Capacity Building Workshop on Yamoussoukro

Decision Regulatory Texts

Economic Regulation of International Air Transport

Adiron AlbertoICAO Regional Officer, Technical Assistance/Air Transport

Kigali, Rwanda, 22 – 24 July 2019

Preamble

……….

THEREFORE, the undersigned governments

having agreed on certain principles and

arrangements in order that international civil

aviation may be developed in a safe and orderly

manner and that international air transport

services may be established on the basis of

equality of opportunity and operated soundly

and economically;

CHICAGO CONVENTION

2

Chicago Convention

The Air Transport Industry

Air Transport Industry has become:

A Catalyst for economic development

A vital engine of global socio-economic growth

One of the greatest contributors to the

advancement of modern Society.

Traffic is for scheduled services

The size of the industry in 2017

5

4.1 billion passengers

37 million aircraft departures

56 million freight tonnes carried

Over 1 400 scheduled airlines

More than 26 000 aircraft

More than 3 900 airports

173 air navigation centres

290,000 pilots* and 82,000 air traffic controllers* Active pilots for passenger aircraft above 100 seats

-

50

100

150

200

250

0

1000

2000

3000

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5000

6000

7000

8000

9000

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44

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00

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16

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s(b

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)

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sis

Gu

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Asia

n c

risis

Iran

-Ira

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Fre

igh

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on

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-Kilo

me

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(billio

n)

Growth of air transport in 2017

Scheduled commercial trafficTotal (international and domestic) services

6Source: ICAO Annual Report of the Council

7.7 trillion RPK

+7.9%vs. 2016

224 billion FTK

+9.5%growth rate vs. 2016

20

17

Source: ICAO Annual Report of the Council Scheduled commercial traffic

International and domestic

passenger traffic

+7.8% in 2017 (ICAO

projection)

+7.0% in 2017 (ICAO

projection)

7

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

5 000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Domestic and International Revenue Passenger-Kilometres (RPK)(in billion)

International RPK Domestic RPK

Source: ICAO

Share of Total Revenue Tonne-

Kilometres by region in 2017

8

The Air Transport Industry

Regulatory Framework

Bilateral Regulation

The International Air Transport is today regulated by:

(i) Predominantly by Bilateral Air Services Agreements (BASAs);

and

(ii) Multilateral Air Services Agreements (MASAs).

Parties to bilateral regulation can be:

(a) two sovereign States

(b) a supra-State (i.e. a community or other union of States acting

as a single body under authority granted by its member States)

(c) regional governmental body or two airlines (for example, in the

determination of capacity or prices).

11

Roots of the Bilateral System

Bilateral Regulation

The roots of the bilateral regulation can be found in the Chicago Convention. The most

important pillars supporting the bilateral system are:

Article 1 of the Chicago Convention, which confirms the sovereignty of States over

territorial airspace.“Every State has complete and exclusive sovereignty over the

airspace about its territory”, and

Article 6, which establishes the requirement that ”special permission or other

authorization must be obtained from the State(s) concerned for the operation of any

scheduled international air services.”

12

Bilateral Regulation

Changing Policy Environment

The international air transport had grown substantially by the 1970s and 1980s. Many

markets had reached a level of maturity and complexity requiring changes in policies.

The result was the adoption of more liberal policies for the regulation of international air

transport by an increasing number of countries.

Some States concluded new liberal bilateral agreements which essentially remove all

restrictions on market access, capacity and pricing (so-called “open-skies” agreements).

There was also growing regionalism in international air transport regulation, converting some

bilateral regulations to regional or sub-regional multilateral regulations

ICA

O

We

b o

f Bila

tera

l Air

Se

rvice

s Ag

ree

me

nts.

(Market Access is becoming more open)

Regulatory Development

Bilateral Open Skies (as of June 2018)

States which signed open skies

agreements with both the US and

third countries*

States which signed open skies

agreements with the US only

States which signed open skies

agreements with the third countries

only

~300+ Open Skies Agreements

involving 163 States

*open skies agreement for all-cargo only for Argentina, Mongolia, Vietnam

15

Multilateral Regulation

Multilateral regulation is regulation undertaken jointly by three or more States,

within the framework of an international organization and/or a multilateral treaty

or agreement, or as a separate specific activity. Multilateral Regulation may

include:

Relevant regulatory processes and structures;

Outcomes or output written as treaties or other agreements, resolutions, decisions,

directives, or regulations; and

The observations, conclusions, guidance and discussions of multinational bodies,

both inter-governmental and non-governmental.

Intra-African arrangements for liberalization

• Yamoussoukro Decision relating to the implementation of the

Yamoussoukro Declaration concerning the liberalization of access to air

transport markets in Africa (1999)

• Declaration on the Establishment of a Single African Air Transport Market

(SAATM) (2015) from 2018, committed to by 27 States

Support to African Continental Free Trade Area (AfCFTA)

Multilateral Regulation

Regional Liberalization: Most world regions have liberalization programs

Full liberalization

arrangements

(ASEAN, CARICOM,

EU, LACAC. Trans-

Tasman

cooperation)

Gradual

liberalization

arrangements

(AFCAC, Damascus

Agreement

signatory states,

South Pacific

Islands)

Regional Liberalization

Economic Regulation on International Air Transport

ICAO Policy and Guidance Materials

ICAO Regulatory Framework

Doc 9587 Doc 9626

Economic

policy and

regulation

ICAO Regulatory Framework

Doc 9082 Doc 8632

Economic

policy and

regulation

ICAO Regulatory convergence

Addressing Regulatory challenges

Competition

Air Carrier

Ownership &

Control

Market

Access

Trade in

Services

Consumer

Protection

22

Market Access Liberalization

ICAO’s Long-Term Vision for Air Transport Liberalization

“We, the Member States of the International Civil Aviation Organization,

resolve to actively pursue the continuous liberalization of international air

transport to the benefit of all stakeholders and the economy at large.

We will be guided by the need to ensure respect for the highest levels of

safety and security and the Principle of fair and equal opportunity for all

States and their stakeholders”

23

International agreements on Liberalization

Assembly Resolution A39-15 requests the Council to:

a) Complete the examination of international agreement by which States could liberalize market access; and

b) Continue the development of an international agreement to liberalize air carrier ownership and control and a specific international agreement to facilitate further liberalization of air cargo services.

Efforts on these are currently on-going.

What is ICAN?

A meeting facility for States to

conduct multiple bilateral, regional

or plurilateral air services

negotiations in a single location

A forum for the participants to learn

about current trends, discuss topical

issues and exchange experiences;

excellent networking opportunities

Negotiations between States

remain private in nature, not

open to third parties

ENHANCE EFFICIENCY & REDUCE COST

One-stop approach to facilitate ASA negotiations/consultations

Saving time and money by avoiding separate individual trips to conduct talks.

ICAN Platform to Support States

Conclusion

Regulatory Framework

Regulatory Framework

ICAO will continue to collaborate with States to foster the

modernization and reform of regulatory framework for

international Air Transport.