United Airlines 2012 Annual Report Download - page 10

Table of Contents
airline safety, pilot training, and consumer protection. Climate change legislation is also likely to be a significant area of legislative and regulatory focus and
could adversely impact the Company’s costs. See , below.
In December 2009, the DOT issued the first of several rules intended to enhance airline passenger protections. The 2009 rule included regulations mandating
that major air carriers, including United and Continental, adopt detailed contingency plans and implement procedures applicable to tarmac delays exceeding
three hours for domestic flights and four hours for international flights, subject to exceptions for safety and security. In April 2011, the DOT issued a second
set of consumer protection regulations. This second initiative imposed regulations requiring carriers to charge the same baggage fee throughout a passenger’s
entire itinerary (even if on multiple carriers) and expanded the scope of the tarmac delay rule to cover foreign carriers operating to and from the United States.
Although the DOT delayed the enforcement date for its new baggage fee regulations until July 2012, it is now in force and could expose United to DOT
enforcement action and civil penalties.
In December 2011, the FAA issued a final rule amending the existing flight, duty, and rest regulations applicable to U.S. air carriers operating under Part 121
of the Federal Aviation Regulations. The provisions under the 2011 final rule are likely to negatively impact the Company’s operations and increase the
Company’s costs by mandating extensive changes to the way we schedule crews and deploy aircraft. Moreover, in December 2012, the FAA issued a draft
policy statement proposing to cede authority over some areas of cabin crewmember workplace safety and health condition oversight to the Occupational Safety
and Health Administration. If this change in policy is finalized, it would expose the Company to increased regulatory requirements in the aircraft cabin, with
the potential for increased costs and adverse operational impacts.
Finally, aviation security continues to be the subject of frequent legislative and regulatory action, requiring changes to the Company’s security processes,
frequently increasing the cost of its security procedures, and adversely affecting its operations.
International Regulation
 International air transportation is subject to extensive government regulation. In connection with the Company’s international services, the Company
is regulated by both the U.S. government and the governments of the foreign countries the Company serves. In addition, the availability of international routes
to U.S. carriers is regulated by aviation agreements between the U.S. and foreign governments, and in some cases, fares and schedules require the approval of
the DOT and/or the relevant foreign governments.
Foreign countries are increasingly enacting passenger protection laws, rules and regulations that meet or exceed U.S. requirements. In cases where
this activity exceeds U.S. requirements, additional burden and liability may be placed on the Company. The European Union (“EU”) now requires
compensation to passengers for canceled and delayed flights, in addition to denied boarding compensation. Similar foreign regulations require passenger
compensation and subject the Company to enforcement penalties in addition to changes in operating procedures.
 Historically, access to foreign markets has been tightly controlled through bilateral agreements between the U.S. and each foreign country
involved. These agreements regulate the markets served, the number of carriers allowed to serve each market and the frequency of carriers’ flights. Since the
early 1990s, the U.S. has pursued a policy of “open skies” (meaning all U.S.-flag carriers have access to the destination), under which the U.S. government
has negotiated a number of bilateral agreements allowing unrestricted access between U.S. and foreign markets. Currently, there are more than 100 open skies
agreements in effect. However, many of the airports that the Company serves in Europe, Asia and Latin America maintain slot controls. A large number of
these are restrictive due to congestion at these airports. London Heathrow International Airport, Frankfurt Rhein-Main Airport, Shanghai Pudong International
Airport, Beijing Capital International Airport, Sao Paulo Guarhulos International Airport, Tokyo Narita International Airport and Haneda International Airport
are among the most restrictive foreign airports due to capacity limitations. As an example, under the 2010 United States-Japan open skies agreement, only four
slot pairs are available in Haneda to U.S. air carriers at this time, none of which is held by the Company.
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