Order on Discussion Authority Regarding a Smoking Ban on Transatlantic Flights

DEPARTMENT OF TRANSPORTATION

Office of the Secretary

[Docket No. 49973]

Order on Discussion Authority Regarding a Smoking Ban on

Transatlantic Flights

January 24, 1995.

SUMMARY: We are publishing the entire order as an appendix to this

document.

EFFECTIVE DATE: January 30, 1995.

FOR FURTHER INFORMATION CONTACT:

Peter Bloch, U.S. Department of Transportation. Office of the Assistant

General Counsel for International Law, Room 10105, 400 Seventh Street,

S.W., Washington, D.C. 20590. (202) 366-9183.

Patrick V. Murphy,

Acting Assistant Secretary for Aviation and International Affairs.

Order

On December 15, 1994, a joint application was filed by American

Airlines, British Airways, Continental Airlines, KLM Royal Dutch

Airlines, Northwest Airlines, Trans World Airlines, United Air Lines,

and USAir (Joint Applicants) requesting approval of, and antitrust

immunity for, discussions to be held for the purpose of reaching a

voluntary agreement to ban all smoking on commercial transatlantic

flights. They propose to announce a date and place for such discussions

and to invite representatives of all interested U.S. and foreign air

carriers and international airport and civic groups to participate.

In support of their application, the Joint Applicants state that

such a grant is consistent with the public interest because eliminating

the exposure of passengers and crew to passive smoke would serve the

public health. They cite [[Page 6344]] several U.S. and other

governmental initiatives under way to ban smoking on international

flights and assert that the voluntary action they advocate will produce

faster results and avoid the possibility of different or conflicting

rules for different countries.

The Joint Applicants also state that the antitrust immunity they

seek is consistent with Department precedent. They state that, under

either of the two tests the Department has employed for granting

antitrust immunity, their application merits approval.

Answers in response to the Joint Application were filed by the

National Smokers Alliance, the Coalition on Smoking or Health, and

Congressman Richard J. Durbin.\1\ The National Smokers Alliance, a

nonprofit membership organization seeking accommodation for smokers,

opposes the grant of antitrust immunity on the grounds that the purpose

of the discussions is to eliminate competition in the provision of air

services and to reduce consumer options. It states that individual

carriers should make decisions banning smoking in a competitive

environment, subject to the economics of the marketplace, and cites the

voluntary ban by one U.S. carrier, Delta, as evidence that such an

approach can achieve antismoking goals.

\1\Congressman's Durbin's comments were filed by United

Airlines, which requests that they be accepted. We will grant that

request.

---------------------------------------------------------------------------

The Coalition on Smoking or Health, representing the American

Cancer Society, the American Heart Association and the American Lung

Association, supports grant of the discussion immunity. The Coalition

believes that a voluntary agreement among carriers in the important

transatlantic market would probably lead to similar agreements on other

international routes, greatly increasing the prospects of worldwide

compliance with the resolution of the International Civil Aviation

Organization (ICAO) calling for smokefree international flights by July

1, 1996. Congressman Durbin also urges prompt approval of the requested

discussion authority, observing that the efforts of the U.S. and other

countries to achieve implementation of the ICAO resolution through

intergovernmental agreement is a slow process, and states that a

voluntary agreement among carriers would provide an important public

health benefit that is clearly in the public interest.

The Joint Applicants filed a request for leave to file a reply to

the answers of the National Smokers Alliance and the Coalition on

Smoking or Health, which we will grant. The Joint Applicants contend

that the Coalition's comments highlight the important public benefit

and strong U.S. policy of achieving a smoke-free environment on

international flights that underlie the discussion immunity request,

while the position of the Alliance that the proposed discussions would

be anticompetitive underscores the reluctance of the carriers to

proceed without that immunity.

As required by statute, we have given the Attorney General and the

Secretary of State a copy of the application and the opportunity to

submit written comments on the application. Neither the Attorney

General nor the Secretary of State has submitted any comments.

Decision

The Department has decided to grant the requested discussion

immunity, subject to several conditions traditionally imposed to

protect the public interest when potentially anticompetitive discussion

authority is granted. The United States has a firmly-established policy

that smoking should be banned on international flights, because

eliminating smoking on international airline flights will provide

important public health benefits. We are granting the application,

because the discussions proposed by the carrier applicants should

hasten the achievement of that goal in transatlantic markets.

We assume for the purposes of our decision here that both the

purpose and effect of the proposed discussions would be to

substantially reduce competition among carriers in the provision of air

transportation. In such instances, we may authorize intercarrier

discussions and grant them antitrust immunity where we find that the

discussions are necessary to meet a serious transportation need or to

achieve important public benefits and that such benefits or need cannot

be secured by reasonably available alternatives that are materially

less anticompetitive. 49 U.S.C. 41308, 41309.

The purpose of the discussions in this case is to secure the

important public benefit of smoke-free air travel in a faster and more

orderly fashion than the present process of government regulation and

intergovernmental negotiation. The discussions are also consistent with

a strong and clearly articulated U.S. policy.

The public health and safety benefits of eliminating smoking and

passive smoke contamination of aircraft were addressed in regulatory

proceedings prompted by the enactment of section 335 of Public Law 101-

164 and resulting in the adoption of the smoking ban on most domestic

flight segments set forth in Part 252 of the Department's regulations,

14 CFR Part 252. In the case of international flights, the U.S. has

sponsored, and in 1992 ICAO adopted, a resolution urging member states

to ban smoking on all international flights by July 1, 1996. In

November, 1994, the U.S., Canada and Australia announced the signing of

an agreement to ban smoking on flights by their carriers operating

nonstop between their territories.

