FLY AMERICA ACT - RULES , REGULATIONS and POSSIBLE EXCEPTIONS
From Section 301-3.6 of the Federal Travel Regulations as amended on February 23, 1990 and effective on March 23, 1990. "Possible Exceptions" are derived from a variety of sources.
Use of US Flag Carriers
1. The Fly America Act - the "Fly America Act" refers to the provisions enacted by section 5 of the International Air Transportation Fair Competitive Practices Act of 1974 (pub. L. 93-624, January 3, 1975), 40 U.S.C. App. 1517, as amended by section 21 of the International Air Transportation Competition Act of 1979 (Pub. L. 96-192, February 15, 1980), 94 Stat. 43.
2. U.S. Flag Air Carrier - the term "U.S. flag air carrier" means an air carrier holding a certificate under section 401 of the Federal Aviation Act of 1958 (49 U.S.C. App. 1371). Foreign air carriers operating under permits are excluded.
3. United States - for purposes of the Fly America Act, "United States" means the 50 states, the District of Columbia, and the territories and possessions of the United States (49 U.S.C. App. 1301 (38)).
4. Gateway Airport in the United States - a "gateway airport in the United States" means the last airport in the United States from which the traveler's flight departs, or the first airport in the United States at which the traveler's flight arrives.
5. Gateway Airport Abroad - a "gateway airport abroad" means the airport abroad from which the traveler last embarks en route to the United States or at which the traveler first debarks incident to travel from the United States.
General Requirements of the Fly America Act
The Fly America Act, 49 U.S.C. App. 1517, as implemented in the Comptroller General's guidelines, Decision B-138942, March 31, 1981, requires Federal employees and their dependents, consultants, contractors, grantees, and others performing United States Government financed foreign air travel to travel by U.S. flag air carriers:
1. Unless travel by foreign air carrier is a matter of necessity as defined in paragraph (b)(3) of this section, or
2. When U.S. flag air carrier service is available within the guidelines in paragraphs (b)(4)(5) of this section.
Use of foreign air carrier service may be deemed necessary if a U.S. flag air carrier otherwise available cannot provide the air transportation needed, or use of U.S. flag air carrier service will not accomplish the agency's mission.
4. Availability of US Flag Carrier Services
1. General - U.S. flag air carrier service is available even though:
A. Comparable or a different kind of service can be provided at less cost by a foreign air carrier;
B. Foreign air carrier service is preferred by or is more convenient for the agency or traveler; or
C. Service by a foreign air carrier can be paid for in excess foreign currency, unless U.S. flag air carriers decline to accept excess foreign currencies for transportation payable only out of these monies. (See also paragraph (b)(5)(iv) if this section.)
2. Scheduling Principals - In determining availability of U.S. flag air carrier service, the following scheduling principals should be followed unless their application results in the last or first leg of travel to and from the United States being performed by foreign air carrier:
A. U.S. flag air carrier service available at point of origin should be used to destination or, in the absence of direct or through service, to the furthest interchange point on a usually traveled route;
B. Where an origin or interchange point is not served by U.S. flag air carrier, foreign air carrier service should be used only to the nearest interchange point on a usually traveled route to connect with US flag carrier service; or
C. Where a U.S. flag air carrier involuntarily re-routes the traveler via a foreign air carrier, the foreign air carrier may be used notwithstanding the availability of alternative U.S. flag air carrier service.
Guidelines for Determining Unavailability of U.S. Flag Air Carrier Service
Travel to and from the United States - Passenger service by a U.S. flag air carrier will not be considered available when the travel is between a gateway airport in the United States and a gateway airport abroad and the gateway airport abroad is:
A. The traveler's origin or destination airport, and the use of U.S. flag air carrier service would extend the time in a travel status, including delay at origin and accelerated arrival at destination by at least 24 hours more than travel by foreign air carrier;
B. An interchange point, and the use of U.S. flag air carrier service would require the traveler to wait 6 hours or more to make connections at that point, or delayed departure from or accelerated arrival at the gateway airport in the United States would extend the time in a travel status by at least 6 hours more than travel by a foreign air carrier.
