1 Legal framework
1.1 Which legislative and regulatory provisions govern the aviation sector in your jurisdiction?
There are multiple legislative and regulatory provisions which govern the aviation sector in the United States. They include:
- Title 14 of the Code of Federal Regulations;
- Title 49 of the United States Code; and
- regulations issued by the US Department of Transportation (DOT), the Federal Aviation Administration (FAA) and the National Transportation Safety Board.
1.2 Which bilateral and multilateral instruments on aviation have effect in your jurisdiction?
Various bilateral open skies agreements are in place between the United States and more than 100 international partners. These agreements eliminate government interference in the commercial decisions of air carriers about routes, capacity and pricing, freeing carriers to provide more affordable, convenient and efficient air service for consumers.
1.3 Which bodies are responsible for enforcing the applicable laws and regulations? What powers do they have?
The DOT and the FAA have enforcement branches and procedures for enforcement of safety (FAA) and economic consumer protection regulations (DOT).
1.4 What is the regulators' general approach in regulating the aviation sector?
The FAA's primary concern is safety and the DOT's primary concern is economic fitness and consumer protections.
2 Licensing and market access
2.1 What licences are required to provide aviation services in your jurisdiction? Does this vary depending on route?
An air carrier holding itself out to the general public must possess an operating certificate from the Federal Aviation Administration issued under Title 14 of the Code of Federal Regulations (CFR) Part 119. Generally, airlines and scheduled air carriers hold operations specifications and operate under CFR Part 121, and on-demand and commuter air carriers hold operations specifications and operate under CFR Part 135. Private or business aviation that does not hold itself out to the general public for operations does not need a licence and is regulated under Part 91 of the CFR. International air carriers must meet other licensing requirements to operate in the United States and must hold a foreign air carrier authority under 14 CFR Part 129.
2.2 What nationality requirements must be satisfied to obtain a licence?
A US air carrier must be deemed a US citizen in order to obtain an operating certificate.
2.3 What financial requirements must be satisfied to obtain a licence?
The US Department of Transportation requires all air carriers to be economically fit to operate in the United States and to pass a comprehensive economic fitness test to ensure that the air carrier is sufficiently capitalised.
2.4 What other requirements must be satisfied to obtain a licence? Do specific requirements or restrictions apply to foreign operators?
Foreign operators must obtain a foreign air carrier permit issued in accordance with 14 CFR Part 129, and are permitted to operate in the United States through various bilateral agreements as identified in question 1.2.
2.5 What is the procedure for obtaining a licence?
The procedure for obtaining a 121 or 135 certificate requires a prospective operator to provide many pieces of information and documentation, including:
- a maintenance programme;
- certification that aircraft have been maintained to a specified standard; and
- identification of key individuals within the organisation.
3 Safety and maintenance
3.1 What key safety requirements apply to operators in your jurisdiction?
Each aircraft must maintain a certificate of airworthiness and aircraft must be maintained pursuant to a maintenance programme.
3.2 What key maintenance requirements apply to operators in your jurisdiction?
An air carrier operating under a Part 121, Part 122 or Part 135 certificate must ensure that each aircraft released to service is airworthy and properly maintained for operations in air transportation in accordance with Parts 43 and 145 of the Code of Federal Regulations. Part 145 applies to repair stations. Further each air carrier must ensure that it provides competent personnel, adequate facilities and equipment; and that everyone who works on its aircraft follows the approved maintenance manual and programme.
3.3 Do these requirements differ depending on whether the operator is providing commercial, cargo or private services?
Maintenance programmes are asset-type specific. The standards of maintenance related to the engine and airframe are similar, but there are interior specifics that differ.
3.4 What are the potential consequences of breach of the safety and maintenance requirements?
An administrative enforcement action, which may result in civil penalty or certificate suspension or revocation.
3.5 What best practices in relation to safety and maintenance should operators consider adopting in your jurisdiction?
The applicable regulatory requirements of the aviation sector are many and nuanced, and require careful thought and consideration in order for operators to maintain the safety of passengers.
