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Wet Lease Policy Guidance - Comments of United

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Wet Lease Policy Guidance

FAA-2005-22765

November 15, 2005

Comments of United Air Lines

United Air Lines, Inc. submits these Comments in response to the Notice the Federal Aviation Administration published in the Federal Register on October 25, 2005. In the Notice, the FAA seeks comment on proposed policy guidance relating to the use by on-demand air taxis operating under Part 135 of the Federal Aviation Regulations of aircraft leased with crew from aircraft owners that are not FAA-certificated air carriers. According to the Notice, the FAA's intent in issuing the guidance is "to provide the public, including air carriers and aircraft owners, with a better understanding of ... key safety issues linked to operational control of flights made under the authority of FAA certificates."

As a certificated carrier operating under Part 121 of the FARs, United shares the FAA's desire to maintain the highest standards of aviation safety, and United supports fully the FAA's effort to provide important policy guidance to a key segment of the aviation industry to ensure compliance with applicable safety regulations. Nonetheless, while United is not directly impacted by the leasing practices described in the Notice, it is concerned about the discussion in the Notice of the term "wet lease" as used in Part 119 of the FARs. In particular, United is concerned that the discussion appears to be inconsistent with an interpretation of the term "wet lease" that the FAA's Chief Counsel issued in April of 1999. See Letter dated April 29, 1999, from the Chief Counsel to Captain Duane Woerth, President of the Airline Pilots Association, International, a copy of which is attached hereto. The Chief Counsel's interpretation has been widely circulated, and was represented at the time to foreign governments as being the FAA's explanation as to the types of services U.S. carriers may obtain from foreign air carriers consistent with the requirements of FAR § 119.53(b).

In comparing the brief discussion of the term "wet lease" in the Notice with the detailed analysis set forth in the Chief Counsel's letter, United is concerned that the Notice encompasses a broader range of transactions within the term than does the Chief Counsel's prior interpretation. However, whether the FAA actually intended to make any change in the Chief Counsel's interpretation of the term is not indicated in the Notice. To the extent the FAA did not intend such a result, United urges the FAA promptly to make that clear to the industry so that all industry participants will be able to continue relying upon the Chief Counsel's prior interpretation in deciding what types of contractual arrangements fall within the scope of FAR 119.53(b).

At the same time, changing the definition of the term "wet lease" as used in Part 119 to include any contractual arrangement whereby a U.S. carrier obtains an aircraft with crew from a foreign air carrier would send the wrong message, at the wrong time, to foreign governments that continue to be concerned about restrictive U.S. aviation policies. In the course of on-going negotiations with the European Union to secure a ground breaking U.S.-EU "open skies" air services agreement, the U.S. is proposing further liberalization of its rules on wet leases to address the EU's concerns that those rules continue to be both discriminatory and unduly restrictive. Any change at this junction in the FAA's interpretation of the term "wet lease" would run counter to the proposals the U.S. delegation is making in these negotiations and could undermine the U.S. efforts to secure an "open skies" agreement with the EU, a long-standing objective of the Department that United strongly endorses.

Moreover, changing the definition of the term "wet lease" to impose new limitations on U.S. carriers' ability to charter aircraft with crew from foreign carriers appears to run directly counter to the Department's continuing support for deregulation.

Counsel: Wilmer Cutler, Bruce Rabinovitz, 202-663-6960, bruce.rabinovitz@wilmerhale.com

http://www.united.com/

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