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Legal Issues Relating to Airports Promoting Competition (2019)

Chapter: ACRP LRD 37: Legal Issues Relating to Airports Promoting Competition

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Suggested Citation:"ACRP LRD 37: Legal Issues Relating to Airports Promoting Competition." National Academies of Sciences, Engineering, and Medicine. 2019. Legal Issues Relating to Airports Promoting Competition. Washington, DC: The National Academies Press. doi: 10.17226/25479.
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Background There are over 4,000 airports in the country and most of these airports are owned by governments. A 2003 sur- vey conducted by Airports Council International–North America concluded that city ownership accounts for 38 percent, followed by regional airports at 25 percent, single county at 17 percent, and multi-jurisdictional at 9 percent. Primary legal services to these airports are, in most cases, provided by municipal, county, and state attorneys. Research reports and summaries produced by the Airport Continuing Legal Studies Project and published as ACRP Legal Research Digests are developed to assist these attorneys seeking to deal with the myriad of legal problems encountered during airport development and operations. Such substantive areas as eminent domain, environmental concerns, leasing, contracting, security, insurance, civil rights, and tort liability present cutting- edge legal issues where research is useful and indeed needed. Airport legal research, when conducted through the TRB’s legal studies process, either collects primary data that usually are not available elsewhere or performs analysis of existing literature. Foreword The widespread consolidation that has occurred within the U.S. airline industry (leaving just four majors or net- work carriers), as well as the rise of several air carrier business models (including “Ultra Low Cost Carriers” that often fly only one flight to certain cities a few days a week), has fundamentally changed the nature of air ser- vice and the competition among air carriers at airports. Consolidation also has occurred in the fixed-base operator (FBO) arena and competition among these service providers has been significantly altered or elimi- nated. Airport operators have an obligation under their federal grant assurances to provide access to air carriers and FBOs, and certain categories of airports must develop competition plans. Airports also must not grant exclusive rights to aeronautical service providers. These obligations on airports to not “unjustly dis- criminate” those seeking to provide aeronautical services can be challenging for airports to meet these obligations while also addressing the needs of the gen- eral aviation community in which they serve. The same can apply at commercial service airports that may not have the appropriate capacity to properly serve potential new entrants. This digest serves to provide to airport lawyers, management, and staff the legally permissible means and methods of encouraging and accommodating competition at U.S. airports. It discusses the history of how competition has been addressed by government and airports and provides the context of the concentra- tion of air carriers and FBOs, the accommodation of air carriers with differing business models, and avoiding the grant of exclusive rights when aeronautical service providers merge. Legal Issues Relating to Airports Promoting Competition This digest was prepared under ACRP Project 11-01, “Legal Aspects of Airport Programs,” for which the Transportation Research Board (TRB) is the agency coordinating the research. Under Topic 09-02, this digest was prepared by Eric T. Smith, Kaplan Kirsch & Rockwell, LLP, Washington, DC. The responsible program officer is Marci A. Greenberger. This digest was revised in November 2019. JUNE 2019 AIRPORT COOPERATIVE RESEARCH PROGRAM ACRP LRD37 LEGAL RESEARCH DIGEST

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TRB's Airport Cooperative Research Program (ACRP) LRD 37: Legal Issues Relating to Airports Promoting Competition explores permissible means and methods of encouraging and accommodating competition at U.S. airports. It discusses the history of how competition has been addressed by government and airports and provides the context of the concentration of air carriers and fixed-base operators (FBOs), the accommodation of air carriers with differing business models, and avoiding the grant of exclusive rights when aeronautical service providers merge.

Competition among airlines and FBOs at U.S. airports presents a myriad of issues for the airport sponsor, its executives and for local elected officials—all of whom themselves often face multidimensional challenges and needs. U.S. airports, and especially those which have used federal airport improvement funds, operate within a unique atmosphere.

Congress, through the enactment of airport funding legislation, created a broad and general framework within which airport sponsors must operate. Much of this general framework has been supplemented by United States Department of Transportation / Federal Aviation Administration and provides airport sponsors with some further guidelines within which airports must operate. This framework/guidance, however, relies largely upon general standards such as dealing with airlines and FBOs in a “reasonable” and “not unjustly discriminatory” manner. Given this fact, the resolution of competition issues at any particular airport is necessarily highly dependent upon the locally derived factual context and, therefore, requires locally derived solutions.

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