4 Consumer protection
4.1 What rights do passengers enjoy in your jurisdiction in relation to: (a) Flight delays or cancellations? (b) Overbooking? (c) Denied boarding for other reasons? (d) Baggage delay, damage or loss? and (e) Disabled access?
(a) Flight delays or cancellations?
There are no federal laws requiring air carriers to provide passengers with money or other compensation when their flights are delayed. Each air carrier may establish its own policies about what it will do for delayed passengers, if anything.
In some situations, due to a significant delay (which is not specifically defined by the US Department of Transportation (DOT)), a passenger may be entitled to a refund, including a refund for all optional fees associated with the purchase of the ticket. The DOT determines whether a passenger is entitled to a refund on a case-by-case basis, which is evaluated on many circumstances such as the length of the delay, the length of the flight and the passenger's particular circumstances.
If a flight is cancelled and a passenger chooses to cancel the trip as a result, the passenger is entitled to a refund for the unused transportation – even for non-refundable tickets. The passenger is also entitled to a refund for any bag fee paid and any extras purchased, such as a seat assignment.
Air carriers may involuntarily bump passengers from an oversold flight when there are not enough volunteers; however, it is the air carrier's responsibility to create its own fair boarding priorities. The DOT requires air carriers to give passengers who are bumped involuntarily a written statement describing their rights and explaining how the carrier decides who gets bumped.
An air carrier is required to compensate a passenger after involuntarily bumping him or her from an oversold flight in certain situations. However, there are situations where the passenger is not entitled to compensation. Passengers who are denied boarding involuntarily due to overselling are entitled to compensation that is based on:
- the price of their ticket;
- the length of time for which they are delayed in reaching their destination because of being denied boarding; and
- whether their flight is a domestic flight or an international flight leaving from the United States.
(c) Denied boarding for other reasons?
An air carrier may refuse to transport a passenger for any non-discriminatory reason listed in its contract of carriage, the agreement between the passenger and the air carrier, such as:
- being intoxicated or under the influence of drugs;
- attempting to interfere or interfering with the duties of a flight crew member; or
- disrupting a flight or engaging in unruly behaviour.
(d) Baggage delay, damage or loss?
Under DOT regulations (for domestic travel) and international treaties (for international travel), air carriers must compensate passengers if their bags are damaged, delayed or lost.
Air carriers are responsible for repairing or reimbursing a passenger for damaged baggage and/or its contents when the damage occurs while the bag is under the air carrier's control during transportation (subject to maximum limits on liabilities).
Air carriers are required to compensate passengers for reasonable, verifiable and actual incidental expenses that they may incur while their bags are delayed, subject to the maximum liability limits.
(e) Disabled access?
The Air Carrier Access Act (ACAA) makes it illegal for air carriers to discriminate against passengers because of their disability. The DOT is responsible for enforcing the ACAA, which applies to all flights to, from or within the United States. Air carriers must also provide passengers with disabilities with many types of assistance, including:
- wheelchair or other guided assistance to board, deplane or connect to another flight;
- seating accommodation assistance that meets the passenger's disability-related needs; and
- assistance with the loading and stowing of assistive devices.
4.2 Are airfares regulated in your jurisdiction? What other requirements apply to the pricing and sale of flights?
The DOT requires air carriers that display ticket prices to advertise the total price that a consumer must pay to purchase a ticket. Wherever an airfare is advertised – such as on a website, in an email or during the booking process – the fare price must include all applicable government taxes and fees, and any mandatory carrier-imposed surcharges. Airlines are free to create different ticket types with different types of restrictions (fare classes). While some tickets are fully refundable and may include two free checked bags, free drink a seat assignment and other amenities, other tickets may provide only transportation on the aircraft and may be non-refundable.
