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User Charges in International Aviation

Published online by Cambridge University Press:  27 February 2017

L. Welch Vogue  and
Calvin Davison
L. Welch Vogue
Affiliation:
Of the District of Columbia Bar
Calvin Davison
Affiliation:
Of the District of Columbia Bar
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Extract

The charges that air carriers pay for the use of airports and airways to provide international air service have become a source of recurrent and heated controversy between governments. This controversy largely stems from the rapid rise in user charges over the last decade, but it has been fed by the lack of uniformity practiced by some countries in levying these charges. Thus, the relatively specialized issue of user charges involves some important general concerns of international law, such as international economic cooperation (in the matter of arriving at general agreement on what constitutes reasonable charges), discrimination, and most-favorednation treatment.

Type
Research Article
Information
American Journal of International Law , Volume 73 , Issue 1 , January 1979 , pp. 42 - 59
Copyright
Copyright © American Society of International Law 1979

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References

1 This article is primarily concerned with charges imposed for the use of airports and airways. Other taxes and charges, however, may be imposed on passengers and air carriers, the receipts from which may not be used for the provision of facilities related to air transportation.

2 See p. 50 infra.

3 In an ICAO survey of 93 airports, all were found to be under the ownership of a national, provincial, and/or municipal government. In 71 of the cases, the airport was owned by the national government. The remaining airports were owned by lower levels of government or were under mixed ownership involving more than one level of government. The Economic Situation of International Airports—1970 (Results of an ad hoc Survey) at vii, 2, ICAO Circular 115-AT/30 (1973). For the extent of government ownership of foreign air carriers, See Civil Aeronautics Board, Government Ownership, Subsidy, And Economic Assistance In International Commercial Aviation at v-vi (May 1975).

4 IATA Doc. ERFA-WP/64.

5 Statements by the Council to Contracting States on Charges for Airports and Route Air Navigation Facilities 7, ICAO Doc. 9082-C/1015 (1974). Further information on the scope of the user charge problem was presented in the course of the hearings on the International Air Transportation Fair Competitive Practices Act. See, e.g., Hearings before the House Committee on Interstate and Foreign Commerce, 93rd Cong., 2nd Sess. 208-14 (1974) (App. B to the testimony of Paul R. Ignatius).

6 The Critical Role Of Government In International Air Transport, Report Of The Comptroller General To Congress (March 17, 1978). Cab Study, Recent Trends In Airline Cost Elements, Table 9 (Jan. 31, 1978).

7 GAO Rep., supra note 6, at 21.

8 Id. at 22-29.

9 Id.at 37.

10 Aerovias Interamericanas de Panama, S.A. v. Board of County Commissioners of Dade County, Florida, 197 F. Supp. 230 (S.D. Fla. 1961), rev'd sub nom. Board of County Commissioners of Dade County, Florida v. Aerolineas Peruanasas, S.A., 307 F.2d 802 (5th Cir. 1962), cert, denied, 371 U.S. 961 (1963), petition for rehearing denied, 372 U.S. 932 (1963).

11 See notes 15 and 16, infra.

12 On the basis of 1971 data, ICAO concluded that for 30 states accounting for 53% of the estimated 1971 total costs, and for which both revenue and cost data were available, total revenues Represented 17% of total costs for en route air navigation facilities and services. 1973 Supplement to the Global Review of the Economics of En Route Air Navigation Facilities and Services at ii, 14-17, ICAO Circular 103-AT/24. ICAO further estimated that, excluding the United States, such costs for the countries studied had increased by 65%, or 13% per year, for the period 1967 to 1971. Id. at 9. On the other hand, revenues related to en route facilities and services received by 26 states for the same period increased at the rate of 24% annually. Id. at 14.

13 The net results of the airports covered by the survey were fairly evenly distributed between positive and negative results. Twenty-five airports Reported positive net results totalling $31 million and twenty-one airports Reported negative net results totalling $47 million; nine airports Reported zero net results.” ICAO Circular 115-AT/30, supra note 3, at ix. ICAO cautioned, however, that these net results might not be too meaningful because of subsidies for operating losses in some cases and the fact that many airports did not include any interest costs in their expense accounts. Id. at 18. A substantial portion of airport revenues is derived from other than air traffic operations. Id. at 7.