Despite such initiatives, however, the process of negotiating and

implementing smoking bans with dozens of governments is a slow and

uncertain process due to the complexities of dealing with so many

different countries. Furthermore, failure to achieve agreement with all

of the countries of a given region would create confusion for

passengers and present significant crew and aircraft coordination

problems for airlines. A voluntary agreement among carriers in the

important transatlantic market will clearly help avoid such problems

while making it more likely that the goals of the U.S. and most of the

world's nations under the ICAO resolution can be achieved.

We also find that there are no reasonably available alternatives to

the requested discussions having a materially less anticompetitive

effect. Direct governmental action would not be a market solution and

would present the difficulties noted above. And, while the National

Smokers Alliance points to an independent action by one U.S. carrier to

ban smoking on at least some of its international flights, we find no

basis to believe that a pure reliance on individual carrier marketing

decisions will either avoid the difficulties faced by direct government

action or significantly contribute to the realization of U.S. policies

and objectives.

The applicants assert that each of them would be reluctant to ban

smoking on its own transatlantic flights because doing so could cost it

a significant number of passengers. As a result, notwithstanding

Delta's own decision to bar smoking on its flights, the applicant

carriers might well delay prohibiting smoking until smoking was

prohibited by government action. This causes us to find that

independent carrier action is not a reasonably available alternative

which would achieve the same result as the proposed discussions, the

early elimination of smoking from most transatlantic service. The

United States wishes to bar smoking on international

[[Page 6345]] flights as soon as possible. In our judgment, the

discussions proposed by the applicants may achieve the United States'

goal--the elimination of smoking--much sooner than independent action

by individual airlines.

We also find that the requested approval and grant of antitrust

immunity to discuss a voluntary agreement to ban smoking on

international commercial flights in transatlantic service is

appropriately limited in nature and well-calculated to achieve a result

consistent with our objective of eliminating smoking on all

international flights. As noted, the Joint Applicants propose to

announce a date and place for such discussions, and to invite

representatives of all interested domestic and foreign air carriers, as

well as representatives of international airports and interested civic

groups. We will also require that representatives of airline employee

unions or associations and private consumer groups (including the

commenters in this proceeding) be invited to attend, although the

latter may be limited to observer status.

We have determined to grant the request for discussion authority

and antitrust immunity in this order, rather than through a show-cause

proceeding. The discussions sought by the applicants seek to carry out

an established public policy goal of the United States, the prohibition

of smoking on international flights. Implementing that goal as soon as

possible will provide important public health benefits. We are willing

to grant antitrust immunity in this instance because, unlike most

situations where it has been sought, the purpose of the discussions at

issue here is fully consistent with the public interest. To the extent

that consumer service options would be curtailed by an agreement, such

a result is inherent in the public policy decision to eliminate smoking

aboard aircraft. Furthermore, any agreement reached by the carriers may

not be implemented without our approval, and interested persons will

have an opportunity to comment on any application for such approval.

In addition, to minimize any adverse impact on the public interest,

we will condition our approval and grant of antitrust immunity upon the

following express conditions: (1) The discussion authority is limited

to 120 days from the date of publication of this order; (2) advance

notice of any meeting shall be given to all identifiable entities and

groups noted above, as well as to the Department of Transportation, the

Department of Justice, and the Federal Trade Commission; (3)

representatives of the Department of Transportation, the Department of

Justice and the Federal Trade Commission shall be permitted to attend

the meetings authorized by this order; (4) the Joint Applicants or a

representative shall file within 14 days with the Department a report

of each meeting held including inter alia the date, place, attendance,

a copy of any information submitted to the meeting by any participant,

and a summary of the discussions and any proposed agreements; (5) any

agreement reached must be submitted to the Department for approval and

must be approved before its implementation; (6) the attendees at such

meetings must not discuss rates, fares or capacity; and (7) the

discussions will be held in the metropolitan Washington, D.C. area.

Accordingly,

1. The Department approves the request for discussion authority

filed by the Joint Applicants in this docket, subject to the

restrictions listed below, under section 41308 of title 49 of the

United States Code, for 120 days from the date of publication of this

order, for discussions directed toward eliminating smoking on all

international flights in transatlantic service;

2. The Department exempts persons participating in the discussions

approved by this order from the operation of the antitrust laws under

section 41309 of Title 49 of the United States Code;

3. The Department's approval is subject to the following

conditions:

(a) Advance notice of any meeting shall be given to all

identifiably interested air carriers, foreign air carriers,

international airports, airline employee unions or associations, civic

groups and consumer groups, as well as to the Department of

Transportation, the Department of Justice, and the Federal Trade

Commission;

(b) Representatives of the entities and groups listed in

subparagraph (a) above shall be permitted to attend all meetings

authorized by this order;

(c) The Joint Applicants or a representative shall file within 14

days with the Department a report of each meeting held including inter

alia the date, place, attendance, a copy of any information submitted

to the meeting by any participant, and a summary of the discussions and

any proposed agreements;

(d) Any agreement reached must be submitted to the Department for

approval and must be approved before its implementation;

(e) Attendees at such meetings must not discuss rates, fares or

capacity;

(f) The Department shall retain jurisdiction over the discussions

to take such further action at any time, without a hearing, as it may

deem appropriate; and

(g) Any meetings authorized by this order shall be held in the

metropolitan Washington, D.C. area.

4. Petitions for reconsideration may be filed pursuant to our rules

in response to this order;

5. We will serve a copy of this order on all parties served by the

Joint Applicants in this docket, as indicated by the service list

attached to their Application, on all parties filing Answers to the

Application, and Congressman Richard J. Durbin; and

6. We will publish a copy of this order in the Federal Register.

By:

Patrick V. Murphy,

Acting Assistant Secretary for Aviation and International Affairs.

[FR Doc. 95-2498 Filed 1-31-95; 8:45 am]

BILLING CODE 4910-62-M