4.3 What other marketing and advertising requirements apply to operators in your jurisdiction?
The DOT requires air carriers that display ticket prices to advertise the total price that a consumer must pay to purchase a ticket. Wherever an airfare is advertised – such as on a website, in an email or during the booking process – the fare price must include all applicable government taxes and fees, and any mandatory carrier-imposed surcharges.
4.4 What requirements apply in relation to the retention and protection of passenger data in your jurisdiction?
No answer submitted for this question.
4.5 What other general consumer protection requirements are of relevance for operators in your jurisdiction?
No answer submitted for this question.
4.6 How are consumer complaints in relation to aviation services handled in your jurisdiction?
The DOT Office of Aviation Consumer Protection handles consumer complaints related to aviation services. The DOT in most instances has the authority to investigate complaints raised by passengers. The DOT issues enforcement orders against air carriers.
5 Accidents and liability
5.1 What is the applicable aviation liability regime in your jurisdiction?
Part 205 of the Code of Federal Regulations requires air carriers to have aircraft accident liability insurance coverage. The minimum amounts of coverage may be provided through insurance policies; or an air carrier may self-insure.
5.2 What insurance requirements apply to operators in your jurisdiction?
US and foreign direct air carriers, including commuter air carriers but excluding US air taxi operators and Canadian charter air taxi operators, shall maintain the following coverage:
- third-party aircraft accident liability coverage for bodily injury to or death of persons, including non-employee cargo attendants, other than passengers, and for damage to property, with minimum limits of $300,000 for any one person in any one occurrence, and a total of $20 million per involved aircraft for each occurrence; except that for aircraft of not more than 60 seats or 18,000 pounds maximum payload capacity, carriers need only maintain coverage of $2 million per involved aircraft for each occurrence; and
- any such carrier providing air transportation for passengers shall, in addition to the coverage required above, maintain aircraft accident liability insurance coverage for bodily injury to or death of aircraft passengers, with minimum limits of $300,000 for any one passenger, and a total per involved aircraft for each occurrence of $300,000 times 75% of the number of passenger seats installed in the aircraft
5.3 What body is responsible for investigating accidents in your jurisdiction and what procedure will it follow in doing so?
The National Transportation Safety Board (NTSB) is responsible for investigating civil aviation accidents. The NTSB may refer accidents to the Department of Justice where criminal activity is suspected.
Aviation accidents must be reported immediately to the NTSB following an aircraft accident. Following an aircraft accident, an air carrier must preserve all aircraft wreckage, the contents of the aircraft and the records for the aircraft. The NTSB will generally take possession of the aircraft after an accident, and will issue a report after the completion of its investigation.
5.4 What reporting requirements apply to accidents and incidents in your jurisdiction?
Aviation accidents must be reported immediately to the NTSB following an aircraft accident. Following an aircraft accident, an air carrier must preserve all aircraft wreckage, the contents of the aircraft, and the records for the aircraft. The NTSB will generally take possession of the aircraft after an accident and will issue a report after the completion of its investigation.
6 General operation
6.1 What requirements apply to charter services in your jurisdiction?
As stated above, charter operators must obtain and maintain an operators' certificate under Part 135 of the Code of Federal Regulations. A charter operator must meet requirements similar to those of a more traditional scheduled air carrier or airline, including:
- meeting the citizenship requirements;
- having an approved maintenance programme;
- possessing exclusive control over at least one aircraft; and
- identifying key personnel related to its operations.
6.2 What requirements apply to the carriage of cargo in your jurisdiction?
Cargo may generally be carried in commercial operating aircraft and exclusive cargo companies may operate as a charter operation under Part 135. There are also certain exceptions for cargo companies under Part 298.
6.3 What environmental requirements apply to operators in your jurisdiction?
The United States is party to, and has voluntarily agreed to participate in the pilot phase of, the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) under the auspices of the United Nations' International Civil Aviation Organization (ICAO). Under CORSIA, non-exempt US-based operators must monitor their annual carbon dioxide emissions from international flights between the United States and other participating countries, and purchase a sufficient number of carbon-reduction offsets corresponding to the excess of their emissions over a prescribed baseline. In June 2020, the ICAO Council voted to revise that baseline from the average of 2019 and 2020 emissions levels to 2019 levels only, due to the precipitous decline in global aviation caused by the COVID-19 pandemic. CORSIA participation (on a country basis) is voluntary through 2026 and will be compulsory thereafter.
