Avoiding Deadstick: a Construction of Article 17 Bis of the Ata to Promote Labor-management Relations

• Jurisdiction: United States,Federal
• Citation: Vol. 46 No. 2
• Publication year: 2018

AVOIDING DEADSTICK: A CONSTRUCTION OF ARTICLE 17 BIS OF THE ATA TO PROMOTE LABOR-MANAGEMENT RELATIONS

Evan Dunn^*

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Table of Contents

I. Introduction...............................................................................516

II. Historical Background: Opening the Skies..........................517

A. Early Moves Towards Bilateral Agreements............................517
B. Deregulation: Unshackling the Airline Industry......................520
C. "Open Skies" Ahead................................................................524
D. U.S.-EU Air Transport Agreement...........................................527

1. 2007 Agreement: First Stage Negotiations........................527
2. 2010 Agreement: Second Stage Negotiations....................532

III. Labor Standards of the ATA Signatories............................533

A. U.S. Controlling Law: Railway Labor Act...............................534
B. European Union Labor Law.....................................................535
C. Preemption of Treaties and Other Joint Measures Affecting Labor Standards........................................................536

IV. Article 17 bis Practical Construction..................................537

A. The Plain Meaning of the Text of Article 17 bis Creates a Legal Obligation......................................................................537
B. The Legal Obligation Under Article 17 bis Extends to Article 4 Authorizations............................................................544
C. NAI Arbitration: Violations of Labor Standards Under the ATA...........................................................................................548

1. Relevant Background to NAI Application..........................548
2. Evidentiary Analysis..........................................................549

V. Looking Forward........................................................................554

A. Impending U.S. Resolutions.....................................................554
B. Multinational Options..............................................................555

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I. Introduction

In order to compensate for growing labor costs, U.S. air carriers have recently increased airfares on flights.¹ However, the emergence of lost-cost carriers (LCCs), who bypass these labor costs, threaten the market dominance U.S. carriers have exercised over the last decade. Deregulation and increased liberalization has created a small profit margin that is threatened by LCCs who do not face the same labor and operating expenses. Foreign carriers are challenging large U.S. carriers, offering dramatically lower airfares on transatlantic flights.² Facing more stringent domestic labor standards, U.S. carriers have petitioned the U.S. Department of Transportation (USDOT) to reevaluate granting permits for foreign carriers with suspect labor practices, generating heightened foreign criticism.³

On July 25, 2016, this criticism came to a head when the European Union (EU) Commissioner for Transport, Violeta Bulc, formally demanded arbitration because the USDOT refused to grant Norwegian Air International's (NAI) foreign air carrier permit.⁴ Though the USDOT has since granted the application, the three-year denial raised significant concerns about the meaning of Article 17 bis of the U.S.-EU Air Transport Agreement (ATA or the Agreement), which is the "core labor protection provisions of the agreement."⁵ Whether the USDOT should have granted NAI a foreign air carrier permit was vigorously contested. U.S. carriers, labor organizations, and several U.S. politicians argue that NAI violates express labor standards, which is prohibited under Article 17 bis of the ATA. Though Article 17 bis may not provide an explicit basis for denying foreign carrier permits, NAI's application for a foreign air carrier permit should have been denied under a proper construction of the article and the USDOT permit-granting provisions.⁶

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Part II of this Note canvases the trend from closed skies to bilateral agreements to present day open skies agreements, specifically examining how the airline industry's move towards liberalization has undermined organized labor requiring the creation of Article 17 bis of the ATA. Next, Part III addresses the respective international labor laws that regulate airline employees and their collective relationship with management. Part IV analyzes whether Article 17 bis of the ATA includes the granting of air carrier certificates, and whether intentional violation of labor standards can be a basis for denying certification under the ATA. From that analysis, this Note will argue that the USDOT inappropriately granted NAI's foreign carrier permit under Article 17 bis. Finally, in Part V, the Note concludes with a look towards future considerations for the third phase of the ATA and the pending U.S. legislation to limit foreign air carrier permits.

