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.

The Fly America Act is applicable to all travel funded by United States Federal Government funds and requires the use of a US flag carrier airlines with a few exceptions. These individuals include US Federal employees, their dependents, consultants, contractors, grantees, and others.

The Fly America Act is incorporated into the Federal Acquisition Regulation (FAR) at 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, it does offer US airlines some recompense for the US Government's Civil Reserve Air Fleet (CRAF) programme and provides balance against some of the existing, largely obsolescent and, in many cases, inequitable bilateral US/non-US Air Transport Agreements. This partly accounts 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 (see below). The US is systematically replacing these ATAs by Open Skies agreements, which are considerably more liberal in their reciprocal arrangements. The most recently signed agreement is the Open Skies Agreement with the EU. A further treaty is being negotiated with China.

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 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 2 exceptions are the bilateral air transport agreements between the US and Saudi Arabia and between the US and Brazil.
*Both the US/Saudi and US/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 US.
*The US/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 US 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) US airlines involved in the Civil Reserve Air Fleet programme. There is no consideration here for the unfortunate side-effect whereby EU contractors working on DoD programmes are forced to lose money on all air transportation in support of the US 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-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. 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-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.
*When the US air carrier only has seats in first and/or business class, and economy class service is available from a non-US air carrier.
*When non-US 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 US 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 alloted is based on USG city-pair contract fares on US carriers, to which overseas agencies are usually not entitled but non-US airlines local to the agency may offer fares that will meet the budget. Hence the agency cannot meet budget using US 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-US air carrier is necessary for medical reasons, including use of non-US 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-US 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-US 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-US air carrier based on a threat against a US 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-US air carrier based on a threat against US 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 authorised class of service on a US flag air carrier, and a seat is available in your authorised class of service on a non-US 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 US Government, thus making the aims of the contract unachievable, as per 41 CFR Part 301-10.138 (a)(2), above. Inter-governmental reciprocity agreements (e.g. the 2004 US/UK Defense Procurement MoU) may fall into this category.