Travel Between Two Points Outside the United States - For travel between two points outside the United States, U.S. flag air carrier service will not be considered to be reasonably available:
A. If travel by foreign air carrier would eliminate two or more aircraft changes en route;
B. Where one of the two points abroad is the gateway airport en route to or from the United States, if the use of the U.S. flag air carrier would extend the time in travel status by at least 6 hours more than travel by a foreign air carrier, including accelerated arrival at the overseas destination or delayed departure from the overseas origin, as well as the gateway airport or other interchange point abroad; or
C. Where the travel is not part of a trip to or from the United States, if the use of a U.S. flag air carrier would extend the time in travel status by a least 6 hours more than traveled by foreign air carrier including delay at origin, delay en route and accelerated arrival at destination.
Short Distance Travel - For all short distance travel, regardless of origin and destination, U.S. flag air carrier service will not be considered available when the elapsed travel time on a scheduled flight from origin to destination airport by foreign air carrier is 3 hours or less and service by U.S. flag air carrier would involve twice the travel time.
Travel Finances Solely with Excess Foreign Currencies - U.S. flag air carriers render themselves unavailable by declining to accept payment in foreign currencies for transportation services required by certain programs or activities of the Government which, under legislative authority, are financed solely with excess foreign currencies which may not be converted to U.S. dollars. In these instances, and notwithstanding the provisions of paragraph (b)(4)(1)(C) of this section, foreign flag air carriers that will accept the required foreign currency may be used to the extent necessary to accomplish the mission of the particular program or activity. The statement of justification required under paragraph (c)(3) of this section must indicate that the transportation service needed can be paid for only in excess foreign currencies and that otherwise available U.S. flag air carriers declined to accept payment in the foreign currencies.
Use of Foreign Flag Carriers
1. Authorization or Approval - Expenditures for commercial foreign air transportation on foreign air carrier(s) will be disallowed unless there is attached to the appropriate voucher a certificate or memorandum adequately explaining why service by U.S. flag air carrier(s) is not available, or why it was necessary to use a foreign air carrier. Use of foreign flag air carriers may be authorized or approved only when U.S. flag air carrier service is not available as determined under the guidelines in paragraph (b) of this section, or when foreign air carriers are used under the reciprocal terms of an appropriate bilateral or multilateral agreement as described in paragraph (c)(2) of this section, or when use of foreign air carriers is necessary under paragraph (b)(3) of this section.
2. Air Transport Agreements - Nothing in the guidelines in paragraph (b) of this section shall preclude and no penalty shall attend the use of a foreign air carrier which provides transportation under an air transport agreement between the United States and a foreign government, the terms of which are consistent with the international aviation goals set forth at 49 U.S.C. App. 1502(b) and provide reciprocal rights and benefits.
3. Justification Statement - A statement executed by the traveler or agency justifying the use of a foreign flag air carrier for any part of foreign travel must be entered on or attached to the travel voucher, transportation request, or any other payment document. Each request for a change in route or schedule which involved the use of a foreign flag air carrier must be accompanied by a statement justifying such use.
4. Employee liability for disallowed expenditures - Where the travel is by indirect route or the traveler otherwise fails to use available U.S. flag air carrier service, the amount to be disallowed against the traveler is based on the loss of revenues suffered by U.S. flag air carriers.
