Jetrader - March/April 2013 - 34

In the era of a la carte fare pricing, the Spirit Passenger Usage Fee (PUF)
case could have broader implications on the key revenue sources credited
with returning the airlines to sustained profitability.
certificate. The outcome of this appeal has
the potential to turn decades of established
delivery practice on its head and adds a
level of uncertainty to deliveries governed
by English law until it is resolved.
United (Continental) Cases: Eleven years
after the New York terrorist attacks, the
World Trade Center lessee’s negligent security claims filed against United Airlines
were dismissed. The case alleged United’s
security checkpoint in Portland, Maine, did
not detect the terrorists before they flew
to Boston. Following their arrival, they
boarded an American Airlines flight to carry
out the attack. And more than 12 years
after the crash of Air France Concorde Flight
4590 on departure from Paris, United/
Continental’s conviction for manslaughter
was overturned by a French appeals court.
The conviction of the mechanic who was
charged with improperly installing a metal
strip that fell from a Continental aircraft
was also overturned. The accident investigation concluded that the strip tore one
of the Concorde’s tires sending debris into
its fuel tanks causing the fire that brought
down the aircraft. Continental disputed the
What’s going on? There are limits to
what is foreseeable. The presiding judge in
the WTC case stated: “It was not within
United’s range of apprehension that terrorists would slip through the (Portland)
security screening checkpoint, fly to Logan,
proceed through another air carrier’s security screening and board that air carrier’s

flight, hijack the flight and crash it into
1 World Trade Center, let alone that 1
World Trade Center would therefore collapse
and cause Tower 7 to collapse.” The same
holds true for the Concorde crash case and
whether a mechanic could ever foresee that
an improperly installed metal strip on one
aircraft could cause another aircraft flown
by another airline to catch fire and crash.
Spirit Passenger Usage Fee (PUF) Case: As
expected, Spirit filed a motion to dismiss this class action suit brought under
U.S. federal racketeering statutes (RICO)
(reported on in the January/February issue
of Jetrader). Spirit argues that airfare pricing
and displays are comprehensively regulated
by the U.S. Department of Transportation.
Therefore, among other things, they argue
that the court, by virtue of the plaintiffs’
racketeering claim, cannot regulate what
Congress gave DOT the authority to do. Spirit
states that RICO is not a, “one-way ticket
around the federal regulations.”
What’s going on? Plaintiffs’ lawyers have
fashioned the best case they can under
the facts given. While the case is just
getting underway, the key hurdle they face
is preemption. DOT has exclusive authority
to regulate airfare advertising and approved
Spirit’s disclosure of the PUF. The plaintiffs’
case can proceed only if the court decides
that RICO provides a private cause of action
outside of the regulatory and enforcement
framework set up by DOT and Congress.
This appears to be a case of first impression in the context of airfare advertising,

but similar actions have generally been
prohibited in relation to other areas where
a comprehensive regulatory framework was
established by Congress. In the era of a
la carte fare pricing, this case could have
broader implications on the key revenue
sources credited with returning the airlines
to sustained profitability.
FAA Proposed Rule on Contract Maintenance:
The U.S. FAA filed a Notice of Proposed
Rulemaking (NPRM) seeking comments on
proposed new rules aimed at enhancing
reporting and related requirements for
maintenance contracted out by FAR Part
121 and 135 air carriers.
What’s going on? Contract maintenance
at U.S. air carriers now exceeds 70 percent,
says the FAA. FAA concedes that existing
oversight rules should be sufficient. But
citing history back to the 1996 Valujet
crash, FAA found that oversight of contract
maintenance was lacking, lists of contract
maintenance providers were not kept up-todate and that maintenance programs were
written on the basis that work would be
performed in-house. FAA is proposing that
affected carriers report to the FAA the
name and address of each contract maintenance provider and a description of the
work they are performing. In addition, the
airlines must provide contract maintenance
providers with the necessary instructions
so they may properly follow the airline’s
often customized maintenance program.
By setting expectations and developing
more explicit rules, FAA’s stated goal is to
strengthen the standards and oversight of
contract maintenance.

Stands on Demand, Inc.
Don Mitchell is a partner with the law
firm of Smith, Gambrell & Russell, LLP and
concentrates his practice in United States
and cross-border aviation equipment finance
transactions and litigation. Please email any
questions, comments or suggestions for future
topics to

8296 NW 64th Street
Miami, FL 33166
Phone: +1-305-717-5415

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©2013 Donald B. Mitchell

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34 The 1
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publication of the International Society of Transport Aircraft Trading

4:23 PM

Jetrader - March/April 2013

Table of Contents for the Digital Edition of Jetrader - March/April 2013

A Message from the President
ISTAT Honors Renowned Airline Executive
State of the Regions: North America
Q&A: Paul A. Jacobson
Investment Thesis: Why Airplanes are Great Assets?
Remarket or Dismantle: That is the Question
What's Going On?
Aircraft Appraisals
Letter of Intent: Crafting Road Maps for Success
ISTAT Members on the Move Index
Jetrader - March/April 2013 - Cover1
Jetrader - March/April 2013 - Cover2
Jetrader - March/April 2013 - 3
Jetrader - March/April 2013 - 4
Jetrader - March/April 2013 - A Message from the President
Jetrader - March/April 2013 - 6
Jetrader - March/April 2013 - 7
Jetrader - March/April 2013 - Calendar/News
Jetrader - March/April 2013 - 9
Jetrader - March/April 2013 - ISTAT Honors Renowned Airline Executive
Jetrader - March/April 2013 - 11
Jetrader - March/April 2013 - 12
Jetrader - March/April 2013 - 13
Jetrader - March/April 2013 - 14
Jetrader - March/April 2013 - 15
Jetrader - March/April 2013 - State of the Regions: North America
Jetrader - March/April 2013 - 17
Jetrader - March/April 2013 - 18
Jetrader - March/April 2013 - Q&A: Paul A. Jacobson
Jetrader - March/April 2013 - 20
Jetrader - March/April 2013 - 21
Jetrader - March/April 2013 - 22
Jetrader - March/April 2013 - 23
Jetrader - March/April 2013 - Investment Thesis: Why Airplanes are Great Assets?
Jetrader - March/April 2013 - 25
Jetrader - March/April 2013 - 26
Jetrader - March/April 2013 - 27
Jetrader - March/April 2013 - 28
Jetrader - March/April 2013 - Remarket or Dismantle: That is the Question
Jetrader - March/April 2013 - 30
Jetrader - March/April 2013 - 31
Jetrader - March/April 2013 - 32
Jetrader - March/April 2013 - What's Going On?
Jetrader - March/April 2013 - 34
Jetrader - March/April 2013 - Aircraft Appraisals
Jetrader - March/April 2013 - 36
Jetrader - March/April 2013 - 37
Jetrader - March/April 2013 - Letter of Intent: Crafting Road Maps for Success
Jetrader - March/April 2013 - 39
Jetrader - March/April 2013 - ISTAT Members on the Move
Jetrader - March/April 2013 - 41
Jetrader - March/April 2013 - Index
Jetrader - March/April 2013 - Cover3
Jetrader - March/April 2013 - Cover4