Overview of Regulatory and Industry Developments in International

August 2022

Doc

umentation for the 41st Session of the ICAO Assembly in 2022

INTERNATIONAL CIVIL AVIATION ORGANIZATION

Overview of Regulatory

and Industry Developments

in International Air Transport

August 2022

Documentation for the 41st Session of the ICAO Assembly in 2022

INTERNATIONAL CIVIL AVIATION ORGANIZATION

Overview of Regulatory

and Industry Developments

in International Air Transport

Published in English only by the

INTERNATIONAL CIVIL AVIATION ORGANIZATION

999 Robert-Bourassa Boulevard, Montréal, Quebec, Canada H3C 5H7

For ordering information and for a complete listing of sales agents

and booksellers, please go to the ICAO website at www.icao.int

Overview of Regulatory and Industry Developments in International Air Transport

August 2022

ISBN 978-92-9265-886-1

retrieval system or transmitted in any form or by any means, without prior

permission in writing from the International Civil Aviation Organization.

(iii)

AMENDMENTS

Amendments are announced in the supplements to the Products and

Services Catalogue; the Catalogue and its supplements are available

on the ICAO website at www.icao.int. The space below is provided to

keep a record of such amendments.

RECORD OF AMENDMENTS AND CORRIGENDA

AMENDMENTS

CORRIGENDA

No.

Date

Entered by

No.

Date

Language

Entered

(v)

CONTENTS

Page

Introduction........................................................................................................................................................... (ix)

REGULATORY DEVELOPMENTS)

Chapter 1. Liberalization ................................................................................................................................... 1-1

1.1 Background ......................................................................................................................................... 1-1

1.2 Bilateral liberalization........................................................................................................................... 1-

1.3 Regional liberalization ......................................................................................................................... 1-11

1.4 Global multilateral liberalization ........................................................................................................... 1-24

1.5 Unilateral liberalization ........................................................................................................................ 1-25

1.6 Impact of the COVID-19 pandemic on air transport industry and regulatory support measures .......... 1-26

1.7 Liberalization of “soft rights” ................................................................................................................ 1-33

Chapter 2. Connectivity and economic development .................................................................................... 2-1

2.1 Background ......................................................................................................................................... 2-1

2.2 Passenger connectivity ........................................................................................................................ 2-1

2.3 Intermodal connectivity ........................................................................................................................ 2-2

2.4 Air cargo connectivity .......................................................................................................................... 2-3

Chapter 3. Competition policies ....................................................................................................................... 3-1

3.1 Background ......................................................................................................................................... 3-1

3.2 Areas of competition under air transport that are regulated ................................................................. 3-1

3.3 ICAO’s work in preventing anti-competitive behaviours in international air transport .......................... 3-2

3.4 Implementation of competition regulatory framework at bilateral level ................................................ 3-

3 3.5 Implementation of competition regulatory framework at the regional or multilateral level .................... 3-6

Chapter 4. Consumer protection policies ....................................................................................................... 4-1

4.1 Background ......................................................................................................................................... 4-1

4.2 ICAO’s work on consumer protection .................................................................................................. 4-2

4.3 Implementation of consumer protection polices among States ........................................................... 4-3

4.4 Implementation of consumer protection policies within bilateral, regional

and multilateral arrangements ............................................................................................................. 4-14

Chapter 5. Space transportation systems ....................................................................................................... 5-1

5.1 Background ......................................................................................................................................... 5-1

5.2 Policy and regulations — recent development .................................................................................... 5-1

Chapter 6. Unmanned aviation ......................................................................................................................... 6-1

6.1 Regulatory framework for unmanned aircraft system (UAS) ............................................................... 6-1

6.2 States’ policy and regulatory framework .............................................................................................. 6-2

(vi) Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

INDUSTRY DEVELOPMENTS

Chapter 7. Industry responses ......................................................................................................................... 7-1

7.1 Background ......................................................................................................................................... 7-1

7.2 Technology .......................................................................................................................................... 7-1

7.3 Airlines’ commercial strategy ............................................................................................................... 7-2

7.4 Environment ........................................................................................................................................ 7-3

Chapter 8. Airline alliances ............................................................................................................................... 8-1

8.1 Background ......................................................................................................................................... 8-1

8.2 Star Alliance ........................................................................................................................................ 8-3

8.3 oneworld .............................................................................................................................................. 8-4

8.4 SkyTeam ............................................................................................................................................. 8-4

8.5 Other new alliances ............................................................................................................................. 8-4

Chapter 9. Mergers and acquisitions ............................................................................................................... 9-1

9.1 Background ......................................................................................................................................... 9-1

9.2 Recent mergers and acquisitions ........................................................................................................ 9-1

9.3 Cross border mergers and acquisitions: ICAO Draft Convention on foreign investment in airlines ..... 9-3

Chapter 10. Hubs ............................................................................................................................................... 10-1

10.1 Background ......................................................................................................................................... 10-1

10.2 Recent development............................................................................................................................ 10-2

Chapter 11. Privatization ................................................................................................................................... 11-1

11.1 Background ......................................................................................................................................... 11-1

11.2 Airline privatization .............................................................................................................................. 11-1

11.3 Airport privatization .............................................................................................................................. 11-3

Chapter 12. International air cargo transportation ......................................................................................... 12-1

12.1 Commercial trends of the air cargo industry between 2016 and 2021 ................................................. 12-1

Chapter 13. Commercial space transportation ............................................................................................... 13-1

13.1 Latest commercial updates on the space transportation industry ........................................................ 13-1

Chapter 14. Commercial operations of unmanned aircraft/vehicles ............................................................. 14-1

14.1 Latest commercial updates of the unmanned aircraft/vehicles industry............................................... 14-1

Appendix A. List of regional multilateral liberalization arrangements ......................................................... A-1

Contents (vii)

LIST OF FIGURES

Figure 1-1. Level of traffic rights exchanged in ASAs deposited to WASA up to May 2022 .............................. 1-2

Figure 1-2. States with highest number of ASAs deposited to WASA as of May 2022 ...................................... 1-3

Figure 1-3. Open skies progress between 2016 and 2022 ................................................................................ 1-3

Figure 1-4. Bilateral ASAs entered by the United States up to May 2022 ......................................................... 1-4

Figure 1-5. Bilateral ASAs entered by Rwanda up to May 2022 ........................................................................ 1-5

Figure 1-6. States with at least one Liberal Air Services Agreement in 2016 vs 2020 ....................................... 1-6

Figure 1-7. States with the highest number of ASAs with a principal place of business provision

as designation criteria ..................................................................................................................... 1-8

Figure 1-8. Venues of ICAN............................................................................................................................... 1-9

Figure 1-9. ICAN continues to facilitate States’ bilateral negotiations ................................................................ 1-10

Figure 1-10. States within the African Union that subscribed to Solemn Commitment ........................................ 1-12

Figure 1-11

. Regional economic groups in Central and Latin America ................................................................ 1-16

Figure 1-12. Multilateral air transport liberalization in Asia and Pacific region ..................................................... 1-20

Figure 1-13. Status of EU’s air transport arrangements with partner States as on June 2022 ............................ 1-22

Figure 1-14. States that ratified the Damascus Convention ................................................................................ 1-23

Figure 1-15. States that ratified MALIAT ............................................................................................................. 1-25

Figure 1-16. Impact of past disease outbreaks on aviation ................................................................................. 1-26

Figure 1-17. World passenger traffic evolution (1945-2022) ................................................................................ 1-27

Figure 1-18. Comparison of total seat capacity by region (7-day average, year-over-year compared to 2019) .. 1-28

Figure 2-1. Global connectivity by States between year 2016 and 2022 ........................................................... 2-2

Figure 3-1. Categories of anti-competitive behaviours relevant to international air transport ............................ 3-2

