NACA Aims to Restrict Foreign Airline Charters

WASHINGTON -- U.S. tour operators that contract with foreign airlines for charter flights might be forced to use a more expensive option under a proposal being made to the Transportation Department.

The proposal is contained in a National Air Carriers Association (NACA) petition that would restrict the ability of foreign airlines to offer charter flights between the U.S. and third countries.

In some cases it would also give U.S. charter airlines a right of first refusal when operators negotiate charter contracts with foreign carriers.

At issue are what the DOT defines as "fifth freedom" charters, meaning a carrier from Country A flies between Country B and Country C, without serving its homeland.

The DOT routinely approves such flights, but NACA claims the policy hurts U.S. carriers.

Under the NACA plan, foreign carriers would have a more difficult time getting approval.

U.S. carriers, for example, would be given the right of first refusal on such charter contracts, "price notwithstanding," as long as they could provide an aircraft no more than 20 seats above the requested capacity within two hours of the requested time.

Foreign airlines would also have to demonstrate that U.S. carriers have actual, as opposed to theoretical, opportunities to offer an equivalent level of service from their homelands to third countries.

At Apple Vacations, Ted Papps, vice president of air contracting, said the company has not yet evaluated the proposal. Apple owns a charter airline -- USA 3000, a NACA member -- but it does use foreign carriers on occasion.

Papps said deciding which airline to use depends on several factors, including quality, reliability and the type of available aircraft.

Price also is a factor, he said.

"In a free enterprise system, everybody's got to be competitive," he said. "You buy the particular product that suits the particular need."

The DOT is not required to act on the petition, but its next step could be determined in part by comments filed in the docket by industry parties.

The petition was filed on docket number OST-02-11741.

NACA president Ronald Priddy acknowledges the petition faces an "uphill battle," but NACA is hoping to get support from labor unions and others.

NACA anticipates opposition from some large tour operators as well as from foreign carriers, Priddy said.

But, Priddy added, "We think [our proposal] is in the public interest." He said U,S. carriers face higher regulatory requirements, which can make it hard for the U.S. carriers to compete on cost.

Since 1999, according to NACA figures, foreign carriers have operated more than 7,500 roundtrip charter flights carrying U.S.-originating passengers, and the group claimed "the overwhelming majority" were flights to third countries.

NACA estimated the lost business has cost U.S. carriers more than $500 million since 1999, a financial blow that became harder to absorb after Sept. 11.