Provision of Aviation Insurance Coverage for Commercial Air Carrier Service in Domestic and International Operations

This memorandum authorizes the Secretary of Transportation to provide federal aviation insurance or reinsurance to U.S.-flag air carriers from December 27, 2007 through August 31, 2008, with a possible extension to December 31, 2008 if commercial insurance is unavailable on reasonable terms. The President delegates authority to the Secretary to extend coverage based on determinations of national security, air commerce, or foreign policy necessity.

Federal Register Open PDF 73 FR 1813

Impact dates

Dec 31, 2008
Absolute deadline for any insurance coverage extension
Aug 31, 2008
Initial insurance coverage period expires
Dec 27, 2007
Secretary to immediately notify air carriers and arrange Federal Register publication

Key directives

Determine continuation of U.S.-flag commercial air service necessary for air commerce, national security, and foreign policy
Approve provision of insurance/reinsurance to U.S.-flag air carriers until August 31, 2008
Authorize conditional extension August 31-December 31, 2008 when commercial insurance unavailable on reasonable terms
Delegate authority to Secretary to extend determination for additional periods beyond August 31, 2008 but no later than December 31, 2008
Direct Secretary to immediately notify all air carriers under 49 U.S.C. 40102(2)
Arrange for Federal Register publication

Who is ordered

Secretary of Transportation · Department of Transportation

Timeline

Immediate

Insurance coverage authorized effective December 27, 2007
Secretary directed to notify all air carriers immediately
Federal Register publication arranged

Near term (90d)

Coverage continues through August 31, 2008
Secretary may need to assess availability of commercial insurance alternatives

Long term

Potential extension authority through December 31, 2008
Possible need for further legislative or administrative action if program needs continuation beyond 2008

Risks & tensions

Conditional extension after August 31, 2008 requires subjective Secretary determination that commercial insurance unavailable 'on reasonable terms and conditions'
Delegation of extension authority to Secretary creates tension between executive and agency discretion
Post-9/11 federal aviation insurance program reflects ongoing market failure in terrorism risk coverage