[Federal Register Volume 60, Number 21 (Wednesday, February 1, 1995)]
[Notices]
[Pages 6343-6345]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2498]



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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.
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    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]
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