Figure 3-2. Provisions provided in TASA in deterring anti-competitive practices within the

operations of international air transport ........................................................................................... 3-4

Figure 3-3. Types of fair competition provisions in ASAs and related arrangements ......................................... 3-5

Figure 3-4. Inclusion of provisions on fair competition in ASAs and their amendments ..................................... 3-5

Figure 4-1. Timeline of ICAO’s work on consumer protection............................................................................ 4-2

Figure 4-2. Signatory States to Warsaw Convention ......................................................................................... 4-7

Figure 4-3. Signatory States to Montreal Convention ........................................................................................ 4-8

Figure 8-1. Three major alliances and the current fleet size of their home carriers ........................................... 8-3

(viii) Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

LIST OF TABLES

Table 1-1. Air transport liberalization arrangements within ASEAN that are currently in force ............................ 1-17

Table 1-2. Air transport liberalization arrangements between the ASEAN and dialogue partners ....................... 1-18

Table 1-3. New progress made in air transport liberalization in the ASEAN ........................................................ 1-18

Table 1-4. Air transport liberalization arrangements within ASEAN subregions that are in force ........................ 1-19

Table 1-5. World passenger traffic evolution (1945-2022) ................................................................................... 1-27

Table 1-6. Highlights of State regulatory support measures ................................................................................ 1-31

Table 2-1. Examples of airlines intermodal services with rail service providers .................................................. 2-3

Table 3-1. Highlights of ICAO’s support measures to States in area of competition............................................ 3-3

Table 3-2. Regional legal frameworks on competition ......................................................................................... 3-7

Table 3-3. Regional cooperation on competition ................................................................................................. 3-11

Table 4-1. Areas of air transport consumer rights and protection ........................................................................ 4-2

Table 4-2. Consumer aspects in TASA ............................................................................................................... 4-5

Table 4-3. Regional frameworks on aviation consumer protection ...................................................................... 4-5

Table 5-1.

Example of recent policy and regulatory framework implemented by States

on space transportation systems ........................................................................................................ 5-3

Table 6-1. Example of recent policy and regulatory framework implemented by States on UAS ........................ 6-2

Table 8-1. Global airline alliances ........................................................................................................................ 8-1

Table 9-1. Recent airline mergers and acquisitions ............................................................................................. 9-2

Table 10-1. Comparison of hubs by airlines — increase ..................................................................................... 10-2

Table 10-2. Comparison of hubs by airlines — de-hubbing ................................................................................. 10-3

Table 10-3. Hubs of airlines of major alliances .................................................................................................... 10-3

______________________

(ix)

INTRODUCTION

This overview provides the latest air transport regulatory developments and the industry’s commercial trends globally. It

is divided into two parts:

(i) Global regulatory development of international air transport

This section focuses on progress in the fields of policies and regulatory framework of international air

transport implemented by States. It focuses on three main economic elements of the industry: (i) market

access; (ii) competition; and (iii) consumerism.

The regulatory development of market access is examined through progress of liberalization, particularly

on market access performed by States, regional economic groupings and organizations at bilateral,

regional, multilateral and national levels (unilateral). It also reports on policies and regulations in the

fields of competition and consumer protection applied by States. The works performed by the

International Civil Aviation Organization (ICAO) in the areas of market liberalization, competition and

consumerism is also presented in this section.

The direct implication of the implemented policies and regulations on international air transport globally

is provided in this section through an overview of the global air transport connectivity. The regulatory

development for space transportation and the unmanned aircraft vehicles (UAV) are also presented in

this section.

(ii) Commercial trends in the international air transport industry

The section reports on the commercial developments of international air transport in the pre-, during

and after COVID-19 pandemic period. Airlines’ commercial activities include the diversification of

business models; forming alliances, mergers, acquisitions and privatization are also analysed in this

section.

The section also provides an overview of the operational development of commercial space aircraft and

UAV.

______________________

1-1

REGULATORY DEVELOPMENTS

Chapter 1

LIBERALIZATION

1.1 BACKGROUND

1.1.1 Throughout the 21st century, international air transport has rapidly emerged as pertinent to social and

economic development globally with complex interconnected functions across other industries. However, challenges for

this industry remains the achievement of a workable equilibrium between demand and supply in order to attain and sustain

the desired financial standings and sustainability at large. The recent COVID-19 pandemic has reaffirmed the delicateness

of this industry to externalities, which adds complexity to its existing characteristics.

1.1.2 Article 6 of the Convention on International Civil Aviation (Chicago Convention) laid the fundamentals to the

uniqueness of international air transport. Operations of scheduled international air service would require special

permission or other authorization of a State. This rendered the market access of international air transport as a crucial

commodity from an air transport economic perspective and therefore is heavily regulated by States. However, realizing

the critical role of this industry to the development of the economy and social welfare, deregulation and liberalization were

actively pursued, mainly through bilateral arrangements even though multilateralism is increasingly engaged.

1.1.3 Based on a study performed by the International Civil Aviation Organization (ICAO) in 2013 on the Global

Quantitative Indicators for Evaluating the Degree of Liberalization, liberalization of the air services agreement (ASA)

reflects changes in the economic regulatory environment. In order to provide a coherent approach to this subject, two

types of agreements were selected as representative of liberalized ASAs:

a) Bilateral open skies agreements (ASAs) contain at least the following liberal elements:

1) unrestricted traffic rights (at a minimum covering Third, Fourth and Fifth Freedom Rights);

2) multiple airline designations;

3) no limitation on routings;

4) free determination of capacity; and

5) free pricing tariff regime or at least a dual disapproval tariff regime.

b) Multilateral open skies arrangements, contains free determination of capacity at least up to Third, Fourth

and Fifth Freedom Rights.

1.1.4 As competitiveness intensified, the industry required improved access to capital markets in order to meet its

financial obligations in implementing its business strategies. Therefore, relaxation of ownership and control of the

regulatory regime is another significant indicator of liberalization that is being considered by States. The aftermath of the

COVID-19 pandemic has reaffirmed this approach as a necessity, considering airlines’ struggle to not only rebuild

1-2 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

capacities that were severely crushed as a result of unprecedented prolonged closures of borders globally, but also to

reconstruct their financial standings that were destroyed by zero earnings, soaring expenditures and increased passenger

refund cases.

1.1.5 Considering 1.1.3 and 1.1.4 of this overview, the remaining discussion on liberalization is based on the

liberalization indicators.

1.2 BILATERAL LIBERALIZATION

Air Services Agreements

1.2.1 Access to international air transport market through bilateral arrangements remain the primary approach for

most States ever since the Bermuda I Agreement was signed in 1946. Up to May 2022, based on records available in the

ICAO World Air Services Agreements (WASA) database

, more than 40 bilateral ASAs were concluded between the

period of 2017 and 2019

, adding to the thousands of bilateral arrangements (including amendments and/or Memoranda

of Understanding) that were reportedly concluded during the past decade. As of May 2022, more than 4 000 ASAs were

deposited to WASA with various levels of market access exchanges.

1.2.2 The most common degree of market access exchanges is the Third and Fourth Freedom Rights, which

makes 55.38 per cent of the total ASAs deposited to WASA. This was followed by the exchange of Fifth Freedom (37.92%),

Sixth Freedom (3.86%), Seventh Freedom (2.61%) Rights and cabotage rights (0.23%), as depicted in Figure 1-1.

Source: ICAO WASA

Figure 1-1. Level of traffic rights exchanged in ASAs deposited to WASA up to May 2022

1.2.3 The top five States with the highest number of ASAs

deposited to WASA as of May 2022 are the United

States (109), China (82), United Kingdom (67), United Arab Emirates (66) and Germany (57).

The WASA online tool replaces the original “Database of the World’s Air Services Agreement” published as ICAO Doc 9511

(provisional edition, 2003). The WASA contains texts of bilateral air services agreements and amendments as well as codified

“Summaries of Provisions” of bilateral ASAs and amendments, which are filed with ICAO by its Member States as well as non-

registered agreements obtained from other sources such as national websites.

