Post on 06-Jul-2018
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July 2009 Transport and Logistics Department 1
Air Transport Management
Session 3: International Regulation
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Air Transport Trading
Agreements
BILATERAL
MLTILATERAL
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Types o! Air Transport
Trading AgreementsBilateral
"#pen $%ies&
'lurilateral
Multilateral
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Types o! Bilateral
AgreementFeatures Restrictive Bermuda 1 Liberal
3rd & 4th Freedoms Limited rights Limited rights Open route access
5th Freedom Few rights Several rights Some rights
esignation Single Single ! ouble "ultiple
#apacit$ 5%5% split
Revenue pool
sometimes re'uired
(ost)*acto capacit$
review
+o limits
(ricing ,ari**s based on cost -pro*it
ouble .pproval
/.,. tari**s applicable
,ari**s based on cost -pro*it
ouble .pproval
/.,. tari**s applicable
ouble isapproval
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Bilateral (egotiation
Topics Routes )* airports+ to ,e ser-ed and attac.ed /reedoms plus any T.ird ountry in-ol-ement
Airline)s+ designation
apacity )!reuency aircra!t type+ ,y route
'ricing regime
.arter and cargo pro-isions
Ancillary issues3 R$ access codes.aringarrangements
slots gate * terminal space
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T.e /i-e /reedoms o!t.e Air 1st 4 t.e rig.t to o-er5y
2nd 4 t.e rig.t to land !or tec.nical reasons
6rd 4 t.e rig.t to carry re-enue tra7c !rom your country to anot.er )e8g8 .ina $out.ern3 uang:.ou to $ydney+
;t. 4 t.e rig.t to carry re-enue tra7c to your country !rom anot.er )e8g8 .ina $out.ern3 $ydney to uang:.ou+
s .ome country )e8g8 Air India3 Del.i ? London Heathrow – New York JFK +
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'ost .icago /reedoms
@t. 4 om,ination o! 6rd and ;t. !reedom rig.ts ena,ling an airline to carry re-enue tra7c ,et=een t=o !oreign countries -ia its o=n
state )e8g8 /innair3 London ? elsin%i ? Bang%o%+
t. 4 T.e rig.t to carry re-enue tra7c ,et=een t=o !oreign countries
=it. no reuirement to originate or terminate t.e ser-ice in t.e carrier>s .ome state )e8g8 Ryanair3 London Stansted ? Bratisla-a+
Ct. 4 T.e rig.t to carry re-enue tra7c ,et=een t=o locations in a
!oreign country )ca,otage+ )e8g8 easyJet3 'aris )#rly+ ? (ice+
Sometimes the 8th freedom is split, so that consecutive caota!e isdeemed the 8th ri!ht and stand alone caota!e as the "th#
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#t.er Tra7c Rig.ts
$han!e of %au!e –
the ri!ht to transfer tra&c to a di'erent si(edaircraft at an intermediate point in a forei!n countr)*e#!# the +rst le! of nited-s London – Los .n!eles –
Honolulu service is operated ) /oein! 000, with achan!e to /oein! 010 for the transpaci+c sector2
$odesharin! –
the ri!ht to market the services of another airlineas if the) were )our own 3i!hts *e#!# .ustrian-s4ienna – /an!kok 5S67 service is marketed ) haias %069:2
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Regulation Applied to Air
Transport Route Rig.ts
Tra7c arrying Rig.ts
Designation
apacity
/ares
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$ ? $ingapore Agreement19C nrestricted designation !or $ carriers
nrestricted
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I(ITIAL #($EE(E$ #/ I(TER(ATI#(AL $ LIBERALI$ATI#(
(e= routes and more carriers operating
Lo=er !ares
'oor proGta,ility
ig. tra7c gro=t.
Increase in $ s.are o! tra7c
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$ "#'E( $HIE$&AREEME(T$;ositive features18/ull
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Anti4trust Immunity In ec.ange !or a country signing an "#pen
$%ies& ,ilateral agreement t.e $o-ernment =ill grant anti4trust immunity tot.e designated carriers !rom t.e t=orespecti-e states ena,ling t.em to ma%e Kointdecisions on pricing sc.eduling capacitypro-ision and ser-ice uality8
it.out suc. immunity airline alliances =ould,e -ery restricted in terms o! =.at aspects o!t.eir ,usinesses t.ey could Kointly underta%e8
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$ #pen $%ies Deals
92 li,eralised ,ilateral agreements .a-e no= ,een esta,lis.ed=it.
t.e $8 T.is includes all E states8
T.e Grst $ #pen $%ies deal =as agreed in 1992 =it. t.e
(et.erlands8
T.e long a=aited E4$ deal =as signed in April 200 and,ecame
eecti-e in Marc. 200C8
T.e most recent deal =as agreed in May 200C =it. Henya8
A !ull listing can ,e !ound at3
.ttp3ostp=e,8ost8dot8go-a-iationN4;0O20RoleP/iles,ilatosagreement8.tm
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lo,al Alliances
De-eloped ,y carriers to circum-ent ,ilateralrestrictions
Airlines need immunity !rom $ Antitrust Legislationin order !or an alliance to ,e a,le to !unction
In ec.ange !or a country agreeing an #pen $%iesdeal t.e $ =ill grant suc. immunity so ena,lingalliance carriers to collude
T.e $ goal in Europe .ad ,een to prise openeat.ro= ,y esta,lis.ing #pen $%ies deals =it.neig.,ouring countries
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Alliances roupings0urope +
.mericaS.merica
.sia(aci*ic .*rica!"0ast
.er LingusB. Finnair
/beria "alev
.merican L.+ #atha$ (aci*icragonair
2.L antas
Ro$al2ordanian
.ustrian bmiLO,Lu*thansaS.S SpanairSwiss ,.(
.ir #anada#ontinentalnited S.irwa$s
.ir #hina .ir+ .ll +ippon.sianaSingapore ,hai".S
0g$ptair S..
