COMMENTS ON THE NATIONAL CIVIL AVIATION AGENCY (“ANAC”) PUBLIC CONSULTATION No. 06/2020

Public Consultation No. 6/2020 (“Consultation”), which is being conducted by ANAC, in accordance with the procedures established by the legislation in force, is intended to discuss the draft resolution whose purpose is to repeal Resolution No. 18, of March 19, 2008, and also Decision No. 38, of March 9, 2010.

Resolution 18/2018 establishes the mandatory adherence of concessionaires of scheduled public passenger air transport services operating under the RBHA 21 flag operations rules, to the International Air Transport Association’s International Operational Safety Audit Program (International Air Transport Association – “IATA”) (IATA Operational Safety Audit – the “IOSA Program”). Decision No. 38/2010, in turn, sets the interpretation of Resolution No. 18/2008.

It is worth pointing out that Resolution 18/2018 was edited after ANAC received, at the end of 2007, a letter from the Latin American Air Transport Association (“ALTA”) requesting the incorporation, in the Brazilian regulations, of the content of the IOSA Program. In view of this, on March 19, 2008, ANAC approved the referred resolution to impose the participation of concessionaires of scheduled public air transport services of passengers operating under the rules of international operations (formerly called flag operations) of RBAC No. 121 in the IOSA Program.

Decision No. 28/2010, in turn, was issued to set the interpretation regarding Resolution 18/2008 with respect to air operators not registered in the IOSA Program that intend to start operating international routes.

It is also important to note that the IOSA Program was established by IATA, initially for its affiliates, with three main objectives:

1. Improve airline operational safety;
2. Complement and strengthen existing aviation authority regulations on operational safety; and
3. Saving the industry time and expense by eliminating redundant audits.

This program seeks to certify and guarantee the quality of the airlines and the tool for coordination, sharing, and standardization of Operational Safety information among the Operators. To remain active in the Program, the company (which does not need to be associated with IATA) must undergo an IATA audit every two years.

However, with the opening of the market arising from the conversion of Provisional Measure No. 863/2018, which amended Article 181 of Law No. 7,565/86, an imbalance in competitive relations was observed, on the same route, between domestic and foreign operators, when the civil aviation authority of the respective country does not require adherence to the Program for international frequencies. In addition, other possible regulatory problems have been identified as a result of mandatory adherence to the IOSA Program and are listed in the justification attached to the Consultation, namely:

1. Creating a market and monopoly of auditor accreditation;
2. Administrative effort by the operator to receive double audits with almost identical scope;
3. Possible additional difficulty for new entrants on international routes; and
4. Raising costs for operators, especially those who have no intention of entering into a code-share agreement.
   code-share
   ).

It was considered the extension of adhesion to the IOSA Program as a requirement for national and foreign operators that would theoretically solve the problem of isonomic treatment among operators competing for the same international route, but this alternative would not solve the other issues listed in the Consultation’s justification, and there is also the possibility of generating other problems. The Consultation’s justification lists the following issues that would not be addressed by applying this measure:

1. Impacts on designated foreign companies that are not in the IOSA Program;
2. Barrier to the entry of new foreign companies on routes to Brazil, especially the low cost companies
   low cost
   ;
3. Maintenance of possible barrier to entry for domestic companies on international routes;
4. Raising costs for operators, especially those who have no intention of entering into a code-share agreement.
   code-share
   );
5. Maintenance of the incentive to market companies accredited by a private association (IATA) and of a monopoly of auditor accreditation; and
6. Possible administrative effort by the operator to receive double audits with almost identical scope.

Given the above issues, addressed by ANAC, the said Agency understood that, despite the existence of benefits in the adhesion of airlines to the IOSA Program, it would be more advantageous for the Brazilian aviation market to repeal the requirement set in Resolution No. 18/2008, regulated by Decision 38/2010, maintaining, however, the recommendation to join the IOSA Program on an optional basis, since, in principle, no new regulatory problems would be created with this measure.

Also according to the justification of the Consultation, ANAC does not believe that the measure will have a negative impact on operational safety with the approval of the revoking resolution, since the Agency establishes, in other regulations, the minimum operational safety requirements, in line with the criteria established in the Annexes to the Chicago Convention, whose content also forms the basis of the IOSA Standardas Manual (ISM) standards that guide IATA audits.

Those interested in responding to the Consultation, should send their manifestations to ANAC until May 7, 2020.

Finally, it should be noted that, once the Consultation is closed, the final text of the Resolution revoking Resolution No. 18/2008 and Decision No. 38 of March 9, 2010, once approved and published in accordance with the procedures established by the applicable legislation, should come into force on the date of its publication in the Official Gazette.