Years 2020 and 2021 were less active due to the closure or minimization of many business activities globally as a result of the

COVID-19 pandemic.

Including amendments and/or Memoranda of Understanding.

55.39

37.92

3.86

2.61

0.23

3rd/4th 5th 6th 7th Cabotage

Chapter 1. Liberalization 1-3

Source: ICAO WASA

Figure 1-2. States with highest number of ASAs deposited to WASA as of May 2022

Open skies agreements

1.2.4 Policy dialogue concerning air transport has long been difficult, often associated with strong attachment to

nationalism, such as State identities, national interest and protectionism to State-owned flag carriers. Since the first open

skies agreement between the Netherlands and the United States in 1992, States have actively concluded a significant

number of open skies arrangements. In 2016, over 900 open skies agreements were signed, involving more than

150 States. As of May 2022, this figure rose to more than 1 000 open skies arrangements. These agreements contain at

least free capacity determination of Third and Fourth Freedom Rights. The number of agreements that liberalized the

market up to Fifth Freedom Rights also increased to more than 720 in 2022; meanwhile, liberalization for up to Seventh

Freedom Rights increased to more than 160 agreements. Several cabotage agreements were also concluded by States,

which signify States’ increasing appetite in liberalizing market access while acknowledging the positive impacts that

liberalization brought to socioeconomic development.

Figure 1-3. Open Skies progress between 2016 and 2022

Up to May 2022.

100

120

China Germany United Arab

Emirates

United

Kingdom

United States

Number of ASAs

Skie

s P

rog

ress

Up to Third and

Fourth Freedom

rights

2016

2022

>900 ASAs

>1 000 ASAs

2016

2022

>700 ASAs

>720 ASAs

2016

2022

>160 ASAs

2022

2016 >12 ASAs

>12 ASAs

Up to Fifth Freedom

rights

Up to Seventh Freedom

rights

Cabotage

Source: ICAO WASA

1-4 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

1.2.5 The United States remains the country with the highest number of open skies agreements with

131 Agreements

. Meanwhile, the country that entered into the most number of open skies agreements between 2017

and 2022

is Rwanda with 11signed agreements

Figure 1-4. Bilateral ASAs entered by the United States up to May 2022

Open Skies Agreements Currently Being Applied | US Department of Transportation.

The last overview of regulatory and industry developments in international air transport was made by the ICAO Secretariat in 2016.

Source: WASA based on at least free capacity determination up to Fifth Freedom Rights.

–

Selected

Country

1st/2nd

Freedom

3rd/4th

Freedom

5th Freedom

6th Freedom

7th Freedom

Cabotage

Source: ICAO WASA

Chapter 1. Liberalization 1-5

Figure 1-5. Bilateral ASAs entered by Rwanda up to May 2022

–

Selected

Country

1st/2nd

Freedom

3rd/4th

Freedom

5th Freedom

6th Freedom

7th Freedom

Cabotage

Source: ICAO WASA

1-6 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

1.2.6 Before 2016, there were 48 States with at least one Liberal Air Services Agreement. By 2020, the number

increased by 12.5 per cent, which represents 28 per cent of ICAO Member States, as shown in Figure 1-6.

Figure 1-6. States with at least one Liberal Air Services Agreement in 2016 vs 2020

Source: ICAO WASA

States with open skies

agreement before year 2016

States with open skies

agreement between year 2016

and 2020

Chapter 1. Liberalization 1-7

1.2.7 Over the years, focus on regulatory relaxation has no longer been limited to hard rights. Regulatory relaxation

has also included other business measures, such as rights for third-party code-sharing, co-terminal and lenient tariffs

measures of dual disapproval of free pricing. The number of ASAs that includes these liberalized measures have been

reportedly steadily increasing over the years. For example, the number of ASAs that permits for third-party code-sharing

increased by 100 per cent in 2022 as compared to 2016 where zero of such provisions were included in any ASAs up to

year 2002. Similarly, inclusion for liberal arrangements for pricing in ASAs has also increased by 360 per cent with more

than 230 agreements that permit free pricing as of May 2022, as compared to just more than 50 ASAs in 2002.

Relaxation in the ownership and control regulatory regime

1.2.8 The objective of regulatory liberalization in this area should be to create an operating environment in which

air carriers can operate efficiently and economically without compromising safety and security. One strategy States may

liberalize or facilitate the liberalization of air carrier ownership and control regulation is to apply certain broadened criteria

for airline designation and authorization that include permission for an airline that has its principal place of business in the

territory of the designating State to be designated under provisions made in the said ASA. The evidence of principal place

of business may be determined through the following:

The airline:

a) is established and incorporated in the territory of the designating party in accordance with the relevant

national laws and regulations;

b) has a substantial amount of its operations and capital investment in physical facilities in the territory of

the designating party;

c) pays income tax;

d) registers and bases its aircraft in the territory of the designating party; and

e) employs a significant number of locals in managerial, technical and operational positions.

1.2.9 States may also treat the ownership and control requirement of foreign designated airlines with more

flexibility to accommodate the needs of other States wishing to liberalize in this area. Some measures may include:

a) allowing its bilateral partner to use the broadened criteria for those partners’ designated carriers while

retaining the traditional criteria for its own designated carriers;

b) accepting the designated carriers of its bilateral partners that meet the traditional ownership and control

criteria if these carriers meet other overriding requirements such as safety and security; and

c) making public its position on the conditions under which it would accept foreign designations.

1.2.10 As of May 2022, more than 13 per cent of total ASAs that were deposited to WASA contain provisions that

allow for airlines with a principal place of business to be designated to operate under the terms of the said ASAs, as

compared to only 7.08 per cent in 2002. Figure 1-7 displays countries with the highest number of ASAs containing

provisions of a principal place of business as the designation criteria.

1-8 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

Source: ICAO WASA

Figure 1-7. States with the highest number of ASAs with a principal place

of business provision as designation criteria

1.2.11 The increase in relaxation of ownership requirements allowed for better opportunities and flexibility for

airlines financially and operationally, which reflected through several mergers and acquisitions that took place globally.

This directly resulted in increased capacity and connectivity of international air transport. It also encouraged new entrants

into the market, which shall generate added capacity, improved connectivity and healthy competition ultimately benefiting

passengers and the economy at large.

ICAO Long-term Vision for International Air Transport Liberalization

1.2.12 The ICAO Council, during its 205th session, endorsed the recommendation made by the Sixth Worldwide

Air Transport Conference (ATConf/6) to adopt the ICAO Long-term Vision for International Air Transport Liberalization.

The 40th Assembly urged all Member States to consider, and apply, the ICAO Long-term Vision for International Air

Transport Liberalization in their policymaking and regulatory practices.

1.2.13 In supporting this vision, ICAO continues to provide guidance and assistance through harmonizing the global

regulatory framework by developing and updating policy and guidance material for States’ reference, as detailed below:

a) Policy and Guidance Material on the Economic Regulation of International Air Transport (Doc 9587)

This document was updated in 2017 to incorporate new policy guidance of relevant text from other

Assembly Resolutions and Council Resolutions and relevant documentation developed by the Air

Transport Regulation Panel (ATRP) and have since been endorsed by the Council.

b) Manual on the Regulation of International Air Transport (Doc 9626)

This document was updated in 2018 to expand its content of the developments in international air

transport and its regulation since 2004. The 2018 edition includes several new topics such as fair

competition, consumer protection and funding of aviation system upgrade and regulatory oversight. A

number of new air transport terms and definitions were also added, including some that were non

existent when the previous editions were published (such as connectivity, aviation system

upgrade, etc.).