.ero*lot .irFrance 6 7L".litalia #S.
elta+orthwest
.erome8ico
#O(.
#hina Southern7orean
7en$a .irwa$s
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Anti4trust Immunity and
Alliance Acti-ity As t.e H .as not esta,lis.ed an "#pen
$%ies& deal =it. t.e $ 5neworld alliance
mem,ers Britis. Air=ays and AmericanAirlines do not .a-e anti4trust immunity8
T.ey are t.ere!ore at a disad-antagecompared to Lu!t.ansa and nited )Star alliance+ Air /rance4HLM and Delta)Sk)team alliance+8
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Europe>s MultilateralRegimeHey !eatures3All eig.t !reedoms o! t.e air may ,e eercised ,y carriers
=it. an E Air #perators ertiGcate
(o pricing controls
(o capacity restrictions
(ational o=ners.ip and control replaced ,y ommunityo=ners.ip
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Europe>s ommon A-iationArea
;articipatin! $ountries3
2 E Mem,er $tates 4 Austria Belgium Bulgaria yprus :ec.Repu,lic
Denmar% Estonia /inland /rance ermany reece ungary Ireland Italy Lat-ia Lit.uania Luem,ourg Malta (et.erlands
'oland 'ortugal Romania $lo-a%ia $lo-enia $pain $=eden
nited Hingdom
C (on4E Mem,er $tates 4 Al,ania Bosnia er:ego-ina roatiaIceland
Macedonia (or=ay $er,ia and Montenegro
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E T.ird ountry 'olicy
In 199C t.e European ommission )E+ too% C Mem,er$tates )Austria Belgium Denmar% /inland ermanyLuem,ourg $=eden H+ to t.e European ourt o!
Justice !or esta,lis.ing ,ilateral agreements =it. t.e $t.at discriminated against E airlines8
T.e ruling o! t.e ourt in (o-em,er 2002 !orced t.e E
ouncil o! Ministers in June 2006 to grant a mandate tot.e E allo=ing it to ,egin negotiating an E ,ilateral=it. t.e $8 T.e deal too% !our years to negotiate8
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Regulation C;200;
All eisting ,ilateral agreements ,et=een Mem,er$tates and T.ird ountries t.at contain pro-isionscontrary to ommunity la= must ,e amended orreplaced ,y ne= agreements t.at are =.olly
compati,le =it. ommunity la=8
Mem,er $tates must esta,lis. non discriminatoryand transparent procedures !or t.e distri,ution o!
tra7c rig.ts ,et=een ommunity air carriers8 Inapplying t.ose procedures Mem,er $tates s.ould.a-e due regard to t.e need to preser-e continuity o!air ser-ices8
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Mec.anisms to amend
eisting ,ilateralagreements/irst approac. comprises negotiations underta%en ,y
indi-idual Mem,er $tates =.ic. in-ol-e t.e insertion o!standard clauses de-ised ,y t.e ommission and Mem,er$tates8
$econd approac. in-ol-es ,ilateral negotiation at
ommunity le-el ,y t.e ommission in t.e !rame=or% o!t.e hori(ontal mandate =.ic. ena,les t.e insertion o! t.enecessary standard clauses in all o! t.e agreementsreac.ed ,et=een t.e Mem,er $tates and a T.ird ountry
6 hori(ontal agreements .a-e so !ar ,een esta,lis.edincluding =it. Al,ania Australia A:er,aiKan BosniaBulgaria .ile roatia eorgia Israel Ha:a%.stanMalaysia Molda-ia Morocco (epal (e= Qealand'a%istan Romania $ingapore and %raine8
Around
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/uture E Eternal
A-iation $trategy T.e ac.ie-ement o! an European #pen A-iation Area ,y
2010 comprising t.e E and all neig.,ouring countries
located along its eastern and sout.ern ,orders is t.eo,Kecti-e8
In addition t.e esta,lis.ment o! glo,al a-iationagreements =it. important trading partners suc. as
Australia anada .ile .ina India Japan (e= Qealand$ingapore and $out. Horea are identiGed as importantgoals8
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T.e /uture Regulatory'icture
In t.e longer term t.e !ormation o! a Transatlantic ommon A-iation Area could ultimately result in a common set o! economic regulations )including competition la=s+ ,eing applied to air transport ser-ices ,et=een and =it.in Europe and t.e $8
E ,ilateral agreements =it. ot.er maKor trading partners =ill !ollo= t.ose =it. t.e $ and anada8
. i l l il l
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#t.er regional plurilateralagreements+ame .greed (articpants
#aricom9#aribbean:
1;;< /n *orce b$ ; out o* 15 states
Fortale=a 1;;> < "0R#OSR states
Ban?ul .ccord 1;;> < @est .*rican states#L"A 1;;> #ambodia Laos "$anmar Aietnam
.#.# 1;;; 1< "iddle 0ast & + .*rican states
#0".# 1;;; < #entral .*rican states
#O"0S. 1;;; C% 0astern & Southern .*rican states
DamoussouEro C 1;;; 5C .*rican nion states
/", 1;;; /ndonesia "ala$sia and ,hailand
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#t.er regional
plurilateral agreements+ame .greed (articpants
B/"( 1;;; Brunei /ndonesia "ala$sia and(hilippines
".L/., C%%1 Brunei #hile +ew ealandSamoa Singapore ,onga and S