II. Historical Background: Opening the Skies

While commercial aviation has become routine, the standards and practices governing the skies remain "stuck in the past."⁷ This remains largely true because much of the foundation for present day air transport agreements were made in the aftermath of World War II. During the war the United States began to look ahead "with the hope of using its military aircraft for civilian purposes."⁸ This hope prompted a convention to address these desires and opened negotiations for air travel cooperation. Nations simultaneously attempted to open flight routes while limiting foreign ownership of their air carriers—an issue that remains unsettled today. Invariably, every move toward open skies between the United States and Europe correspondingly affected airline workers and their ability to protect themselves in the changing landscape.

A. Early Moves Towards Bilateral Agreements

In 1944, the United States hosted the Convention on International Civil Aviation (Chicago Convention), bringing together fifty-four other nations.⁹ At that time, the United States had "a more developed commercial air carrier industry while European air carriers tended to be government-owned and

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focused."¹⁰ This difference became important when recovering nations rebuked the United States' push for more liberal aviation rights. In the end, fifty-two nations agreed to the 1944 Chicago Convention, creating the International Civil Aviation Organization (ICAO)¹¹ under the auspices of the U.N.

Additionally, the Chicago Convention established the first five "freedoms of the air."¹² The first two freedoms were universally accepted: the right to pass over a nation's territory without landing and the right to land in that nation for non-traffic purposes.¹³ Whereas, the latter three freedoms were not as widely accepted.¹⁴ Still, the Chicago Convention provided the necessary first step for nations to cooperate on subsequent bilateral air transport agreements, expanding the latter three freedoms and liberalization going forward.¹⁵

The first notable bilateral agreement was between the United Kingdom and the United States in 1946—Bermuda I. Bermuda I was a bilateral agreement that reaffirmed first and second freedom rights to its signatories and extended third, fourth, and fifth freedom rights (a drastic step beyond the agreement at the Chicago Convention).¹⁶ Furthering the push for liberalization, nations could determine capacity limits for flights so long as they related to "traffic requirements" on the individual routes and "airline operation."¹⁷ Rates were tied to the "rate conference machinery" of the International Air Transport Association (IATA).¹⁸ Consequently, Bermuda I became a template for subsequent bilateral agreements.¹⁹

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However, the U.K. decided to unilaterally end Bermuda I in 1976, forcing the United States to agree to stricter measures under Bermuda II just a year later.²⁰ Bermuda II was hailed as "a successful attempt by the British to remove some of the excess capacity of United States' carriers in the United Kingdom."²¹ Under Bermuda II, air carriers were limited to a few gateways in the opposing country's airports and had their capacities subject to review by one another.²² Bermuda II was a protectionist effort to push against the U.S. airline industry deregulation in the 1970s and 1980s.²³ Ultimately, Bermuda II remained in effect until the signing of the ATA in 2007.²⁴

While bilateral agreements, like Bermuda II, evidenced a global trend towards protectionism, U.S. policy makers were domestically deregulating the airline industry. By the 1970s, the civil aviation industry continued to rely on an antique framework established by the Civil Aeronautics Act of 1938²⁵ and the Federal Aviation Act of 1958.²⁶ These acts created a bloated bureaucracy that sheltered the airline industry from traditional market forces with elaborate political protections. Under this system, the Civil Aeronautics Board (CAB) was responsible for determining: which airlines could provide long-haul service, what routes carriers were allowed to fly, and what fares each carrier could charge for those routes.²⁷ For example, CAB required elaborate hearings when fare changes were requested to determine whether the recommended change would be adopted.²⁸ These restrictions were so stringent that in the forty years since the Civil Aeronautics Act "CAB did not allow the entry of a single new trunk airline."²⁹ By 1975, the airline industry could best be described as "a forty-year old still living at home with his parents," explained then CAB Chairman John Robson.³⁰ The airline industry had outgrown these regulations.

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B. Deregulation: Unshackling the Airline Industry

Faced with barriers from a non-responsive bureaucratic agency, CAB, and mounting foreign protectionism, the U.S. Congress passed—and President Jimmy Carter signed—the Airline Deregulation Act of 1978.³¹ The act made substantive revisions to the Civil Aeronautics Act of 1938 and the Federal...