China (Hong

Kong)

China (Macau) Rwanda United Arab

Emirates

United States

Number of ASAs

Chapter 1. Liberalization 1-9

c) ICAO’s Policies on Taxation in the Field of International Air Transport (Doc 8632)

This document includes the text of the consolidated Council Resolutions on taxation of international air

transport and associated commentary on the Resolutions. This document serves as policy guidance to

ICAO Member States. At the Third Meeting of its 156th Session, the Council adopted the consolidated

Resolution on Taxation in the Field of International Air Transport, which appears in Doc 8632, Third

Edition.

ICAO Air Services Negotiation (ICAN) event

1.2.14 ICAO assisted States in conducting their air services negotiations and business to business networking with

various stakeholders, by providing a central meeting place for States to conduct multiple bilateral air services negotiations

and consultations. Through ICAN, States’ regulatory efficiency is increased while a reduction in States’ regulatory financial

costs and time frames are expected to be made

. ICAN has also emerged as a forum for wider range of participants (not

only limited to regulators) to learn about current trends, discuss topical issues and exchange experiences.

Figure 1-8. Venues of ICAN

Costs that relate to attending and/or hosting bilateral and multilateral negotiations.

Source: ICAO WASA

1-10 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

1.2.15 The first ICAN was organized in Dubai, United Arab Emirates, in 2008 with participation from 27 States.

Since then, 13 ICANs were organized in 13 different cities, with participation of more than 150 States, representing

80 per cent of ICAO Member States, with more than 5 000 bilateral meetings conducted and close to 4 000 agreements

and arrangements concluded and signed.

Figure 1-9. ICAN continues to facilitate States’ bilateral negotiations

700

600

500

400

300

200

100

200

60 65

340

350

485

458

550

500

588

550

430

400

456

417

470

420

341

300

(

)

(

)

(

)

(

)

(

)

(

)

(

)

(

)

(

)

(

)

(

)

Participating States

Agreements/Arrangements

Bilateral Meetings

Linear (Agreements/Arrangements)

400

120

130

Source: ICAO

Chapter 1. Liberalization 1-11

1.2.16 Despite various challenges brought by the COVID-19 pandemic, ICAN remains a relevant negotiation

platform among States. The ICAN events display resilience and evolve in meeting existing demands and circumstances.

For example, the organization of ICAN 2021 took into consideration ongoing limitations, such as the then globally imposed

travel restrictions, making the event the first hybrid event, which allowed States to participate either in person or virtually.

The ICAN 2022 event, which will be held in Abuja, Nigeria from 5 to 9 December 2022, will continue to accommodate

participation via both alternatives to allow for a wider range of participation.

1.3 REGIONAL LIBERALIZATION

1.3.1 Multilateralism, on a worldwide scale, has not yet reached a globally accepted agreement for the exchange

of commercial air transport rights, while regional multilateralism, however, is widely accepted by States as an approach to

reach common goals. The progress made through regional liberalization has been substantial: some regional

arrangements not only serve as supplementary regulatory documentation to existing bilateral air services arrangements,

but also provide better rights, hence increasing its significance in developing States’ international air transport.

1.3.2 Even though the modalities, pace, size and level of development of regional liberalization varies from one

region to another, they can exhibit consistency in terms of a regions’ objectives, which is to harmonize regulatory

approaches and allow better access to the shared market through regional common participation with end goals of shared

economy and social prosperity.

1.3.3 This section will provide an overview of progress made by key regional liberalization initiatives and their

impact on regional air transport development. More details and a full list of all regional liberalization agreements are

available in Appendix A.

Africa

1.3.4 African countries have long recognized multilateralism’s integral role in fostering development, prosperity

and peace. The forming of the Yamoussoukro Declaration in 1988 and the Abuja Treaty

in 1994 reinforced the multilateral

approach within the African region, in creating a common market among its members. The Yamoussoukro Declaration

affirmed commitments by States to make all necessary efforts to integrate their airlines within eight years to the new

African air transport policy, in order to liberalize the African air transport market, and which led to the signing of the

Yamoussoukro Decision (YD) in 2000.

1.3.5 In 2015, the Assembly of Head of States and Governments, during the 24th Ordinary Session of the African

Union, established a Single African Air Transport Market (SAATM) and the Solemn Commitment towards advancing

concrete and unconditional implementation of the YD. SAATM was launched in 2018 with the participation of 23 committed

States, which has now increased to 35

. SAATM is also designated as one of the flagship projects of the African Union

Agenda 2063.

Abuja Treaty is a treaty that establishes the African Economic Community (AEC). It was adopted on 3 June 1991, entered into force

on 12 May 1994 and signed by all Member States of the Organization of African Unity (OAU), except Eritrea.

https://www.saatmbenefits.org/about/saatm-states/

1-12 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

Figure 1-10. States within the African Union that subscribed to Solemn Commitment

Source: AFCAC

Members States of the African Union

Countries that subscribed to

the SAATM Solemn Commitment

Chapter 1. Liberalization 1-13

1.3.6 The YD also encourages the African subregional economic groupings to pursue and to intensify their efforts

in the implementation of the Solemn Commitment. The air transport liberalization progress made by each of these

subregional groupings are wide-ranging, as listed below:

a) North Africa: The Arab Maghreb Union (AMU)

While AMU recognized the need to liberalize air services within the union, liberalization within this

subregional group is dominated by bilateral arrangements.

b) West Africa: The Economic Community of West African States (ECOWAS)

Air transport matters are addressed by two subregional groupings:

1) Banjul Accord Group (BAG)

The establishment of BAG in 2004 aimed primarily to accelerate the implementation of the YD,

which led to the signing of the Multilateral Air Services Agreement (MASA) in 2004, by all members

of BAG. MASA provides for unlimited market access up to Fifth Freedom Rights and other air

transport liberalization elements that are fully compatible with the provisions and obligations of the

YD.

2) West African Economic and Monetary Union (WAEMU)

In 2002, WAEMU’s Council of Ministers adopted a common air transport programme with an aim

to foster development of air transport industry of the subregion. The programme consists of four

main strategies: (a) ensuring that infrastructure and equipment comply with ICAO Standards and

Recommended Practices (SARPs); (b) harmonizing air transport regulations; (c) enhancing the air

transport system; and (d) liberalizing air transport services, which allows for full freedom to market

access up to cabotage rights.

c) Central Africa: The Central African Economic and Monetary Community (CEMAC)

The CEMAC Council of Ministers adopted the Agreement on Air Transport in 1999 that provides the

basis to develop CEMAC’s intraregional air transport sector liberalization in order to establish greater

access within the region, through lifting restrictions on capacity up to Fifth Freedom Rights. Several

other provisions of the Agreement are also in line with the YD, such as multiple designation and free

tariff determination.

AMU was established in 1989 by a treaty that was signed by Algeria, Libya, Mauritania, Morocco and Tunisia and modelled after the

European Community in order for Member States to achieve progress and prosperity, preserve peace, develop a common policy in

certain domains and gradually achieve free movement of people and transfer of service, goods and capital.

ECOWAS was established in 1975 by 15 countries through the Treaty of Lagos, to promote economic cooperation and integration.

Cape Verde (Cabo Verde) joined in 1976.

Seven West African States established BAG in 2004 via the signing of BAG Agreement: Cabo Verde, Gambia, Ghana, Guinea,

Liberia, Nigeria and Sierra Leone.

WAEMU was established in 1994 to create a common market based on the free flow of persons, goods, services and capital within

West Africa. The members are Benin, Burkina Faso, Côte D’Ivoire, Mali, Niger, Senegal and Guinea Bissau.

CEMAC was established in 1994 through a treaty signed between Central African Republic, Chad, Democratic Republic of the

Congo, Equatorial Guinea and Gabon with an aim to harmonize development of Member States within the institutional framework

of the Economic Union and Monetary Union.

