressed concern about the thaw in U.S.-Cuba relations, air carriers and service providers have quickly entrenched themselves in the market, which would raise sharply the potential political and commercial cost of any change in policy.

To find out more about how these initiatives might affect your company, contact Anita Mosner, who will continue to monitor ongoing developments and work with stakeholders to shape future policy. 

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.

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