DOT May Prohibit Some Alitalia Flights due to Italy’s Airport User Fees

For many years U.S. air carriers have argued that Italy’s two-tiered airport user fees are discriminatory.  Italy’s airports charge lower landing and take-off fees for intra-EU flights, while fees for extra-EU flights (those going to or from Italy via a foreign location) are much higher.  Both DOT and the U.S. State Department have argued to the European Union (and directly to Italian authorities) that these different fees discriminate against U.S. carriers and violate the user charges provision (Article 12) of the U.S.-EU Air Transport Agreement (“the Agreement”).   Italy, however, has steadfastly refused to lower the fees.  The EU recently required the Italian government to justify the higher fees or eliminate them, but resolution of the issue from the EU side could take many months.

DOT’s patience recently broke when it issued an Order to Show Cause last month, tentatively finding that the two-tier system violates Article 12, thus warranting remedial action against Italy under the federal International Air Transportation Fair Competitive Practices Act (“IATFCPA”) (49 U.S.C. § 41310(c), as amended).  DOT also ruled that because of the violation, it would impose restrictions on the flights of Italy’s flag carrier, Alitalia, to the United States.  If DOT finalizes the order, it will bar Alitalia from participating in any on-line, interline or codeshare arrangements between points in Italy and the United States, via any intermediate point in the EU.

Alitalia has vehemently objected to the order, noting that the United States is bound under the Agreement to arbitrate the dispute before imposing any punitive measures against Alitalia.  Alitalia describes the proposed sanctions as “breathtakingly punitive in nature,” and departing from the required rule of proportionality under the IATFCPA.   Alitalia notes that DOT historically has only imposed such extreme sanctions on flag carriers where their governments have refused to operating authority to a U.S. carrier.

US Airways, American Airlines and United all filed responses supporting DOT’s order, including its proposed restrictions on Alitalia’s flights to the United States.   The EU has expressed its dismay about the order, noting that the EU is still evaluating whether Italy’s two-tiered system is indeed discriminatory on the basis of nationality, since both EU and third-country carriers (including U.S. carriers) are subject to the same landing charges when flying on any routes from points outside the European Union.

DOT has not yet issued its final order on this matter.

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