1-14 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

d) Southern and East Africa

There are three regional economic communities in the Southern and East Africa region that address the

air transport sector; namely: (a) Common Market of Eastern and Southern Africa (COMESA)

;

(b) Southern African Development Community (SADC)

; and (c) East African Community (EAC)

1) COMESA

COMESA’s policy on air transport is contained in Article 87 of the COMESA Treaty, which, among

others, requires its Member States to liberalize the granting of air traffic rights with a view to increase

efficiency and profitability of their airlines. In 1999, COMESA’s Council of Ministers issued the

Regulation for the Implementation of the Liberalized Air Transport Industry (Legal Notice No. 2)

which became binding on its Member States. Through this regulation, liberalization within COMESA

provides for unlimited capacity up to Fifth Freedom Rights. As of 2019, 17 Member States had

incorporated Legal Notice No. 2 in their domestic regulation

2) SADC

The SADC Protocol on Transport, Communications and Meteorology, signed in 1996, contained a

policy statement by Member States to develop a harmonized regional aviation policy that includes

the gradual liberalization of intra-regional air transport for SADC airlines, which is in-line with the

YD.

3) EAC

The EAC Treaty, signed in 1999, among others, outlines the modalities of corporation in the field of

air transport in terms of adopted policies and implementation programmes, which include

liberalizing the granting of air traffic rights and other aspects that matched with the elements of the

YD.

1.3.7 The African region is one of the regions that demonstrate consistency and perseverance in liberalizing its air

transport market through multilateral approaches. Despite diverse economic, social, political and vast economies and

geographical coverage, the region remains committed in pursuing regional integration of the air transport market through

phased approaches, as well as tailored strategies and implementation plans.

The Americas

1.3.8 Deregulation of air transport within the United States in 1978 had set off a chain of events, which over the

next decades were to spark the transformation of international air transport globally, from a protected and highly regulated

industry into one that is more open and competitive. Deregulation had led into renegotiations of many United States air

COMESA was established in 1994 to replace the Preferential Trade Area for Eastern and Southern Africa signed in 1981, to foster

economic prosperity through regional integration within its 21 Member States.

SADC was formed as a loose alliance of nine States in Southern Africa known as the Southern African Development Coordination

Conference (SADCC). SADCC was established in 1980 following the adoption of Lusaka Declaration – Southern Africa: Towards

Economic Liberation within 15 Member States.

EAC was established in 1999 through a treaty and consists of seven Members States: Democratic Republic of the Congo, Burundi,

Kenya, Rwanda, South Sudan, Uganda and the United Republic of Tanzania. The aim of EAC is to widen and deepen economic,

political, social and cultural integration in order to improve the quality of life of the people of East Africa.

Status of ICT Sector and proposed Strategy review terms of Reference (comesa.int) Annex 1 of Report on the Status of

Implementation and Domestication of COMESA Programmes in Infrastructure dated June 2019.

Chapter 1. Liberalization 1-15

transport bilateral arrangements to more liberalized measures that included opening up of market access up to Seventh

Freedom Rights, which remains active until this day. Therefore, multilateralism in liberalizing air transport within the North

American market is not as prevalent as any other regions.

1.3.9 Central and Latin America are, however, more active in pursuing liberalization via multilateralism. Since the

1990s, several subregional liberalization arrangements were formalized, as listed below:

a) Andean Community

In 1991, the Member States of the Andean Community had established a supra-national legal regime

on intra- and extra- subregional air transport arrangements via the Integration of Air Transport in the

Andean Sub-region, which allows for unlimited capacity up to Fifth Freedom Rights.

b) Caribbean Community (CARICOM)

CARICOM initially concluded a Multilateral Agreement concerning the operation of air transport services

within the Caribbean Community in 1998 (MASA 1998). The agreement was revised in 2018 to

implement the liberalized air transport services regime envisaged by the Revised Treaty of

Chaguaramas

. The revised Multilateral Air Services Agreement (revised MASA), which entered into

force in 2020, aims to establish a single market for air transport services by removing barriers to airline

ownership to allow for establishment of community carrier and liberalized market access up to cabotage

rights.

c) Southern Common Market (MERCOSUR)

Pursuant to a decision to establish a common market, the Sub-regional Agreement on Air Services

(Fortaleza Agreement) was signed in 1991. The agreement co-exists with the existing bilateral ASAs as

it only enables for the operations on routes different from those effectively operated under the existing

bilateral ASAs.

d) Association of Caribbean States (ACS)

The Air Transport Agreement between the Member States and Associate Members of the Association

of Caribbean States was signed in 2004, which liberalized the market up to Fifth Freedom Rights

. The

Agreement entered into force in 2008 and was ratified by 12 States.

Andean Community was established in 1969 though the signing of Cartagena Agreement by Bolivia, Colombia, Ecuador and Peru,

with an aim to create custom unions among its Member States. In 2005, Argentina, Brazil, Paraguay, Uruguay and Chile joined as

Associate Members.

CARICOM was established in 1973 through the signing of the Treaty of Chaguaramas, which was revised in 2002 to establish a

single market within the grouping.

The Revised Treaty of Chaguaramas, which established the Caribbean Community including the CARICOM Single Market, was

signed in 2001. Revision to MASA 1998 was made pursuant to Article 33 (Removal of restrictions on the right of establishment) and

Article 37 (Removal of restriction on provision of services) of the Revised Chaguaramas Treaty. Revised Treaty of Chaguaramas

(caricom.org)

MERCOSUR was established in 1991 through the Treaty of Asuncion and Protocol of Ouro Preto in 1994, to create a common

economic market. The current members are Argentina, Brazil, Paraguay, Uruguay and Venezuela. The Associate Members are

Bolivia, Chile, Colombia, Ecuador, Guyana, Peru and Suriname.

ACS was established in 1994 through the signing of the Convention Establishing the Association of Caribbean States by 25 countries

to promote consultation, cooperation and concerted action among the countries in the Caribbean.

Parties to the agreement have the liberty to exercise the Fifth Freedom Rights either by granting it to all Parties or to exercise the

rights on reciprocal and liberal exchanges of rights among the Parties concerned.

1-16 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

1.3.10 In March 2008, the Latin American Civil Aviation Commission (LACAC) initiated a multilateral open skies

agreement to unify all of its 22 Member States under a single aviation market. The Open Skies Multilateral Agreement for

Member States of the LACAC was finalized in 2010 and entered into force in 2019 upon ratification of three Member States,

namely: Brazil, Panama and Uruguay. The agreement allows for maximized market access up to cabotage rights with

flexibility to extend the granting of Fifth and Sixth Freedom Rights to third-party States.

Figure 1-11. Regional economic groups in Central and Latin America

ACS Members

Andean Community Members

ACS and Andean Community Members

MERCOSUR Members

ACS and MERCOSUR Members

CARICOM and ACS Members

Source: ACS, Andean Community, MERCOUSUR and CARICOM

Chapter 1. Liberalization 1-17

1.3.11 States within Latin America have actively and consistently pursued liberalization of air transport at a regional

level ever since the initial deregulation exercise took place in the 1970s. Multilateralism is also widely accepted among

the subregional economic groupings despite different levels of advancement and participation.

Asia and Pacific

1.3.12 Regional liberalization in Asia is mainly centralized in the Southeast Asia region through the Association of

Southeast Asian Nations (ASEAN). In 2007, the 13th ASEAN Summit endorsed the establishment of the ASEAN Single

Aviation Market (ASAM) by 2015 in support of the development of the ASEAN Economic Community. ASAM aims to

liberalize the ASEAN market up to Seventh Freedom Rights with cabotage rights and consider the introduction of the

ASEAN Community Carrier via relaxation of ownership and control requirements. The development of ASAM was

supported by the Roadmap for Integration of Air Travel Sector (RIATS), which, through this, a progressive liberalization

approach of the ASEAN market among its 10 Member States

was established, as listed in Table 1-1. These agreements

are still in force.

