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Published online by Cambridge University Press: 21 July 2009
International civil aviation regulation is still mainly characterized by government influence and bilateral air transport services agreements. Also, the internationalization of the airline industry is still far away although the developments within the EEC may lead to the recognition of the need to abolish the ‘nationality’ criterion for airlines to operate internationally, at least for scheduled air services between the EEC member states. Professor Wassenbergh contends that the bilateral regime should be replaced by a multilateral regime, or to begin with maybe by one or more plurilateral regimes, creating a framework of rules enabling free competition between the airlines but allowing for temporary differential treatment based on existing differences between the states concerning their capabilities with respect to the participation under their own flag in the international air traffic market (‘pluralism’). Internationalization and privatization of the airline industry should form the basis for the treatment of air transport as a ‘trade in services’ to which the GATT-rules may be made to apply.
1. The Paris Convention of 1919. Cf. also, Netherlands Royal Decree of Aug. 3, 1914 (closing the ‘Netherlands’ air space’ for aircraft of belligerents).
2. This could already be observed in connection with the adoption – under the pressure of demand - of (illegal) liberal policies for charter air transportation across the North Atlantic and in Europe. See Wassenbergh, H.A. Aspects of Air Law and Civil Air Policies in the Seventies (1970). For scheduled air transport see, e.g. the US-Belgium air agreement of October 23, 1978. Annex II legalizes charter air transport on the North-Atlantic and contains the so called liberal Belgian charter rules. Each Party determines its own country-of-origin ‘Charter Air Service’ rules, regulations and laws. With respect to traffic originating in the territory of a Party the designated airline of the other Party may also operate charters in compliance with the laws, regulations and rules of its own state (Section 2). If Belgium would virtually equalize its charter rules with the carriage of scheduled air traffic, the Belgian designated airline would be automatically authorized in the US under Belgian rules to operate in practice (quasi-)scheduled air services under the guise of charter service to/from and through any point in the US from/to Belgium. Such charter service rules have been agreed upon also between the Netherlands and the US, and Switzerland and the US. Such rules promote more freedom of operation for international air transportation as the foreign carrier may enjoy more liberal rules in a foreign country than the homeland carriers of that country, giving such country reason to liberalize its air policy.Google Scholar
3. Cf. Wassenbergh, H.A. & Fenema, Van International Air Transport in the Eighties (1981). Also, Michael Levine at the International Aviation Club, Washington D.C., Sept. 20,1988.Google Scholar
4. Cf. Mrs. Thatcher's opinion on European integration, in The International Herald Tribune of Sept. 21,1988.
5. An example is the Bermuda Agreement of 1946 (the so-called ‘Bermuda-1 Agreement’) which refers bilateral tariff regulation to the multilateral I ATA system while its capacity clauses became a standard for bilateral air agreements. However, the principle of ‘equal opportunity for the designated airlines to operate on the agreed services on the specified routes no longer (if ever) can apply! Especially also in view of technological advances and market developments, circumstances, i.e. ‘opportunities’, for airlines to operate routes (economically) greatly differ in practice and cannot be made equal by governments, except maybe by unequal treatment, granting unequal freedom. Cf. the GATT doctrine of ‘differential’ treatment. What can and should be done by governments as a general principle (of ‘Most Favoured Nation’ and ‘national treatment and ‘non-discrimination’) is to grant designated airlines equal freedom (i.e. to the same extent) to operate their respective specified routes, and equal facilities (soft rights). Cf. also Art. 5 of the Chicago Convention with respect to technical freedoms if exercised on non-scheduled flights. The technical freedoms if exercised on international scheduled air services, if not coming under the provisions of the Multilateral Air Services Transit Agreement of 1944 or under bilateral air agreements cannot be said to be universal i.e. regulated under international customary air law. Unfortunately Sates have not generally committed themselves on a free grant of the technical freedoms for scheduled air services.
6. It is noteworthy that in the industrialized world privatization of the airline industry is promoted, be it still a national privatization. Globalization on the other hand is cross-border cooperation. Examples are SAS as a ‘Scandinavian’ carrier with interests in foreign airlines and KLM which also is building bridges across frontiers.
7. Cf. Art. 85(3) EEC Treaty (which Treaty provides that the benefits should ultimately go to the consumer, while Art. 85 recognizes that this can also be the case through inter-airline cooperation, which can than be exempted).
8. Cf. Arts. 85 and 86 EEC Treaty.
9. Eight mega carriers take care of 80% of the domestic traffic in ihe USA. The five largest EEC-airlines account for 70% of the scheduled European traffic.
10. Actions by the unions involved, understandable under the difficult circumstances, add to the overall malfunctioning of the deregulated international air transport system. An other unexpected phenomenon of US deregulation and the traffic expansion which resulted from it, is the wide use of older jet aircraft and their increase in value, despite safety concerns.
11. The ‘Association of European (scheduled) Airlines’, for example, predicts that around 1995 17 of the 43 big European airports will be congested.
12. Cf. Res. 896 (1988) para. 7 of the Parliamentary Assembly of the Council of Europe (which speaks of “incompetitive” dominance as the only dominance which should be avoided).