14 The ICAO has estimated that total international civil flights increased by 45% from 1968-69 to 1971. ICAO Circular 103-AT/24, supra note 12, at 7. During the same period, the share of total traffic accounted for by international civil flights remained unchanged overall at 21%. Id. at 8.

15 61 Stat. 1180, TIAS No. 1591, 15 UNTS 295.

16 Article 15 reads as follows: Every airport in a contracting State which is open to public use by its national aircraft shall likewise, subject to the provisions of Article 68, be open under uniform conditions to the aircraft of all the other contracting States. The like uniform conditions shall apply to the use, by aircraft of every contracting State, of all air navigation facilities, including radio and meteorological services, which may be provided for public use for the safety and expedition of air navigation. Any charges that may be imposed or permitted to be imposed by a contracting State for the use of such airports and air navigation facilities by the aircraft of any other contracting State shall not be higher, (a) As to aircraft not engaged in scheduled international air services, than those that would be paid by its national aircraft of the same class engaged in similar operations, and (b) As to aircraft engaged in scheduled international air services, than those that would be paid by its national aircraft engaged in similar international air services. All such charges shall be published and communicated to the International Civil Aviation Organization: provided that, upon Representation by an interested contracting State, the charges imposed for the use of airports and other facilities shall be subject to review by the Council, which shall Report and make recommendations thereon for the consideration of the State or States concerned. No fees, dues or other charges shall be imposed by any contracting State in respect solely of the right of transit over or entry into or exit from its territory of any aircraft of a contracting State or persons or property thereon.

17 The operative word here is “solely“; this provision does not mean that aircraft in transit cannot be charged for their use of airports and airways.

18 See p. 57 infra.

19 TIAS No. 8641, 11977J Gr. Brit. TS No. 76 (Cmd. 7016).

20 Article 10 of Bermuda II reads as follows: (1) Each Contracting Party shall use its best efforts to ensure that user charges imposed or permitted to be imposed by its competent charging authorities on the designated airlines of the other Contracting Party are just and reasonable. Such charges shall be considered just and reasonable if they-are determined and imposed in accordance with the principles set forth in paragraphs (2) and (3) of this Article, and if they are equitably apportioned among categories of users. (2) Neither Contracting Party shall impose or permit to be imposed on the designated airlines of the other Contracting Party user charges higher than those imposed on its own designated airlines operating similar international air services. (3) User charges may reflect, but shall not exceed, the full cost to the competent charging authorities of providing appropriate airport and air navigation facilities and services, and may provide for a reasonable rate of return on assets, after depreciation. In the provision of facilities and services, the competent authorities shall have regard to such factors as efficiency, economy, environmental impact and safety of operation. User charges shall be based on sound economic principles and on the generally accepted accounting practices within the territory of the appropriate Contracting Party. (4) Each Contracting Party shall encourage consultations between its competent charging authorities and airlines using the services and facilities, where practicable through the airlines’ Representative organizations. Reasonable notice should be given to users of any proposals for changes in user charges to enable them to express their views before changes are made. (5) For the purposes of paragraph (4) of this Article, each Contracting Party shall use its best efforts to encourage the competent charging authorities and the airlines to exchange such information as may be necessary to permit an accurate review of the reasonableness of the charges in accordance with the principles set out in this Article. (6) In the event that agreement is reached between the Contracting Parties that an existing user charge should be revised, the appropriate Contracting Party shall use its best efforts to put the revision into effect promptly.

21 S. EXEC. Rep. NO. 95-11, 95th Cong., 1st Sess. 2 (1977).

22 The 1967 Conference was called “Conference on Charges for Airports and Route Air Navigation Facilities.” The 1973 Conference was called “Conference on the Economics of Route Air Navigation Facilities and Airports.” Another Conference is tentatively planned for late 1979. The International Air Transport Association formed a Charges Working Group which studied the problem and Reported to ICAO. IATA also publishes periodically a manual entitled International User Charges which attempts to Report user charges around the world.