Table 1-1: Air transport liberalization arrangements within ASEAN that are currently in force

Legal modalities

Scope

Signing year

Enter into

force

ASEAN Multilateral Agreement on

the Full Liberalization of Air

Freight Services

Unlimited Third, Fourth and Fifth Freedom

Rights among all points with international

airports in the ASEAN.

May 2009

November

2009

ASEAN Multilateral Agreement on

Air Services (MAAS)

Unlimited Third, Fourth and Fifth Freedom

Rights between ASEAN capital cities.

May 2009

December

2009

3 ASEAN Multilateral Agreement on

Full Liberalization of Passenger

Air Services (MAFLPAS)

Unlimited Third, Fourth and Fifth Freedom

Rights between any ASEAN cities.

November

2010

July 2011

Source: ASEAN Secretariat

1.3.13 ASAM is successful in implementing structured and progressive liberalization of market access up to Fifth

Freedom Rights among ASEAN Member States. Further liberalization up to cabotage rights and relaxation of ownership

regulations in allowing the formation of the ASEAN Community Carrier are still a work-in-progress.

ASEAN was established in 1967 to promote economic cooperation among its Member States. ASEAN’s Member States are Brunei

Darussalam, Cambodia, Indonesia, Lao People’s Democratic Republic, Malaysia, Myanmar, Philippines, Singapore, Thailand and

Viet Nam.

1-18 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

1.3.14 The ASEAN also extended the regional liberalization initiative to other dialogue partners as listed in Table 1-2.

Table 1-2. Air transport liberalization arrangements between the ASEAN and dialogue partners

Dialogue

partners

Legal modalities

Scope

Signing year

Enter into

force

China

Air Transport Agreement between

the Governments of the Member

States of the Association of

Southeast Asian Nations and the

Government of the People’s

Republic of China

Unlimited Third and Fourth

Freedom Rights between any

points in Contracting Parties,

Fifth Freedom Rights between

Contracting Parties.

January 2011

August

2011

2 European

Union

ASEAN-European Union

Comprehensive Air Transport

Agreement

Up to Fifth Freedom Rights

between points within the

territory of the Contracting

Parties.

Negotiation

concluded in

June 2021

TBA

Republic

of Korea

ASEAN-Republic of Korea Air

Services Agreements

In discussion

Japan

ASEAN-Japan Regional Air

Services Agreement

In discussion

Source: ASEAN Secretariat

1.3.15 Since 2017, progress in the liberalization of the air transport market was made within the ASEAN region, as

detailed below:

Table1-3. New progress made in air transport liberalization in the ASEAN

Legal modalities

Scope

Signing year

Enter into

force

1 Protocol 3 of MAFLPAS Domestic code-share rights

between points within the territory of

other ASEAN Member States.

October 2017 March 2019

Protocol 4 of MAFLPAS

Co-terminal rights between points

within the territory of any other

ASEAN Member States.

November

2018

August 2019

Protocol 3 to the Air Transport

Agreement between the Governments

of the Member States of the

Association of Southeast Asian Nations

and the Government of the People’s

Republic of China

Expansion of Fifth Freedom Rights

between Contracting Parties.

November

2019

Not in force

Source: ASEAN Secretariat

Chapter 1. Liberalization 1-19

1.3.16 Besides ASEAN, several other smaller regional groupings, such as Cambodia, Lao People’s Democratic

Republic, Myanmar and Viet Nam (CLMV)

, Brunei Darussalam, Indonesia, Malaysia and Philippines East ASEAN

Growth Area (BIMP-EAGA)

, Indonesia, Malaysia, Thailand Growth Triangle (IMT-GT)

are also active in liberalizing the

subregional air transport market access through arrangements as listed in Table 4.

Table

1-4. Air transport liberalization arrangements within ASEAN subregions that are in force

Legal modalities

Scope

Signing

year

Enter into

force

CLMV Multilateral Agreement on Air

Services

Unlimited Third, Fourth and Fifth

Freedom Rights between designated

points in Contracting Parties, Fifth

Freedom Rights between Contracting

Parties.

2003

Memorandum of Understanding on

Expansion of Air Linkages between

BIMP-EAGA

Unlimited Third, Fourth and Fifth

Freedom Rights between designated

points in Contracting Parties.

2007

3 Memorandum of Understanding on Air

Linkages between IMT-GT

Unlimited Third, Fourth and Fifth

Freedom Rights between designated

points in Contracting Parties.

1995 1995

Source: ASEAN Secretariat

1.3.17 Regional liberalization in the Pacific is formed through the Pacific Islands Air Services Agreement (PIASA),

which aims to gradually integrate aviation services in order to support sustainable development of the Pacific Islands

countries. The implementation of PIASA was divided into three phases with the final goal of creating a Single Aviation

Market. The first stage involves the commencement of a single aviation market among the Forum Island Countries

. The

final stage allows for accession to PIASA by Australia and New Zealand. This Agreement, which entered into force in 2007,

enables unlimited Third, Fourth, Fifth and Sixth Freedom Rights between the territories of all parties to this Agreement. As

of 2019, six States had ratified PIASA, namely: Cook Islands, Nauru, Niue, Samoa, Tonga and Vanuatu.

CLMV is a country association within the ASEAN and operates through CLMV’s Economic Minister Meeting.

BIMP-EAGA was established in 1994 to spur development in remote and less developed areas within the Member States.

IMT-GT was formed in 1993 to speed the economic transformation in the least developed provinces within the Member States.

Members of Forum Island Countries are Cook Islands, Fiji, Kiribati, Marshall Islands, Micronesia (Federated States of), Nauru, Niue,

Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu.

1-20 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

Figure 1-12. Multilateral air transport liberalization in the Asia and Pacific region

1.3.18 Multilateralism approaches in liberalizing the air transport market is slowly finding its place within the Asia

and Pacific region despite challenges of geographical barriers, economic standing disparity, diverse technological

development and differing socio-political climates. In some instances, it is proven as an effective and efficient modality in

accelerating air transport growth, such as enabling the spur of new low-cost carriers (LCCs) in Asia, specifically in ASEAN

countries. These LCCs initiated their services by operating on the lesser congested/saturated routes that have less direct

competition, which were made accessible through the market liberalization initiatives. Multilateralism also provides States

an opportunity for a better negotiation position, as displayed through the relationship of the ASEAN and its dialogue

partners.

Europe and North Atlantic

1.3.19 The air transport market within the European Union (EU) was progressively liberalized under the Single

Aviation Market between 1987 (First Package), 1990 (Second Package) and 1992 (Third Package). As a result, full

cabotage was implemented since 1997, substitution of national carriers with community carriers was implemented under

the Third Package and no restrictions to capacity, as well as free fare setting within the market was realized since the

implementation of the First and Second Package.

Source: ICAO

Countries in Asia and Pacific

Members of ASEAN

ASEAN’s Dialogue Partners

with implemented legal

instruments

ASEAN’s Dialogue Partners

with legal instruments in discussion

Chapter 1. Liberalization 1-21

1.3.20 Changes in the regulatory environment were made in two ways:

a) Bilaterally — through negotiation of ASAs with their partner States through either renegotiation of ASAs

or signing of a Horizontal Agreement. The EU had entered into separate bilateral negotiations with 73

partner States representing 340 bilateral ASAs. Meanwhile, horizontal negotiations were entered with

41 countries and one regional organization

with eight Member States, representing an additional 670

bilateral ASAs; and

b) Multilaterally — through actions initiated by the European Commission (EC) or the European Court of

Justice.

