UK: Aviation And The New Trump Administration

Last Updated: 14 March 2017
Article by Dylan Jones

Transportation policy issues played an important role in the recent United States presidential election. Amongst the often contentious and vitriolic debate, improving and modernising the transportation infrastructure of the United States was one area upon which the candidates, and most Americans, agreed.

Newly sworn-in President Donald Trump has called for a considerable transportation infrastructure initiative, indicating a particular interest in improving aviation infrastructure. While airport and air traffic control modernisation may be the early aviation focus of the Trump Administration, there are several other aviation issues which will need to be addressed. President Trump signalled the importance he places on transportation issues by naming the experienced Elaine Chao as his nominee for Secretary of Transportation. Ms Chao served as head of the Federal Maritime Commission under President Ronald Reagan, as a deputy transportation secretary under President George H. W. Bush and as Secretary of Labour under President George W. Bush. Ms Chao is also married to Senate Majority Leader Mitch McConnell (a Republican Senator from Kentucky). Ms Chao's experience and familiarity with Capitol Hill may serve to smooth the inevitably difficult congressional transportation budget negotiations.

For the time being, it appears that Michael Huerta will continue in his role as Administrator of the Federal Aviation Administration ("FAA") and serve out his five-year term which is due to expire in January 2018. This will provide some consistency at a time when the FAA is undertaking many important initiatives, including the implementation and enforcement of new rules applying to the operation of unmanned aircraft systems.

It is worth recalling that President Trump has personal experience of the airline business; through his ownership of the Trump Shuttle some years ago. Looking ahead, there are several areas in which the Trump Administration may have a significant impact on aviation issues.

Aviation infrastructure

President Trump has proposed a USD$1 trillion spending initiative on transportation infrastructure over the next decade; specifically highlighting the need for improved airports and the long-overdue modernisation of the US air traffic control system.

Airport infrastructure in the US is badly in need of investment. Anyone who has flown into major international and domestic hubs in the US, such as LaGuardia or JFK in New York, O'Hare in Chicago or Dulles serving Washington, DC, recognises that these airports are overdue for improvement. This is particularly so in light of international airports competing with US airports for travel and trade business, such as Dubai International or Changi Singapore, which have surpassed the major US airports in terms of capacity and quality.

A major part of the proposed initiative promises to be changes to the US air traffic control system; however, what those changes may be is yet to be fully determined. Foremost will be efforts to finally provide the FAA with the funding and support needed to migrate to the satellitebased NextGen air traffic control system. This important modernisation of the antiquated national air traffic control system has long been held up over disputes regarding proposals to privatise or create a government-owned corporation to oversee the system. These proposals have met with a varying degree of support from aviation industry interests, but are strongly opposed by labour groups.

Of course, the overall price tag of this enormous initiative will be hotly debated in Congress. Congressional leaders and budget hawks will be very hesitant to add this cost to the Federal deficit; likewise, any proposed transportation (or general) tax increases will not be greeted favourably. Based upon these concerns, funding mechanisms such as public-private partnerships and private investments in return for tax incentives have been put forward. However, similar programs have historically met with little interest or success. Therefore, at this time, it is unclear how (or if) President Trump's proposed initiative may be paid for.

International agreements

Generally

During the campaign, President Trump signalled that he would seek to withdraw from or renegotiate international trade agreements entered into by the US by his predecessors. On his first full day in office he carried through on this promise by Executive Order, pulling the US out of the world's biggest trade deal, the Trans-Pacific Partnership. He has also indicated an interest in scrapping NAFTA and certain WTO agreements.

While the stated goal for attacking these trade agreements is the preservation and eventual re-growth of manufacturing jobs in the US, from an aviation industry perspective there are concerns that this may have the opposite effect. As international industries by their very nature, aviation manufacturing, transportation and cargo delivery rely on the free movement of goods. A strict protectionist trade policy may see aircraft orders decrease and parts supply chain issues increase for companies such as Boeing or Lockheed Martin, decreased airline traffic between certain regions for carriers such as Delta and United and decreased delivery opportunities for companies such as UPS and Federal Express – along with potential corresponding job losses within each sector.

It is yet to be seen how far the Trump Administration is looking to go in this regard. For instance, President Trump has indicated his dissatisfaction with major US aircraft manufacturers for the size of their defence contracts, and specifically called out Boeing's contract for delivery of future versions of Air Force One; however he has since met with representatives from these companies to negotiate proposed cuts in corporate tax rates and efforts to maintain manufacturing facilities in the US. These discussions may open the door to ensuring that aviation industries in the US are not significantly impacted by further protectionist policies.

Open Skies agreements

The US is a party to more than 100 Open Skies agreements which have resulted in greater competition, lower airfares and increased routes to hundreds of international destinations. For the most part, US airlines have supported Open Skies agreements as they provide rights to serve many key international destinations as often as they wish. However, the Big Three US carriers Delta, United and American have sought Executive action against the Gulf carriers Emirates, Etihad and Qatar arguing the Gulf carriers have significantly increased their US operations in violation of the terms of the relevant Open Skies agreements.