13. Three group exemption regulations of the European Commission of July 26,1988, implementing the ‘competition regulations’ of the Dec. 14, 1987 liberalization Package of the EEC-Council of Transport Ministers, are ‘a posteriori’ regulations but in fact are again ‘a priori’ regulations predetermining what will be forbidden in practice.
14. In a way the Bermuda-1 standard capacity clauses de-regulated airline operations by requiring only an ‘ex-post-facto’ review of capacity. In practice this soon led to a priori predetermination of capacity on the basis of the ‘primary objective’ criterion, on which basis capacity had to be scheduled primarily for the traffic to/from the home-state of the airline. The over-regulation of capacity on specified routes, which was a result of Bermuda-1's a priori de-regulation, but a posteriori restrictionism, could not be upheld where traffic demand required more freedom for the airlines to choose their routes and determine the capacity of their air services themselves.
15. Arts. 85 and 86 EEC Treaty.
16. For true deregulation the Arts. 6 and 5(2) of the Chicago Convention should be deleted while Art. 5(1) should be made applicable also to scheduled air services. Art 1 (and Art. 2) should then be interpreted as giving states-parties to the Convention only sovereign power for non-economic matters!
17. E.g. KLM selling tickets on a foreign airline's services from Amsterdam to London in the KLM office in Paris, or KLM selling airline tickets in an office in a place to which KLM does not operate air services (off-line transportation).
18. E.g. KLM selling tickets on KLM services from Paris to Amsterdam in its Paris office.
19. The importance of these capital flows is shown frequently, for instance, in the Moniteur da Commerce International. Its October 1988 issue showed that Air France was the number 1 ‘exporter’ among French service industries. Total revenue from exports was over 15 billion ffrcs and the net foreign currency contribution to the French economy in 1987 being over 5 billion ffrcs.
20. Cf. OECD, Elements of a Conceptual Framework for Trade in Services (1987). Cf. also, Mid-Term Review GATT-Conference, Montreal, December 1988 (where agreement was reached also on the application of a number of GATT-principles to trade in services).
21. Circulated by the Secretary of the ICAO Air Transport Committee on May 9,1988.
22. Representatives of the second and third category member states; see Arts. 48 and 50 of the Chicago Convention of 1944.
23. The International Chamber of Commerce (ICC) wonders whether this questionnaire procedure should not have been done the other way round, the ICAO asking GATT to explain how the free trade principles are applied in practice to trade in goods and what the differences are between goods and services for the application of these principles! The ICC as the world-wide business organization in favour of international free trade conditions, concluded that in view of the very special characteristics of civil aviation - sovereignty over the air space, public utility, public interest, safety and security, infrastructure needed, government ownership and control, nationality of aircraft and airlines, military reserve potential - the study of a possible application of (free) trade principles to international air transport, at least initially, should remain in the hands of the existing expert bodies dealing with civil aviation matters. Especially the first stages of this approach would be experimental and can best be handled by bodies familiar with international air transport problems. Cf. the statement adopted by the ICC Air Transport Commission on June 9,1989: “The Application of GATT (Free Trade) Principles to Air Transport”. The fact that the ICC undertook to study the matter in the first place and wishes to monitor the further developments can be explained by the objectives of the ICC, which is an international free trade organization of international business men, airlines and customers of ‘international transport services’, including international air transport Airlines and ‘users’ are meeting in the Air Transport Commission of the ICC. Moreover the ICC has a consultative status with ICAO.
24. AEROPA, M. Pierre Jeandrain pointed at the case of the Belgian TEA wishing to take over the French company Point Air. Its traffic rights were inalienable state property and were incapable of being transferred along with Point Air's assets.
25. ‘Soft rights’ in air transport (‘doing-business’ rights) are all privileges short of the rights (a) to operate scheduled air services on specified routes and (b) to carry traffic on those routes at agreed tariffs, which rights are referred to as ‘hard rights’.
26. Originally Ihe idea at Chicago in 1944 was not to forbid but to allow cabotage and this in general, i.e. not expressis verbis not only on an exclusive basis (cf. also Arts. 16 and 17 of the Paris Convention of 1919, and ICAO Doc. C-WP/4406 of May 26,1966). The present criteria for cabotage can be said to be: (a) the fact that the carriage of the traffic for remuneration or hire and the fares to be applied to such carriage come under the exclusive say of one state or authority (one sovereignty); (b) that it is not ‘international traffic’ (cf. Art. 96(e) of the Chicago Convention of 1944 and Art. 1 of the Warsaw Convention of 1929); and (c) that if (a) and (b) apply, it should not be granted on an exclusive basis. The criterion that it is not international traffic is of importance in case a stopover en route is made in a foreign country, which may turn the traffic concerned into international traffic or the other way around that international traffic becomes cabotage because a stopover is made e.g. in the territory of the destination of the traffic. Examples are a trip London-Amsterdam-Hongkong becoming international traffic because of the stop-over in Amsterdam and Amsterdam-Rio(stop-over)-Sao Paulo, which could become cabotage between Rio and Sao Paulo because of the stop-over at Rio de Janeiro.
27. See e.g., recent US-Australia arrangements whereby the safety-net is 37.5% of total traffic plus a growth rate of less than 6% over the previous year.
28. US News & World Report, July 10,1989, at 48.
