By Linda Chiem

Law360 (June 3, 2020, 8:18 PM EDT ) China-based airlines are barred from flying to and from the U.S. starting mid-June, the Trump administration said Wednesday, in response to China's refusal to allow U.S. airlines to restart flights that had been halted amid the coronavirus pandemic.

The U.S. Department of Transportation issued an order suspending all passenger flights from China-based airlines beginning June 16, saying Beijing has flouted an air transport agreement between the two countries by denying U.S. carriers a "fair and equal opportunity to compete" in the market.

The Civil Aviation Administration of China refused to grant Delta Air Lines and United Airlines' recent requests to restart scheduled passenger flights from the U.S. to China that had been temporarily suspended since March to combat the COVID-19 outbreak, according to the DOT. China was working off an arbitrary "baseline" date of March 12 to justify its refusal to clear U.S. carriers to restore their China capacity to levels before government travel restrictions and stay-at-home orders had kicked in, the DOT said.

Meanwhile, Chinese carriers suspended some, but not all, of their U.S.-China scheduled flights, and have "generally maintained a degree of passenger service" to the U.S., the DOT said. As government officials begin reopening the economy, the DOT views the imbalance in air passenger service levels between U.S. versus China-based carriers as unfair, saying it's "inconsistent" with the terms of the U.S.-China Civil Air Transport Agreement.

"Based on the facts before us, we continue to find that the government of China has, over the objections of the U.S. government, impaired the operating rights of U.S. carriers and denied U.S. air carriers the fair and equal opportunity to exercise their operating rights under the agreement," the DOT said in its order.

The order takes effect June 16, but the DOT says President Donald Trump can choose to enforce it sooner. The DOT order can also be pulled if China ends up granting Delta and United's requests.

"Our overriding goal is not the perpetuation of this situation, but rather an improved environment wherein the carriers of both parties will be able to exercise fully their bilateral rights," the DOT said. "Should the CAAC adjust its policies to bring about the necessary improved situation for U.S. carriers, the department is fully prepared to revisit the action it has announced in this order."

The DOT order "disapproves" of all existing schedules for flights to and from the U.S. and China that are operated by Air China, China Eastern Airlines, China Southern Airlines and Xiamen Airlines. Other China-based air carriers subject to the order include Beijing Capital Airlines Co. Ltd., Hainan Airlines Holding Co. Ltd. and Sichuan Airlines Co. Ltd.

Experts told Law360 on Wednesday that the DOT order is justified, but noted that political tensions are high as the U.S. and China have been aggressively squaring off on a number of trade, economic and national security issues.

"There are obviously several moving parts associated with our relationship with China, including their apparent failure to be forthright with the world involving COVID-19, their policy toward Hong Kong and the U.S.-China trade agreement," said Mark Dombroff, a partner with Fox Rothschild LLP and a former U.S. Department of Justice and Federal Aviation Administration attorney. "It is impossible to consider any one of these in isolation. I'm hopeful that the Chinese relent on the issue of air transportation and that the issues with China de-escalate on all fronts."

Given the current status of China-U.S. relations, any policy decision taken by either government can be perceived as political, but the DOT's order is grounded in "reciprocity," said Juscelino F. Colares, associate dean for global legal studies at Case Western Reserve University.

"Agreements that govern air travel between two countries are reciprocal. This means airlines for each country are expected to balance the flights to and from each country," Colares said, explaining that Delta and United's requests to resume service had been "met by Chinese civil aviation authority's unprincipled refusal to change the limits on international service it first imposed in March."

"The U.S. response to Chinese recalcitrance in fulfilling its duties seems proportional," Colares said. 

The move isn't out of the ordinary, Colares added, because the U.S., along with other countries, "has a long history of standing for the principle of reciprocity and proportionality." 

"Air travel between the United States and countries like Iran, Cuba, Libya, etc. has been suspended altogether in response to international developments or violations of the principle of reciprocity," he said.

Republicans on the House Transportation and Infrastructure Committee applauded the DOT's "bold and decisive" decision, saying in a statement Wednesday that China must adhere to its obligations under its international air service agreement with the U.S.

"China must quickly reverse course and allow our passenger airlines access to the Chinese aviation market," Reps. Sam Graves, R-Mo., and Garret Graves, R-La., said in a joint statement. "Until then, Chinese passenger airlines will be able to fly to the United States as frequently as U.S. passenger airlines can fly to China — which is not at all."

--Editing by Stephen Berg.

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