Specifically, it is alleged that the Gulf carriers have improperly received subsidies from their governments that put US domestic carriers at an unfair disadvantage. Many US aviation interests do not agree with the Big Three on this issue; particularly airport interests who see increased passenger numbers, smaller carriers who gain open access to increased route opportunities and cargo companies who take advantage of Open Skies agreements to more efficiently operate their global delivery services. The Obama Administration resisted calls from the Big Three to temporarily ban the Gulf carriers from adding new US routes, allowed loan guarantees through the Export- Import Bank for the purchase of Boeing aircraft by the Gulf carriers and did not engage in official consultations with the governments of Qatar and the United Arab Emirates to discuss unfair trading practices.

Given the Trump Administration's more protectionist leanings, the Big Three may receive a more sympathetic reception to their subsidy dispute with the Gulf carriers.

International sanctions

Sanctions in place against several nations greatly impact the aviation industry. These sanctions restrict the ability of aircraft manufacturers to sell their products to the subject nations and prevent air carriers from establishing potentially profitable routes to these countries. Further, the sanctions place broad general restrictions on individuals and companies from doing business with these countries; and likewise place financial and travel restrictions on individual and corporate nationals of the subject nations.

Russia

During the election, much was made of reports of supposed close relations between President Trump and Russian interests. Regardless of the veracity of these reports, all indications are that the US and Russia will have much closer relations under the Trump Administration than any other recent administration. What this means in terms of the international sanctions in place against Russia is yet to be seen; however, any softening of the sanctions regime will benefit the aviation sector, with increased aircraft orders and airline passenger and cargo traffic being likely consequences. Further, Russia has long been recognised as a major region for the business jet sector, which could see significant benefits from any relaxation of sanctions.

Iran

President Trump has indicated his concerns with the ground-breaking nuclear agreement reached between the Obama Administration and Iran which, among other things, opened diplomatic channels between the two countries and relaxed sanctions that have been in place since 1979. The relaxed trade restrictions permitted the Treasury Department to grant a license to Boeing to sell 80 aircraft to Iran's national carrier, Iran Air - which is estimated to amount to a USD$16 billion deal.

President Trump has stated that he considers the nuclear agreement to be "the worst deal ever made", however, given the support it enjoys in the international community it may prove a difficult agreement from which to withdraw. It will be interesting to see in which direction the Trump Administration chooses to go forward.

Cuba

During the election, President Trump warned that he is prepared to roll back the Obama Administration's opening of diplomatic relations with Cuba that many see as a gradual and inevitable normalisation of relations. In response to these efforts, and in anticipation of eventual full freedom of movement between the neighbouring countries, US carriers have begun regularly scheduled commercial flights to Havana. Obviously, should President Trump choose to revert to the formerly icy relationship between the two countries, these aviation opportunities would be curtailed.

Climate change

While on the campaign trail, President Trump repeatedly indicated that he believes climate change to be a 'hoax' and that he would "cancel" the Paris climate change agreement.

An early indicator of President Trump's stance on climate change will come with the anticipated implementation of aviation emission rules. In October 2016, the general assembly of the International Civil Aviation Organization ("ICAO") adopted standards for new aircraft designs to take effect in 2020. This measure was supported by the US and dozens of other countries and requires a minimum level of jet engine fuel efficiency. Federal authorities must now write these standards into law; however, the Trump Administration may choose to delay their enactment.

President Trump will be under some pressure from US aircraft manufacturers who supported these measures and fear that failure to adopt these standards would create uncertainty as to their ability to sell their aircraft overseas in countries which adopt the new rules. Further, powerful lobbying interests such as the National Association of Manufacturers have already called upon the Trump Administration to commit to the ICAO standards in order to maintain a level playing field among international aircraft manufacturers.

Aviation security

Other key policy areas for the Trump Administration are immigration and national security, which the Trump Administration sees as going hand in hand. This was dramatically brought into focus by President Trump's controversial Executive Order halting all refugee admissions into the US and temporarily barring people from seven Muslim-majority countries from entering the US. This move had the immediate effect of creating worldwide travel chaos for passengers and confusion for international airport security authorities, airports and air carriers; entities the Trump Administration then held responsible for the disorder. At the time this bulletin goes to print, it is unclear what long term impacts this decision, and the global reaction to it, may have on aviation interests, both domestically and internationally. What is clear from this decision and its fallout is that a significant increase in funding for aviation security and border controls at airports is a likely component of a first Trump budget.

Further, there will be a probable review and/or restructuring of the Transportation Safety Administration ("TSA"); moves which may be welcomed by officials on both sides of the political aisle. Following its creation by the George W. Bush Administration in the wake of the September 11th terrorist attacks, the TSA quickly developed and maintained a reputation for being overly bureaucratic, mismanaged, arbitrary and ineffective. As a result, President Trump may put forward proposals to address these shortcomings in either a national security initiative or as part of his interest in overhauling the federal employee system.

Aviation And The New Trump Administration

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions