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European and US Developments in Noise Regulations

by Mark Atwood & Austen Hall

EUROPE

Proposal for a Council Regulation affecting re-certificated Chapter 3 aircraft

Europe is set to go it alone with highly damaging new noise regulations hitting re-certificated aircraft. Parts of the aviation industry have strenuously resisted the proposals. At the recent 32nd ICAO Assembly in Montreal, there was almost unanimous objection from non-European countries.

Some critics in the industry say the European Commission (EC) has not done its research properly, has not consulted the airlines that will be affected, is flouting international understandings on noise matters, will damage ICAO’s position as the leading international aviation body, will encourage a confusing and damaging plethora of noise rules and will force EU member states to breach the non-discrimination provisions of the Chicago Convention 1944.

The Federal Aviation Administration and the US Trade Representative have written to their EU counterparts objecting to the proposals. The trade bodies have complained that the Regulation will breach GATT and WTO trading rules.

By way of background, for some considerable time the European Civil Aviation Commission (ECAC) has been considering proposals affecting civil subsonic jet aircraft re-certificated to Chapter 3. ECAC published a number of draft recommendations. ECAC felt it could not endorse a final draft recommendation without agreement at ICAO level, particularly as ICAO Resolution A31-11 urges ICAO member states to avoid restrictions on Chapter 3 aircraft, at least without discussion at ICAO level.

In March 1998, the EC published a proposed directive affecting re-certificated aircraft - this has subsequently been revised and published as a proposed Council Regulation (which will be automatically binding on EU member states).

The impetus for the ECAC recommendation and the EC’s proposed regulation is that environmental and other lobbyists are forcing the politicians to tighten the noise regulations in an attempt to enhance (or be seen as enhancing) the noise climate around European airports. The proposals are regarded as being purely defensive. Figures produced by Boeing show that just over 1,000 Chapter 2 aircraft will be hushkitted by the end of the US Stage 2 phase-out in 1999.

The crux of the matter is the fear that, with the phased withdrawal of Stage 2 aircraft in the US, there will be an influx of hushkitted aircraft on to EU member states’ registers. ECAC and the EC argue that generally speaking hushkitted aircraft are not genuine Chapter 3 aircraft and rely on trade-offs to meet Chapter 3, whereas modern aircraft built to Chapter 3 do not.

IN SUMMARY, THE PROPOSED REGULATION STATES THAT:-

“Re-certificated” aircraft means aircraft modified either directly through technical measures or indirectly through operational restrictions. While discussions centred around “hushkitted” aircraft, this is misleading. The proposed regulation also affects aircraft re-engined with engines having a by-pass ratio of less than 3 and aircraft re-certificated by means of obtaining an STC for operation with, for instance, reduced speed/payload/flap set-tings (e.g., Raisbeck’s STC for the B727-200). The by-pass ratio limit allows, re-engining of certain DC-8 aircraft with CFM56 engines.

There is concern within the industry that the regulation will have a negative effect on the values of certain re-certificated aircraft. Assuming that Europe is 25% of the world market, the effects will be somewhat limited. While EU airlines operating aircraft registered before April of next year and foreign carriers operating into Europe before April of next year can re-certificate to Chapter 3 and continue to operate. There will be a ban on adding re-certificated Chapter 3 aircraft to any EU register and the regulation will prevent foreign operators from expanding their fleets using re-certificated aircraft from outside their home countries.

African airlines - especially cargo carriers - are particularly affected. (It should be noted that one of the authors, Austen Hall, is a special adviser on noise issues to the African Civil Aviation Commission-AFCAC). AFCAC has strenuously resisted the proposed regulation and prior to the 32nd ICAO Assembly suggested a freighter aircraft exemption. This was rejected by ECAC and the EC. A recent report produced by Airclaims for AFCAC stated that the African-European aircargo market is worth US$1bn per annum and that the regulation would restrict the availability of aircraft and adversely affect the position of most African cargo operators. Virtually all industry forecasts show that cargo and passenger traffic will continue to increase. The proposed regulation will restrict the availability of aircraft.

Phase-out of Chapter 2 aircraft

New legislation emanating from Europe includes Council Directive 98/20/EC of March last year amending Directive 92/14/EEC on the phase-out of Chapter 2 aircraft. The main reason for the amending directive was to produce a new list of exempt aircraft from developing nations was required because certain aircraft were withdrawn from service, destroyed or for other reasons no longer qualified for an exemption. The EC is now empowered periodically to revise the list of aircraft from developing nations on a regular basis.

The wording relating to exemptions for aircraft from developing nations has been tightened. The exemption to such aircraft does not apply if the aircraft is leased to a person established in a country other than a developing nation. Prior to this, exempt aircraft from developing nations dry-leased to other airlines maintained their specific exemption - this loophole is now closed.

The amending Directive makes it crystal clear that EU member states can only apply the 10% rule to their domestic fleets, but not to foreign carriers. This closed a loophole whereby Directive 92/14 was interpreted by England and Ireland to allow the 10% rule to be applied equally between domestic and foreign carriers. The EC rejected arguments that this provision is discriminatory and breaches Articles 11 and 15 of the Chicago Convention 1944. Specific power is given for the restriction or exclusion of aircraft at Berlin Tegel and Berlin Tempelhof .

THE US

Steps towards final compliance in the US

In the US, attention on aircraft noise issues is focussed primarily on the imminent completion of the removal of Chapter 2 aircraft from the fleet. Under the Aircraft Noise and Capacity Act of 1990 (ANCA), no operator may operate Stage 2 aircraft (the approximate US equivalent of Chapter 2) within the 48 contiguous states after December 31, 1999 (this excludes aircraft operated exclusively in Alaska, Hawaii and the territories). While the final deadline is only one year hence, there is still one more interim deadline left this year US operators must have phased out 75% of the Stage 2 aircraft in their fleets, or, alternatively, operate a fleet that is at least 75% Stage 3 by this time. Foreign and “new entrant” carriers are required to meet the 75% Stage 3 minimum.

The most recent annual progress reports filed with the FAA reveal that in 1997, 1,453 Stage 2 aircraft were still being operated in the US, including aircraft operated into the U.S. by foreign carriers.

Most carriers are choosing to meet the Act’s interim deadlines by growing the proportion of Stage 3 aircraft in their fleets, rather than by purging or retrofitting their Stage 2 aircraft. This, of course, will not work after this year.

This does not mean that carriers are ignoring the impending deadline in the hope that it will go away. Most carriers by this time have developed plans for their Stage 2 jets, but those that are dependent on hush kits or re-engining may be forced to postpone bringing those aircraft into compliance pending certification of hush kits for some aircraft models.

Those that intend to ground older aircraft, which might be uneconomical to retrofit, are getting the maximum amount of use from those airframes, while they can still fly.

The high levels of Stage 2 aircraft are found not only among the smaller or all-cargo carriers. The major US carriers (i.e. the 10 carriers having over $1bn annual revenues) operated 753 Stage 2 aircraft - approximately 21% of their combined fleets. The Majors with the highest proportion of such jets are Northwest (33%), TWA (31%), and Continental (26%). Of all the majors, only Alaska Airlines reported a 100% Stage 3 fleet.

The National carriers (i.e. the 16carriers with over $100m annual revenue) reported a combined fleet only slightly lower than the majors’ in terms of Stage 3 fleet mix. But individually, they ranged the entire gamut, from Aloha Airlines with no Stage 3 jets (since it operates only within Hawaii), to seven carriers with all-Stage 3 fleets.

More surprisingly, the 26 US all-cargo carriers reported an overall 74% Stage 3 fleet mix, operating 241 Stage 2 versus 690 Stage 3 aircraft. Nonetheless, it is this community, with its high proportion of Stage 2 DC-8-50 and -61 series and Boeing 727 cargo conversion aircraft, that will bear the heaviest burden in meeting the final deadline.

Progress on hushkit certification

Hushkits or other methods of compliance for a number of Stage 2 aircraft types are currently certificated and commercially available. Boeing 727s have an embarrassment of riches when it comes to compliance alternatives including a complete re-engining technology from Valsan/Rohr and Dee Howard, hush kits by Federal Express, a “quiet wing” modification by DuganAir Technologies and a package of operating modifications by Raisbeck Commercial Air Group.

Options for other types are more limited. Hushkits for Boeing 737 are available from Nordam and AvAero, and for the DC-9 by ABS Partnership. Hushkits developed by Burbank Aeronautical and Quiet Nacelle Corporation for the DC-8-62 and -63 models that are popular with cargo carriers, have been certificated and are commercially available.

The short-duct DC-8-50s and -61s have proven more problematic. Fine Airlines has received a Supplemental Type Certificate for modification of these aircraft. While initially this STC contained a number of significant weight penalties, it has recently been amended to make these kits significantly more economical. Burbank Aeronautical Corporation II/Quiet Skies, Inc. is also working on certification of hushkits for these aircraft, which they claim will entail no fuel burn or payload penalties. These kits will be based on the BAC/QSI kits developed for the Boeing 707-300s, which received certification this year.

The question for those aircraft types for which compliance methodology has not yet been approved, is whether it will be possible to bring them into compliance with the Stage 3 standards by the final deadline. Despite the deadly finality of the words of the ANCA, there is a small glimmer of hope to be found in the Act, as described below.

Waivers of the final compliance deadline

The ANCA provides that “an air carrier” may apply for a waiver of the final deadline if it meets certain conditions: by next July, its fleet must consist of 85% Stage 3 aircraft; it must file a waiver request by January and its application “must include a plan with firm order” for bringing all of its aircraft into compliance not later than December 2003. The Act specifies that the Secretary of Transportation “may grant a waiver” if it would be “in the public interest”. This determination will consider the effect of such a waiver “on competition in the air carrier industry and on small community air service”.

The FAA has issued some general guidance on how it will approach such decisions. It is clear that applicants will have a significant burden of showing that compliance by the deadline is “financially onerous, physically impossible, technologically infeasible, or [will] have an adverse effect either on airline competition or service to small communities.”

FAA staff advise informally that they may be fairly sympathetic to operators that have firm orders for hush kits or other technologies that have been approved by the FAA, but which cannot be installed before the deadline. They appear to be less inclined to grant relief where a carrier has contracted with a supplier that has not yet been certificated.

One significant legal problem has emerged in recent days: sources at the FAA advise that the legal staff interprets ANCA to preclude the agency from granting “special flight authorisations” (i.e. ferry permits) for Stage 2 aircraft after this year even for the purpose of retrofitting or exporting the aircraft. Though they acknowledge that Congress likely did not intend such a result, they reason that the language of the Act (“After 1999, no person may operate. . .“), permits no exceptions, even for non-revenue operations.

There may be a considerable legal tussle over this interpretation, and Congress will certainly be pressed for corrective legislation in the coming year. Nonetheless, at this point the only alternative to potentially permanent grounding appears to be a waiver.

Finally, it should be noted that because ANCA provides for waivers only for “air carriers,” foreign air carriers are not eligible for waivers. This was yet another drafting error by Congress, one that caused a small tiff in the diplomatic community when the Act was passed in 1990. The FAA proposed corrective legislation earlier this year as part of the FAA Reauthorization Act, but that measure was stripped out of the bill along with everything else that was not absolutely essential, in order to achieve passage. The FAA intends to seek legislation again this year.

CONCLUSION

The industry is progressing in a relatively orderly manner toward the advent of all-Chapter 3 operations throughout much of the world between 2000 and 2003. Though there will be cases of hardship, these should be a far cry from the massive dislocations caused by the transition to Chapter 2 in the mid-1980s.

The disturbing and arbitrary trend in Europe toward a virtual “Chapter 3 1/2” however, threatens to disrupt the fragile bargain between the industry and national regulators, based on an understanding of the continued operability of Chapter 3 aircraft. Industry efforts should be concentrated as well on remedying the remaining problems with the US legislation before it is too late.

This article is by Austen Hall, partner; Clyde & Co, London and Mark Atwood, partner, Sher & Blackwell, Washington DC. For further information, Austen Hall can be contacted at Austen.Hall@Clyde.co.uk (on European aspects) and Mark Atwood at matwood@sherblackwell.com (on US aspects).

copyright 2000/2001, Sher & Blackwell LLP