On September 25, 1991, the Comptroller General released a decision regarding the Code Sharing of flights by U.S. and foreign flag carriers utilizing the equipment of the foreign flag carrier. This is announced in Comp. Gen. File B-240956. The question in this case, presented by the Department of State, is whether a U.S. flag air carrier's arrangement to provide passenger service in international air transportation on the aircraft of a foreign air carrier under a "code-share" arrangement with the foreign air carrier would meet the requirements of the Fly America Act, 49 U.S.C. App. 1517 (1988). Since it appears that such service generally would be considered to be service by a U.S. air carrier in international air transportation rather than by a foreign air carrier, that service should also be considered transportation provided by a U.S. air carrier for purposes of the Fly America Act
Possible Exceptions to the Fly America Act
There are certain exceptions to the Fly America Act that can be applied (with varying possibilities of success):
1. 49 USC 40118 Paragraph b) Transportation by Foreign Air Carriers.— This essentially permits transportation of passengers and property by a non-U.S. carrier if the transportation is provided under a bilateral or multilateral air transportation agreement to which the U.S. government and the government of another country are parties to the agreement. However, it transpires that only two such Air Transport Agreements comply with the requirements of 49 USC 40101 (e), International Aviation Policy, the goals for international aviation policy and do provide for the exchange of rights or benefits of similar magnitude. These two exceptions are the bilateral air transport agreements between the U.S. and Saudi Arabia and between the U.S. and Brazil.
- Both the U.S./Saudi and U.S./Brazil agreements contain specific reciprocal statements that each countries' designated airlines have the right to compete for the transportation of all third and fourth freedom government contract passenger and cargo traffic (including federal, state, local, municipal or other government entities). In other words, these countries have agreed not to enforce any equivalent of Fly America (if such legislation exists in Saudi Arabia or Brazil) and they permit open competition in all their Government air transport contracts to and from the U.S.
- The U.S./EU Open Skies 'Phase I' agreement allows some further exceptions under this provision. However, an exemption is only applicable if the particular route concerned does not have a GSA city-pair contract fare in effect. This appears to be a legislative anomaly, as it is not clear whether this applies if you are not entitled to book at this USG contract rate. It should also be noted that any exemptions resulting from the Open Skies agreement are only applicable for non-military cases, i.e. if U.S. DoD funding is concerned, there are no waivers permitted. This is presumably for security reasons and to maintain Federal Government's effective control over (and recompense to) U.S. airlines involved in the Civil Reserve Air Fleet program. There is no consideration here for the unfortunate side-effect whereby EU contractors working on DoD programs are forced to lose money on all air transportation in support of the U.S. Government. The practical upshot of the provisions applied regarding Open Skies is that there are virtually no occasions where any exemptions can be applied, in spite of the apparent total compliance of the agreement with 49 USC 40101 (e) (see above) and in contradiction with the terms surrounding other open skies agreements.
2. Federal Acquisition Regulation Subpart 47.403 refers to a case which lists a number of accepted exceptions. This is one of the source documents for the generally quoted exceptions (also paraphrased in Code of Federal Regulations, 41 CFR Part 301):
Guidelines for Implementation of the Fly America Act (Case number B-138942), issued by the Comptroller General of the United States on March 31, 1981. The exceptions where use of a non-U.S. carrier is permissible in this are as follows:
- Travel to and from the U.S. Use of a non-U.S. carrier is permissible if:
- The airport abroad is the origin or destination airport, and use of a U.S. carrier would extend the total travel time 24 hours or more than would travel by non-U.S. carrier; or
- The airport abroad is an interchange point, and use of a U.S. Carrier would require the traveler to wait six (6) hours or more to make connection or would extend the total travel time six (6) hours or more than would travel by non-U.S. carrier.
- Travel between points outside the U.S. Use of a non-U.S. carrier is permissible if:
- Travel by non-U.S. carrier would eliminate two (2) or more aircraft changes en route; or
- Travel by U.S. carrier would extend the total travel time six (6) hours or more than would travel by non-U.S. carrier.
- Short Distance Travel. For all short distance travel, regardless of origin and destination, use of a non-U.S. carrier is permissible if the elapsed travel time on a scheduled flight from origin to destination airport by non-U.S. carrier is three (3) hours or less and service by U.S. carrier would double the travel time.