23 Statements by the Council to Contracting States on Charges for Airports and Route Air Navigation Facilities, Doc. 9082-C/1015.

24 These are listed in id., Amend. 1, App. 1, May 3, 1975, and include basic and special approach, landing and take-off facilities and services, other facilities and services provided for aircraft operators, and accommodations for other than aircraft operators.

25 Id., Amend. 1, App. 2, May 3, 1975, lists the following services to be taken into account in computing costs: air traffic services, communication facilities and navigation aids, meteorological services, and other ancillary aviation services.

26 Even with respect to ICAO “Standards” and “Recommended Practices,” a signatory is only obligated either to adopt them or notify ICAO of discRepancies. See Articles 37, 38, and 54(1) of the Chicago Convention, supra note 15. See also, Resolutions and Recommendations of the Assembly—First through Ninth Sessions, ICAO Ass. Res. Al-31. ICAO Doc. 7670; The International Civil Aviation Organization, 18 Dep't State Bull. 463, 463-64 (1948); T. Buergenthal, Law-making in the international Civil aviation organization (1969).

27 ICAO Doc. 7100-AT/707 (1977 ed.)

28 ICAO Doc. 9161-AT/724 (1976).

29 Id. at 40.

30 Id. at 52.

31 The ICAO has also developed extensive technical specifications which are the basis for uniform rules and procedures in international aviation. The Making of an ICAO Standard, ICAO BULL., March 1978, at 24-25.

32 House Hearings, supra note 5, at 212.

33 Id. at 213.

34 GAO Rep., supra note 6, at 26.

35 House Hearings, supra note 5, at 199. The ICAO has stated: Available data indicate that the level of charges for domestic air traffic operations are often substantially lower than for international air traffic operations. For a sample of twenty airports, the revenues per traffic unit from charges levied on domestic traffic were only one-seventh or the corresponding figure for international traffic. ICAO Circular 115-AT/30, supra note 3, at viii. The ICAO has also indicated that “a key factor in the unsatisfactory financial situation of many international airports is the low traffic revenues they earn from domestic operations.” Id. at 9.

36 House Hearings, supra note 5, at 41, 212-13.

37 Id. at 212-14.

38 The legislative history of the Fair Competitive Practices Act is contained in the following documents: Hearings on S. 3481 Before the Subcommittee on Aviation of the Senate Committee on Commerce, 93rd Cong., 2nd Sess. (1974); S. Rep. NO. 93-1257, 93rd Cong., 2nd Sess. (1974); Hearings on H.R. 14266, et al. Before the Committee on Interstate and Foreign Commerce, 93rd Cong., 2nd Sess. (1974); H. Rep. NO. 93-1475, 93rd Cong., 2nd Sess. (1974); 120 CONG. REC. 18859-18903 (daily ed. October 10, 1974); 120 CONG. REC. 11888-11900 (daily ed. December 13, 1974); 120 CONG. REC 21805-21808 (daily ed. December 17, 1974); 120 CONG. REC. 12277-12278 (daily ed. December 18, 1974).

39 Public Law 93-623.

40 Section 3 of the Fair Competitive Practices Act reads as follows: SEC. 3. [88 Stat. 2103] The International Aviation Facilities Act (49 U.S.C. 1151-1160) is amended by redesignating sections 11 and 12 as sections 12 and 13, respectively, and by inserting immediately after section 10 the following new section: “SEC. 11. The Secretary of Transportation shall survey the charges made to air carriers by foreign governments or other foreign entities for the use of airport property or airway property in foreign air transportation. If the Secretary of Transportation determines at any time that such charges unreasonably exceed comparable charges for furnishing such airport property or airway property in the United States or are otherwise discriminatory, he shall submit a Report on such cases promptly to the Secretary of State and the Civil Aeronautics Board, and the Secretary of State, in collaboration with the Civil Aeronautics Board, shall promptly undertake negotiations with the foreign country involved to reduce such charges or eliminate such discriminations. If within a reasonable period such charges are not reduced or such discriminations eliminated through negotiations, the Secretary of State shall promptly Report such instances to the Secretary of Transportation who shall determine compensating charges equal to such excessive or discriminatory charges. Such compensating charges shall, with the approval of the Secretary of State, be imposed on the foreign air carrier or carriers of the country concerned by the Secretary of the Treasury as a condition to acceptance of the general declaration at the time of landing or takeoff of aircraft of such foreign air carrier or carriers. The amounts so collected shall “accrue to an account established for that purpose by the Secretary of the Treasury. Payments shall be made from that account to air carriers in such amounts as shall be certified by the Secretary of Transportation in accordance with such regulations as he shall adopt to compensate such air carriers for excessive or discriminatory charges paid by them to the foreign countries involved” (emphasis added).

