Fly America Act

The Fly America Act

The Fly America Act refers to the provisions enacted by US Code Title 49, Subtitle VII, Part A, subpart I, Chapter 401, 40118 - Government-Financed Air Transportation.

This part of US Code is applicable to all individuals using United States Federal Government funds and requires them to travel limit themselves to US flag carrier airlines. These individuals include US Federal employees, their dependents, consultants, contractors, grantees, and others – in other words everyone directly funded by the US Government. It is not applicable when travel costs are recovered through, for example, company overheads and can thus be shown not to have been directly US Government funded.

The Fly America Act is a requirement of Federal Acquisition Regulation (FAR) Subpart 47.4—Air Transportation by U.S.-Flag Carriers and is, therefore, applicable to all US Government contracts issued to US and non-US companies.

Interestingly, it should also be noted that, according to the US State Department (Transportation Dept , Aviation), the Fly America Act applies equally to non-US nationals and non-US companies or their representatives both within the USA and ex-territorially, regardless of enforcement difficulties or possible infringements of international law and personal liberty that this could represent.

The Fly America Act is generally regarded by non-US interests as being anti-competitive and as unfairly favouring US airlines and, particularly for non-US contractors, can result in significant travel budget issues. However, a counter-argument can also be postulated against some of the existing and largely obsolescent bilateral US/non-US Air Transport Agreements, thus partly accounting for the US State Department’s reluctance to grant exception in accordance with 40 USC 40101 (e), International Aviation Policy or any other exemption provisions.

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. US Code Title 49 40118 Paragraph b) Transportation by Foreign Air Carriers.— This essentially permits transportation of passengers and property by a non-US flag carrier airline if the transportation is provided under a bilateral or multilateral air transportation agreement to which the US Government and the government of a non-US country are parties to the agreement. However, it transpires that only 2 such Air Transport Agreements comply with the requirements of 40 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. Hence, in most circumstances, this exception is unlikely to be accepted. This situation may change if the long overdue US/EU Open Skies agreement is ratified in its current draft format. Note that current UK and EU Air Transport Agreements are not accepted by the US State Department as providing exemptions to Fly America under this provision, regardless of their apparent compliance with the requirements.

2. Federal Acquisition Regulation Subpart 47.403 refers to a case which lists a number of accepted exceptions. This is the source document 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-US carrier is permissible in this are as follows:

• Travel to and from the US. Use of a non-US carrier is permissible if:
  
  • The airport abroad is the origin or destination airport, and use of a US carrier would extend the total travel time 24 hours or more than would travel by non-US carrier; or
    
  • The airport abroad is an interchange point, and use of a US Carrier would require the traveller 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-US carrier.
    
    
• Travel Between Points outside the US. Use of a non-US carrier is permissible if:
  
  • Travel by non-US carrier would eliminate two (2) or more aircraft changes en route; or
    
  • Travel by US carrier would extend the total travel time six (6) hours or more than would travel by non-US carrier.
    
  • Short Distance Travel. For all short distance travel, regardless of origin and destination, use of a non-US carrier is permissible if the elapsed travel time on a scheduled flight from origin to destination airport by non-US carrier is three (3) hours or less and service by US carrier would double the travel time.
    
    
• The Comptroller General has issued a decision regarding the Code Sharing (Airline Alliances) of flights by US and non-US flag carriers utilizing the equipment of the non-US flag carrier. If a US flag air carrier has an arrangement to provide passenger service in international air transportation on the aircraft of a non-US air carrier under a “code-share” arrangement with a non-US air carrier 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 US Flag air 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 is in a US Flag carrier seat, regardless of the air carrier, which owns the aircraft. The key to meeting the requirements is whether the ticket is purchased through the US air carrier. If the ticket is issued through the US 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-US 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 US airline, not the code-sharing non-US 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 US airline on the ticket (e.g.”AA” for American Airlines, “NW” for Northwest, “UA” for United Airlines, etc.).
  

3. A further exception can be found in the Code of Federal Regulations, 41 CFR Part 301-10.136 and Part 301-10.137, which states that a non-US airline may be used when the costs of transportation are reimbursed in full by a third party, such as a non-US government, international agency or other organisation. It is possible that this exception could be used by non-US contractors working on US/non-US partnerships where the non-US Government or company contributes financially to join the programme and the cost of transportation can be shown to be part of this contribution.

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 US Government, thus making the aims of the contract unachievable. Inter-governmental reciprocity agreements may fall into this category. However, this is a potentially complex legal and contractual debate which has, to date, not been instigated.