Since 1974, passengers and cargo whose travel is paid for by the U.S. government have generally been required to obtain transportation provided by a U.S. airline; this provision is known as the Fly America Act. The General Services Administration (GSA) implements this provision through the City-Pairs Program. Every year, the GSA awards more than 12,000 city-pairs at a government rate to airlines who bid for the privilege of carrying taxpayer-funded travel.
Up until 2015, the GSA required that, if an air carrier intended to serve a city-pair through a code share, the U.S. carrier must still be responsible for the service, receive a “substantial portion of the revenue,” and “not act as a mere booking agent on behalf of” a foreign partner. Recently, however, the GSA overturned this long-standing precedent by effectively awarding government contracts to Emirates Airline through a code share with JetBlue. For FY2017, JetBlue was awarded seven routes between the United States and Dubai, UAE, as well as the traffic between New York City and Milan, Italy. Unlike other code shares in which the United States and the foreign partners could operate the service but, for business reasons, one does not do so, JetBlue does not have aircraft economically capable of flying these routes, rendering JetBlue “a mere booking agent” that is renting the use of its code to the foreign airline.
This reinterpretation of Fly America, which allows companies to bid on routes without any ability or intention to fly them, specifically excludes the airline employees whose income taxes support the cost of this travel. While the company might make a profit off these deals as a booking agent, the pilots, flight attendants, gate agents, and others are not paid if these passengers are not flying on their planes.
- The GSA should immediately correct its policy and regulations to ensure that no U.S. airline be allowed to rent its code to a foreign airline to win a Fly America contract.
- Congress should clarify the existing Fly America statute to give meaning to its original intent: government-funded travel should place maximum reliance on using U.S. flag carriers staffed by U.S. flight crews.