41 The annual Reports submitted by the Civil Aeronautics Board to Congress pursuant to the directive of section 2(c) of the Fair Competitive Practices Act summarize the variety of user charge problems that the United States has faced since enactment of the act. Cab, Report For Calendar Year 1975 On Actions Taken Under The International Air Transportation Fair Competitive Practices Act Of 1974 [hereinafter cited as CAB 1975 Rep.]; CAB, Annual Report To Congress, Fiscal Year 1976 [hereinafter cited as CAB 1976 Rep.]; Cab, Annual Report To Congress, Fiscal Year 1977 & Transitional Quarter (July 1, 1976 to Sept. 30, 1976) [hereinafter cited as CAB 1977 Rep.].

42 CAB 1975 Rep., App. B (letter from Secretary of Transportation to Chairman, CAB, July 30, 1975).

43 Id. at 10; CAB 1976 Rep. at 110-11; CAB 1977 Rep. at 115-16.

44 CAB 1975 Rep., App. C (letter from Secretary of Transportation to Chairman, CAB).

45 CAB 1976 Rep. at 107-08; CAB 1977 Rep. at 106-07.

46 CAB 1975 Rep., App. D (letter from Secretary of Transportation to Chairman, CAB).

47 CAB 1976 Rep., App. A (letter from Secretary of Transportation to Chairman, CAB).

48 CAB 1976 Rep. at 109.

49 CAB 1977 Rep. at 111.

50 Letter from the Secretary of Transportation to the Secretary of State (Feb. 17, 1978), not yet published but made available to the authors.

51 238 Aviation Daily 211, 261 (1978).

52 On December 15, 1976, the Department of Transportation adopted regulations implementing section 3 of the Fair Competitive Practices Act. 49 C.F.R. §91.1 et seq. In addition, in Docket 25903, prior to enactment of the Fair Competitive Practices Act, the CAB adopted certain Reporting requirements on user charges (ER-854, adopted April 9, 1974). The CAB now requires air carriers to Report quarterly charges by foreign governments or other foreign entities for airport and en route facilities and services, including the unit charge of each item of expense. The CAB, however, has issued a notice of proposed rulemaking in which it proposes to modify these Reporting requirements and in which it states that its “inclination is to eliminate the Reporting of data for en route and airport charges.” EDR-358, Docket 32860, June 13, 1978, at 3. The Board apparently believes that ad hoc submissions for bilateral negotiations may be more desirable. Id. at 5.

53 Senate Hearings, supra note 38, at 9-10.

54 Supra note 6.

55 This recommendation takes account of the problem discussed earlier involving the compatibility of the portion of section 3 of the Fair Competitive Practices Act regarding excessive charges with Article 15 of the Chicago Convention.

56 Under the supremacy clause of the Constitution, U.S. CONST, art. IV, § 2, of course, a valid treaty overrides any Conflicting state or local law. See Ware v. Hylton, 3 U.S. (3 Dall.) 199 (1796). The Aerovias Interamericanas decisions, supra, did not question that Article 15 was a valid exercise of the treatymaking power. User charges for international aviation would clearly seem to be a matter of international concern and, hence, properly a subject of the treaty power. See Geofroy v. Riggs, 133 U.S. 258, 266 (1890).

57 Airport and Airway Development Act of 1970, Pub. L. 91-258, 84 Stat. 219, 49 U.S.C. 1701 et seq.