1.3.21 In 2005, the EU took further steps to extend its aviation policy beyond its internal borders, based on three

pillars:

a) amendments to bilateral ASAs that are not in line with EU law, which also include the via Horizontal

Agreements that include the principle of EU designation;

b) development of the Common Aviation Market with neighbouring countries to the South, South East and

East, which led to the signing of the European Common Aviation Area (ECAA) Agreement in 2006 and

the Euro-Mediterranean Aviation Agreements (EMAA) with several States

; and

c) negotiation of comprehensive agreements to include the EU aviation market with its key trading partners.

Most recent developments are as below:

1) EU-ASEAN

EU and ASEAN concluded the first bloc-to-bloc Air Transport Agreement in 2021, which aimed to

boost connectivity among the 37 Member States of both blocs.

2) EU-Qatar

EU and Qatar signed a comprehensive Air Transport Agreement in October 2021, the first one

between the EU and the Gulf region.

3) EU-Oman

EU and Oman signed a comprehensive Air Transport Agreement in December 2021.

4) EU- Armenia

EU and Armenia signed a Common Aviation Area Agreement in November 2021, which allows for

the gradual market opening between the EU and Armenia, alongside regulatory convergence

through the implementation of EU aviation rules.

The EU and WAEMU signed a horizontal agreement on air services in 2009.

EMAA was signed with Morocco (2006), Jordan (2010) and Israel (2013). Several progresses were made with other States: Tunisia

(EMAA was initialed in 2017), Lebanon (first round of negotiation took place in 2009 and the negotiations have been stalled since)

and Algeria (The Council of EU in 2008 adopted a decision authorizing the EC to open negotiation with Algeria but the negotiation

has yet to start). Status of aviation relations by country (europa.eu)

1-22 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

5) EU-Ukraine

EU and Ukraine signed a comprehensive Air Transport Agreement in October 2021, which opens

the way for a Common Aviation Area between both parties.

6) EU-United Kingdom

Following the result of the United Kingdom’s European Union Membership Referendum on 23 June

2016, the United Kingdom left the EU on 31 January 2020, which legally led the United Kingdom to

cease being part of the EU Single Aviation Market. Consequently, the Trade and Cooperation

Agreement was signed in January 2021 and entered into force on May 2021, which set out

preferential arrangements in various areas that include aviation.

Figure 1-13. Status of EU’s air transport arrangements with partner States as of June 2022

Source: EC (retrieved on June 2022)

ATLAS OF THE SKY

European

Commision

Comprehensive Aviation Agreements

European Commission Transport Atlas>>

United States

Trü kiye

Brazil

3 000 km

2 000 mi

Agreements signed

Request for future negotiations

Agreements under negotiations

EU Member States and territories

Negotiations suspended

Comprehensive agreements

Agreements pending negotiations

Canada

Chapter 1. Liberalization 1-23

1.3.22 In March 2022, the EC conducted a public consultation for revision of the air services regulation to ensure it

is in-line with moves to make aviation more sustainable, smarter, more resilient and socially responsible

. The revision

includes the matter of freedom to provide services, and when it can exceptionally be restricted.

1.3.23 After more than 20 years of liberalization of the European market, the region has been experiencing positive

impacts on the economy and on social developments, and thus remains consistent with its agenda for liberalization of air

transport. The EU Aviation Strategy adopted in 2015

had identified three key priorities: 1) Tapping into growth market;

2) Limiting limits to growth in the air and on the ground; and 3) Maintaining high EU safety and security standards. These

comprised. improving market access with third countries by targeting new growth markets where significant economic

opportunities could be generated in the following decades.

Middle East

1.3.24 Despite some Arab States having unilaterally adopted open skies policies, international air transport within

this region is still dominantly governed by bilateral arrangements. The Agreement on the Liberalization of Air Transport

between Arab States (Damascus Convention) remains the only multilateral arrangement that is currently in force within

this region. It liberalizes markets among its signatories up to Fifth Freedom Rights. The agreement was signed by 13 Arab

States in 2004, and entered into force in 2007, after eight States ratified it, namely: Jordan, Lebanon, Morocco, Oman,

Palestine, Syrian Arab Republic, Yemen and the United Arab Emirates.

Figure 1-14. States that ratified the Damascus Convention

Public consultation launched for revision of the Air Services Regulation (europa.eu)

EUR-Lex - 52015DC0598 - EN - EUR-Lex (archive-it.org)

Source: The Arab Civil Aviation Commission (ACAC)

States that notified

Damascus Convention

Member Countries of Arab

Civil Aviation Commission

1-24 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

1.4 GLOBAL MULTILATERAL LIBERALIZATION

1.4.1 Multilateralism at large, with different geographical regions, is not actively pursued by States for liberalizing

their air transport market. Major global multilateral liberalization initiatives that are still in force and are currently deliberated

are as below:

a) International Air Services Transit Agreement (IASTA)

IASTA was signed at Chicago on 7 December 1944. It allows for the access of First and Second

Freedom Rights among its signatory States. Sixty-nine per cent of the total of ICAO Member States are

signatories to this agreement, which represents an increase from 131 States in 2015 to 134 States in

2022.

The new signatory States are Mozambique (2016), Peru (2017), and Romania (2021).

b) Multilateral Agreement on the Liberalization of International Air Transportation (MALIAT)

MALIAT was signed and entered into force in 2001 with the purpose of promoting open skies air services

arrangements. The agreement enables for open market access up to Seventh Freedom Rights for air

cargo services with a relaxed airline ownership regulatory regime by adopting the principal place of

business while providing safeguard measures against flag of convenience carriers.

The Agreement is open to accession by any State that is a party to identified aviation security

Conventions

. As of May 2020, eight States remain signatories,

as two States withdrew, namely Peru

in 2005 and Samoa in 2019. (See Figure 1-15.)

c) New: Draft Convention on Foreign Investment in Airlines

At the Sixteenth Meeting of the Air Transport Regulation Panel (ATRP/16) held in April 2022, the panel

discussed a revised draft Convention on Foreign Investment in Airlines, which aimed at establishing a

liberalizing airline ownership regulatory regime at a multilateral level. The Air Transport Committee

(ATC) endorsed the continuation of the work to progress the development of the draft Convention.

d) New: Liberalization of Air Cargo

The ATC in May 2022 endorsed the ATRP to conduct an examination on whether there is a need for a

specific international agreement to facilitate further liberalization of air cargo services.

(i) The Convention on Offences and Certain other Acts Committed on Board Aircraft (1963); (ii) the Convention for Suppression of

Unlawful Seizure of Aircraft (1970); (iii) the Convention for the Suppression of Unlawful Acts against Safety of Civil Aviation (1971);

(iv) the Protocol for the Suppression of Unlawful Acts of Violence at Airports Serving International Civil Aviation (1988).

Brunei Darussalam, Chile, Cook Islands, Mongolia, New Zealand, Singapore, Tonga and the United States.

Chapter 1. Liberalization 1-25

Figure 1-15. States that ratified MALIAT

1.5 UNILATERAL LIBERALIZATION

1.5.1 While an increasing number of States adopt liberal or open skies policies in their bilateral and/or multilateral

arrangements

, some States have progressed by offering liberalization on a unilateral basis by way of opening their

markets to foreign airlines without the requirement of reciprocity. Among the most recent unilateral initiatives:

a) Hainan Province, China

On 3 June 2022, the Civil Aviation Administration of China issued the Implementation Plan to Trial the

Seventh Freedom Rights of the Air in Hainan Free Trade Ports, which allows for operations by foreign

airlines up to Seventh Freedom Rights for both passenger and cargo services in Hainan Province. Even

though the number of operations for Seventh Freedom Rights is capped (seven per week for passenger

and cargo services), there is no capacity limitation for Third, Fourth and Fifth Freedom Rights

Among States that adopted reciprocal open skies for their international air transport arrangements are Canada, Chile, Dominican

Republic, Ecuador, Nepal, New Zealand, Singapore, United Arab Emirates and the United States. In addition, several States signed

the IATA Agenda for Freedom in 2008 by which declared their intention to pursue bilateral relations with a more liberal approach on

areas of airline ownership, freedom to do business and pricing by safeguarding a fair and equal environment. The signatories are

Bahrain, Chile, Kuwait, Lebanon, Malaysia, Panama, Qatar, Singapore, Switzerland, United Arab Emirates and the United States.

