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The conclusions of the ICAO World-wide Air Transport Conference, held from 23
November to 6 December 1994, provide an opportunity to reflect on the evolution of
the economic regulation of international air transport in the 50 years since the Chicago
Conference of 1944, to examine the underlying forces that are driving regulatory change,
and to consider what aspects of international air transport may need to be regulated in
the future and through what mechanisms.
Keywords:
The
evolution
regulation,
liberalization,
of regulatory
international
air services
structure
agreements,
bilateralism,
multilateralism
Agreement
came into effect, opened the door for
the development
of bilateral air services agreements
(US Government
Printing Office, 1945). In 1946, a
prototypical
bilateral
agreement
drawn
up in
Bermuda
(United Nations, 1947)2 between the two
parties that had led the arguments
for the two major
conflicting
philosophical
viewpoints
in Chicago,
namely the UK and the USA, paved the way for the
development
of the network of nearly 3000 bilateral
agreements
in place today.
In recent years, however,
there has been some
diminution
of the role of bilateral agreements
at the
regional level, notably within the European
Union
and the wider European
Economic
Area, where
common international
air transport
regulation
now
applies to 18 States, and within the Andean
Pact,
where
open skies applies
amongst
five States.
Nonetheless
the bilateral
agreement
remains
the
predominant
regulatory
structure
for international
air transport
regulation
today.
The evolution
of regulatory
content
The Agreement
is now colloquially
referred to as Bermuda
I.
having been superseded
by a further bilateral air services agreement between
the United Kingdom
and the United States in
1977, also signed in Bermuda and hence known as Bermuda
II.
Lebanon4witzerland
(1955).
(1953),
Libya-UK
(1953),
Conference
sufficient consensus for the Conference to recommend further work by ICAO on developing some
regulatory arrangements on doing business matters
(that is, soft rights) into more formalized arrangements. Within this general context, some of the
more substantive conclusions of the Conference are
described below.
Safeguards/Safety
net
ownership
and control
sector?
applies
to any form of economic
activity.
International
air transport is unique only to the
extent
that this basic principle
is explicitly
reaffirmed in Article 1 of the Chicago Convention
(although even this relates to airspace over the territory). This explicit recognition,
however, does
create an administrative or legal hurdle, in that it
necessitates the express consent of a State (including conditions attached thereto) in order to enable
market access from another State.
Prestige
Wome
CRAF
50-59.
implications
of foreign investment
in US carriers for the
are discussed in US General Accounting
Office (1992) pp
requirements
In the past it has been claimed that there is a particular barrier to freedom of entry into international
air transport imposed by the. fact that operating
capacity is available only in the form of large,
discrete and extremely
capital-intensive
blocks,
namely jet aircraft. However, there is now a wide
range of sizes of jet aircraft available to meet the
demands of a wide range of route densities and
distances, and aircraft ownership and long lead
times are in any case no longer a prerequisite for
market entry, thanks to the widespread introduction
of leasing and innovative forms of financing.
Physical
limitations
on market
access
meeting
of its
Codicil
Even assuming that the case is proven that international air transport is not a special economic
sector in any way, it remains to be seen whether it
would be appropriate for its inclusion as regards
market access under the present provisions of the
General Agreement on Trade in Services, for two
primary reasons. First, the sector involves the
operations of aircraft and the carriage of passengers not only to and from their country of registration or citizenship but over and between the
territories of other countries; it is consequently
particularly
susceptible
to the extra-territorial
application of national or regional competition law
(ICAO, 1989); this is where the embryo ICAO
Code
of
Conduct
on
Healthy
Sustained
Competition
could be of particular importance.
Second, the development of predatory behaviour
and dumping can occur within a very short time
frame in air transport in comparison with other
sectors, as investment in operating capacity is so
expensive, demand is highly fluctuating, and the
product is extremely perishable, with a consequently low marginal cost per seat or per unit of
freight capacity in times of excess capacity. There
is some doubt that the general dispute settlement
procedures
of the World Trade Organization
would be timely enough to respond to the demands
9
The future
of international
air transport
regulation:
C Lyle
References
European
Communities
(1992) Council Regulation
(EEC) No
2407192 on Licensing
of air carriers,
in Official Journal of
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International
Civil Aviation
Organization
(1962) Handbook of
Administrative Clauses in Bilateral Air Transport Agreements
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Dot
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International
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International
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Civil Aviation Organization
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8632-C/968
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Transport Regulation: Present and Future Dot 9644
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Office (1992) Foreign Investments in US
Airlines GAOIRCED-93-7
\
US Government
Printing
Office
(1945) International Civil
Aviation Conference - Final Act and Related Documents
United Nations (1947) Treaty Series (Volume 3) No 36, United
States of America and United Kingdom of Great Britain and
Northern
Ireland, Agreement
relating to air services, signed at
Bermuda on 11 February
1946
Uruguay Round, Trade Negotiations
Committee
(1994) Final Act
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Appendix
Regulatory arrangements for doing business issues as
agreed by the 1994 ICAO Air Transport Conference
Ground
handling
conversion
and remittance
of
of non-national
personnel
reservation
systems