In July 2020, the US Environmental Protection Agency (EPA) announced the first proposed US emissions standards for commercial aircraft. The EPA regulations, which are currently in the customary 60-day comment period and are expected to be finalised in 2021, will apply to new aircraft type designs as of January 2020 and to in-production aircraft and those with amended type certificates starting in 2028, but not to aircraft currently in use. The EPA regulations are intended to match fuel efficiency standards adopted by the ICAO in 2017 designed to control carbon dioxide and nitrous oxide emissions.
In addition to the environmental concerns noted above, air carriers are subject to noise law and regulations in certain instances. The Federal Aviation Administration requires all large commercial aircraft to meet certain noise standards, including that aircraft generate between 89 and 106 decibels depending on phase of flight, the number of engines and the aircraft weight. Aircraft manufactured more recently must meet more stringent standards of noise.
6.4 How are aviation services taxed in your jurisdiction? Do any special tax regimes apply to this sector? What indirect taxes are of relevance to operators?
Aviation services may be subject to state and federal use and sales tax, depending on the operations and how an air carrier holds itself out to the public. The federal government is the primary taxing agency and administers a federal excise tax domestically, as well as an international tax for international flights.
6.5 What is the applicable employment regime in your jurisdiction and what specific implications does this have for operators in the aviation sector?
Employees are generally considered at will employees of an air carrier, but certain aspects of their employment are federally regulated – including duty time, drug and alcohol use, and certain medical and health requirements.
7 Ownership, financing and leasing
7.1 What body administers the aircraft register in your jurisdiction?
The Federal Aviation Administration (FAA) maintains the aircraft register, in which the ownership of an aircraft is recorded. The registry only records the owner of the airframe and does not record ownership of the engines or propellers.
7.2 What are the formal and documentary requirements for registration?
Upon a change of owner, the new owner must submit to the FAA Registry an aircraft registration application together with supporting documentation evidencing the citizenship of the owner. If the aircraft is owned in a trust for the benefit of a non-citizen or owned in a trust for some other reason, the trust together with an opinion from the FAA's Aeronautical Center Counsel confirming that the trust meets the minimum criteria for registration.
7.3 What is the process for registration?
The new owner submits the documents referenced in question 7.2 to the FAA Registry. After reviewing the documents submitted, the FAA will issue a registration certificate for the aircraft in the name of the owner.
7.4 Is registration of real estate rights, transactions and encumbrances mandatory? What are the consequences of failure to register?
Leases of aircraft above a certain size and aircraft that are used in commercial operations must be registered with the FAA. Additionally, for the purposes of perfecting an interest in an aviation asset or registering an interest with the International Registry, encumbrances must be recorded with the International Registry.
7.5 What operational requirements are of relevance for aircraft lessors and financiers in your jurisdiction?
While the FAA Registry does not record the ownership of engines and propellers, it is possible to encumber such assets by recording the lease or other security document with the FAA Registry.
7.6 What rules govern the detention and seizure of aircraft
No answer submitted for this question.
8.1 How are airports owned and regulated in your jurisdiction?
Most airports are owned by a municipality or local governmental agency; and while the airport may be regulated in part by the municipality or agency, the airport is also regulated by the Federal Aviation Administration (FAA).
8.2 What requirements must be satisfied to obtain airport authorisation in your jurisdiction? What is the procedure for obtaining authorisation?
