Governments Sign Principles for Implementation of Bilateral Air Service Agreements

A Multilateral Statement of Policy Principles regarding the Implementation of Bilateral Air Service Agreements has been signed by seven states and the European Commission.

The signing took place at the conclusion of the IATA-hosted second Agenda for Freedom Summit in Montebello, Canada.

The states that signed the document are Chile, Malaysia, Panama, Singapore, Switzerland, the United Arab Emirates and the United States of America; and was endorsed by the European Commission. In total they represent around 60% of global aviation.

“This is an historic achievement that will help set the foundation for a financially sustainable global aviation industry. I congratulate the seven governments and the European Commission for their visionary leadership. One agreement will not change the world. But this is a strong signal that this industry’s future must be realized in a much more liberal environment,” said Giovanni Bisignani, IATA’s Director General and CEO.

Roberto Kobeh Gonzalez, President of the Council of ICAO who witnessed the signing, said, “Greater economic freedom is a critical element for aviation and I commend IATA’s Agenda for Freedom initiative. The Statement of Policy Principles is perfectly in line with ICAO’s vision for liberalization as articulated at the fifth Worldwide Air Transport Conference in 2003. While safeguarding safety, security and environmental responsibility, governments and industry must also find a platform for financial sustainability in civil aviation.”

The 65 year-old bilateral system of air service agreements places restrictions on how airlines can do business in ways that no other industry faces. National ownership requirements do not allow airlines to merge across borders, precluding the development of global players that has been seen in other previously regulated industries such as telecommunications. Airlines are also restricted in market access, until government negotiators conclude agreements to allow cross-border services.

The policy principles address three main areas:

Freedom to access capital markets: States agreed on principles that would open the possibility for airlines to access global capital markets. This would be achieved with an agreement not to exercise bilateral rights that could allow them to block international services from airlines with non-national ownership structures. States also agreed to consider the possibility of a multilateral agreement to waive ownership restrictions.

Freedom to do business: States agreed on principles that seek to reduce restrictions on market access and to expedite the further opening of markets in future bilateral negotiations.

Freedom to price services: States agreed on principles that would allow greater freedom to price airline services in line with market realities.

While these policy principles are non-binding, they are an important statement of common government intention among the most active countries driving global aviation policy. The document notes specifically that the signatories “recognize the importance of promoting compatible regulatory approaches and reducing the potential for conflicts” and the intention to use the policy principles to guide “implementation of existing air service agreements and our approach to the negotiation of new or amended air services agreements in the future.”

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