- The Comptroller General has issued a decision regarding the Code Sharing (Airline Alliances) of flights by U.S. and non-U.S. carriers utilizing the equipment of the non-U.S. carrier. If a U.S. flag air carrier has an arrangement to provide passenger service in international air transportation on the aircraft of a non-U.S. air carrier under a “code-share” arrangement this could meet the requirements of the Fly America Act. Federal regulations have been revised to indicate that the ticket (or documentation for an electronic ticket) must identify the U.S. carrier’s two letter designator code and flight number, which is located on the right hand section of the passenger receipt. This indicates that the flier has been seated and validated by the U.S. carrier, regardless of the air carrier which owns the aircraft. The key to meeting the requirements is whether the ticket is purchased through the U.S. air carrier. If the ticket is issued through the U.S. air carrier the expense will, in most cases, be eligible for reimbursement, provided the U.S. air carrier is identified on the ticket.
- If the ticket is issued by a non-U.S. air carrier, (even under a code sharing arrangement), the ticket is not eligible for reimbursement on a Federal award. Note that the ticket must be purchased from U.S. airline, not the code-sharing non-U.S. carrier. For example, if a ticket is purchased from British Airways, KLM, Lufthansa etc, the flight numbers will be preceded by the code “BA”, “KL”, “LH” etc and no reimbursement can be made. The flight numbers must have the code from the U.S. airline on the ticket (e.g.”AA” for American Airlines, “DL” for Delta Air Lines, “UA” for United Airlines, etc.).
3. Further exceptions can be found in the Code of Federal Regulations, 41 CFR Part 301-10.136, Part 301-10.137 and Part 301-10.138:
- A non-U.S. airline may be used when the costs of transportation are reimbursed in full by a third party, such as a non-U.S. government, international agency or other organization. It is possible that this exception could be used by non-U.S. contractors working on U.S./non-U.S. partnerships where the non-U.S. Government or company contributes financially to join the program and the cost of transportation can be shown to be part of this contribution.
- When the U.S. air carrier only has seats in first and/or business class, and economy class service is available from a non-U.S. air carrier.
- When non-U.S. air carrier service is deemed a matter of necessity per the following:
- (a) Foreign air carrier service is deemed a necessity when service by a U.S. flag air carrier is available, but
- (1) Cannot provide the air transportation needed; or
- (2) Will not accomplish the agency's mission. An example of this may be if the budget allocated by the USG to complete the 'mission' or contract is insufficient. This can occur when the budget allotted is based on USG city-pair contract fares on U.S. carriers, to which overseas agencies are usually not entitled but non-U.S. airlines local to the agency may offer fares that will meet the budget. Hence the agency cannot meet budget using U.S. carriers but can do so using their own preferred airline.
- (b) Necessity includes, but is not limited to, the following circumstances:
- (1) When the agency determines that use of a non-U.S. air carrier is necessary for medical reasons, including use of non-U.S. air carrier service to reduce the number of connections and possible delays in the transportation of persons in need of medical treatment; or
- (2) When use of a non-U.S. air carrier is required to avoid an unreasonable risk to your safety and is approved by your agency (e.g. terrorist threats). Written approval of the use of non-U.S. air carrier service based on an unreasonable risk to your safety must be approved by your agency on a case by case basis. An agency determination and approval of use of a non-U.S. air carrier based on a threat against a U.S. flag air carrier must be supported by a travel advisory notice issued by the Federal Aviation Administration and the Department of State. An agency determination and approval of use of a non-U.S. air carrier based on a threat against U.S. Government employees or other travelers must be supported by evidence of the threat(s) that form the basis of the determination and approval; or
- (3) When you can not purchase a ticket in your authorized class of service on a U.S. flag air carrier, and a seat is available in your authorized class of service on a non-U.S. air carrier.
4. It may also be possible to obtain exemption if compliance with Fly America can be demonstrated to breach other parts of the contract with the United States Government, thus making the aims of the contract achievable, as per 41 CFR Part 301-10.138 (a)(2), above. Inter-governmental reciprocity agreements (e.g. the 2004 U.S./UK Defense Procurement MoU) may fall into this category.