U.S. carriers had originally planned to reinstate scheduled passenger services to China in early June 2020. United and Delta announced their intent to resume scheduled passenger services on various routes and submitted applications to the CAAC at the beginning of May 2020. In light of the failure of the CAAC to approve U.S. carrier applications, the Department intensified its engagement with the CAAC regarding the Notice, and, in particular, raised objections that the Notice is inconsistent with the terms of the Agreement. The Department highlighted two primary concerns: (1) that the Notice imposes capacity limitations beyond those contemplated in the Agreement; and (2) that the Notice creates an environment that affords Chinese carriers more favorable treatment than U.S. carriers, thereby denying U.S. carriers a “fair and equal opportunity to compete.”
The USG has repeatedly raised with the CAAC its objections to the CAAC Notice and its inconsistency with the Agreement. During a call on May 14, 2020, the Department addressed with the CAAC the inability of U.S. carriers to resume scheduled passenger service and exercise their full bilateral rights, emphasizing that the CAAC Notice established restrictions for U.S. carriers that are inconsistent with the Agreement. In response, the CAAC informed the Department that China is considering removing the March 12 schedule pre-condition; however, the restriction to once-weekly service on one route to China would remain in place.
Against this background, on May 22, 2020, the Department issued Order 2020-5-4 to impose Phase 1 schedule filing requirements under 14 CFR Part 213 of the Department’s regulations to cover all of the scheduled combination services of the captioned foreign air carriers operating to and from the United States.
Subsequent Development
On May 25, 2020, the CAAC submitted a letter to the Department asserting that its Notice is not inconsistent with the Agreement because its provisions “equally apply to all domestic and foreign carriers, being fair, equal and transparent.” The CAAC says it does not “wish to be obliged to respond by taking countermeasures on U.S. carriers” and urges the Department to revoke its order. Meanwhile, the CAAC remains unable to communicate definitively to the Department a time at which its Notice will be revised to allow U.S. carriers to reinstate scheduled passenger flights.
Decision
We have fully described how the CAAC has failed to permit U.S. carriers to exercise fully their rights under the Agreement. We find no basis in the CAAC’s May 25th letter to anticipate a change in CAAC policy that would point to a satisfactory resolution.
Therefore, based on the facts before us, we continue to find that the Government of China has, over the objections of the U.S. Government, impaired the operating rights of U.S. carriers and denied U.S. air carriers the fair and equal opportunity to exercise their operating rights under the