In order for air carriers for operate at airports for aircraft carrying more than 30 seats, the airport must be licensed pursuant to Part 139 of the Code of Federal Regulations. In order to obtain an airport operating certificate, an airport must agree to certain operational and safety standards and provide for such things as firefighting and rescue equipment. These requirements vary depending on the size of the airport and the types of flights available. The regulation, however, does allow the FAA to issue certain exemptions to airports that serve few passengers yearly and for which some requirements might create a financial hardship.
8.3 What key safety and maintenance requirements apply to airports in your jurisdiction?
Safety and maintenance requirements vary greatly between airports of different sizes. However, in many instances the airport must have a policy or procedure relating to aircraft rescue and firefighting, foreign object debris, runway safety, signage and markings, wildlife hazard mitigation and similar.
8.4 What requirements can airports impose on operators that use their facilities?
No answer submitted for this question.
8.5 How are the following regulated in your jurisdiction: (a) Airport charges? (b) Slot allocation? (c) Air traffic control? and (d) Ground handling?
(a) Airport charges?
US airports may set airline rates and charges through bilateral agreements or unilateral rate resolutions or ordinances after airline consultation.
(b) Slot allocation?
Slot administration in the United States generally follows the process laid out by the International Air Transport Association in the Worldwide Slot Guidelines. This process requires a coordinator for each Level 3 airport and a schedule facilitator for each Level 2 airport. The FAA fills that role at US airports, where the FAA establishes the need for runway limitations or formal schedule review. Separately, local airport authorities may review certain flights based on airport terminal capacity. The process relies heavily on ‘historic slots', or slots that carriers have operated for a qualifying duration under the FAA rules or orders. The carriers submit their schedules or slot requests, and the FAA responds to their proposal.
(c) Air traffic control?
The FAA provides air traffic control services for the United States.
(d) Ground handling?
The FAA has issues advice relating to ground handling of aircraft.
9.1 What specific challenges or concerns does the aviation sector present from a competition perspective? Are there any pro-competition measures that are targeted specifically at operators?
US antitrust law prohibit anti-completive market manipulation in fares and routes.
9.2 How are forms of industry cooperation such as pooling, code-sharing, alliances and joint ventures treated from a competition perspective?
Alliances are very common in the United States, with most airlines joining alliances with other domestic and foreign air carriers.
9.3 Does the aviation sector in your jurisdiction benefit from state aid? What forms does this typically take and what rules apply in this regard?
There are federal programmes and grants available in certain circumstances. Specifically, federal grants related to aid for airports are fairly common.
Recently, due to the COVID-19 epidemic, additional federal loans and grants have been made available to air carriers.
9.4 Are there any applicable obligations or incentives to ensure service on routes that are socially desirable, but not commercially viable (eg, to remote areas)?
Rural flight subsidies do exist in the United States and in certain states. However, the availability and adoption of these subsidies are limited.
10.1 In which forums are aviation disputes typically heard in your jurisdiction?
Dispute forums vary between parties and are often determined by an agreement. Many commercial leasing or financing agreements contain agreements dictating that disputes will be heard in New York. Parties may elect a specific jurisdiction or forum to hear disputes.
10.2 What issues do such disputes typically involve? How are they typically resolved?
Disputes vary between owners and air carriers, air carriers and passengers or air carriers and the government.
10.3 Have there been any recent cases of note?
No answer submitted for this question.
11 Trends and predictions
11.1 How would you describe the current aviation landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?
COVID-19 travel downturn is having a significant negative impact on travel, which will likely continue until a vaccine is developed or other such effective therapeutic treatment is available. The landscape is unprecedented in light of COVID-19, and new developments in the next 12 months are nearly impossible to anticipate; and while legislative action is a possibility, this depends entirely on how the COVID-19 pandemic plays out.
12 Tips and traps
12.1 What are your top tips for operators in your jurisdiction and what potential sticking points would you highlight?
COVID-19 has changed what is normal with airlines and air travel. Given this change, it is very difficult to provide general tips and identify sticking points. It is important for air carriers to continually monitor the situation and appropriately react to this continually evolving environment.
Co-authored by Conor A. Gaughan.
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.