Introducing the Fifth, Seventh Freedoms of the Air in Hainan FTP -- Transportation -- HAINAN FREE TRADE PORT (hnftp.gov.cn)

Source: MALIAT Website

(Multilateral Agreement on the Liberalization of International Air Transportation | Maliat)

Signatory of MALIAT

Withdrew from MALIAT

1-26 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

b) Kazakhstan

In 2019, 11 international airports in Kazakhstan were open for operations by foreign airlines, up to Fifth

Freedom Rights. The airports are Nursultan Nazarbayev, Almaty, Shymkent, Aktau, Karaganda Sary-

Arka, Ust-Kamenogorsk, Pavlodar, Kokshetau, Taraz, Petropavlosk South and Semey.

1.6 IMPACT OF THE COVID-19 PANDEMIC ON

AIR TRANSPORT INDUSTRY AND REGULATORY SUPPORT MEASURES

Impact on the air transport industry

1.6.1 Air transport is an industry that is sensitive to externalities. In the past decades, the industry went through

several disease outbreaks that directly affected the industry, such as SARS in 2003, Avian Flu in 2005 and MERS Flu in

2015. However, the impact of the COVID-19 pandemic has surpassed the 2003 SARS outbreak, which had resulted in

the reduction of annual revenue passenger-kilometres (RPK) by eight per cent and US$ 6 billion revenues for Asia and

Pacific airlines. It took six months for the industry to recover from the 2003 SARS, but the recovery from the COVID-19

pandemic is expected to take a much longer period.

Figure 1-16. Impact of past disease outbreaks on aviation

100

120

110

-3

-2 -1

1 2

5 6

8 9 10

11 12

(

)

SARS (2003)

North American

Airlines RPKs

Avian Flu (2005)

RPKs to, from and within

South-East Asia

Avian Flu (2013)

Asia Pacific Airlines RPKs

SARS (2003)

Asia Pacific

Airlines

RPKs

SARS (2003)

China Domestic Market

RPKs

MERS Flu (2015)

RPKs to, from and within

Republic of Korea

Months before and after the start of the crisis

Source: ICAO

Chapter 1. Liberalization 1-27

1.6.2 In fact, the COVID-19 pandemic is beyond just a health crisis. The impact of this pandemic had surpassed

impacts of other major global economic crises since the history of modern civil aviation.

Figure 1-17. World passenger traffic evolution (1945-2022)

1.6.3 The impact of the COVID-19 pandemic on world scheduled passenger traffic is simplified in Table 5 below.

Table 1-5. World passenger traffic evolution (1945-2022)

Indicators

2019 vs 2020

(Actual)

2019 vs 2021

(Preliminary estimates)

2019 vs 2022

(Estimated results)

Seats offered by airlines

-50%

-40%

-15% to 18%

Passengers carried

Overall reduction of

2 703 million passengers

(-60%)

Overall reduction of

2 201 million passengers

(-49%)

Overall reduction of 921

to 1 079 million

passengers (-21% to -

24%)

Gross passenger operating

revenue

US$ -372 billion

US$ -324 billion

US$ -133 to -155 billion

Source: ICAO

5 000

4 500

4 000

3 500

3 000

2 500

2 000

1 500

1 000

500

(

)

COVID-19

pandemic

Total passengers

Domestic passengers

International passengers

1945

1946

1947

1948

1949

1950

1951

1952

953

1954

1955

1957

1958

1960

1961

1962

196

1964

1965

1966

1967

1968

969

1970

1971

1972

1973

1974

1975

1976

197

1980

198

1982

1983

1984

1986

987

1988

990

199

1992

1993

1994

195

1996

1998

2000

002

200

005

2006

200

009

201

013

014

2015

201

2017

2019

2021

2022

Decline in world total passengers

2022 vs. 2019

2021 vs. 2019

2020 vs. 2019

-21% to -24%

-49%

-60%

1-28 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

1.6.4 Each region displays differences in resilience and speed of recovery, as shown in Figure 1-18. Worldwide

capacity contracted by -35.5 per cent in March 2022, compared to 2019. North America demonstrated the most resilience

with capacity approaching the pre-crisis level. Asia and Pacific is the slowest recovering region.

Figure 1-18. Comparison of total seat capacity by region (7-day average, year-over-year compared to 2019)

Regulatory support measures implemented by States

1.6.5 States’ measures in terms of regulatory support in response to the COVID-19 pandemic are varied. Some

of the examples implemented by States are as below:

a) Latin America temporary air cargo liberalization

In December 2020, a new regional air cargo liberalization arrangement to facilitate all-cargo services,

especially vaccine transportation, and long-term recovery across Latin America, was entered by ten

States, namely Brazil, Chile, Dominican Republic, Ecuador, Guatemala, Panama, Paraguay, Peru,

Uruguay and Venezuela. The arrangement establishes rights to operate up to Seventh Freedom Rights

for all-cargo services without restrictions on routes and capacity between the ten signatory States

MOU: Temporary liberalization of the seventh freedom for exclusive cargo services – CLAC – LACAC (clac-lacac.org)

Source: ICAO

40%

20%

-20%

-40%

-60%

-80%

-100%

Africa

Asia and Pacific

Europe

Latin America and the Caribbean

Middle East

North America

Chapter 1. Liberalization 1-29

b) Uzbekistan’s open skies policy for regional airports

In 2020, the government of Uzbekistan issued an order on the introduction of an “open skies” regime to

the country’s ten regional airports. This regime would ease restrictions on the number of flights and

destinations, including Fifth Freedom Rights, for foreign airlines in effect from 1 August 2020 and valid

initially for two years with the possibility of an extension. Foreign airlines are allowed to operate without

any restrictions at Karshi, Nukus, Termez, Bukhara, Navoi and Urgench airports. The Fifth Freedom

Rights and passenger flights at the airports of Andijan, Fergana, Namangan and Samarkand (upon

completion of reconstruction work) are allowed on routes that are not operated by designated airlines of

Uzbekistan without restrictions, considering the technical capabilities of these airports. Foreign airlines

are also entitled to operate all-cargo flights in Navoi and Termez airports using Seventh Freedom Rights.

c) A waiver of slot regulation at EU airports

On 31 March 2020, the EU adopted Regulation 2020/459 amending Regulation (EEC) No 95/93, which

introduced a temporary waiver of the standard “use it or lose it” rule for airline slots at EU airports

(i.e. use at least 80 per cent of the allocated slots, or lose the grandfather rights to them the following

year). The aim of the amendment was to protect the financial health of airlines and avoid the negative

environmental impact of empty or largely empty flights operated only for the purpose of maintaining

underlying airport slots. The “use it or lose it” rule was suspended from 1 March 2020 until 24 October

2020. The waiver also applied retroactively from 23 January to 29 February 2020 for flights between the

EU and China. On 14 October 2020, the EC adopted a further extension of this waiver to cover the

winter season until 27 March 2021.

d) A waiver of slot regulation in Brazil

On 12 March 2020, the National Civil Aviation Agency (ANAC) of Brazil announced a waiver of the slot

cancellation rule at ANAC’s five coordinated airports. This waiver was applicable to all domestic and

international flights planned to operate from 11 March 2020 through 24 October 2020. In July 2020, the

slot waiver was further extended for the northern region from 25 October 2020 to 27 March 2021, with

specific conditions; that is, applicable solely to cancellations of historic slots (slots allocated as historic

or change of historic in the northern region 2020 baseline), provided they are returned at least four

weeks prior to the date of operation.

e) EC guidance on facilitating air cargo operations during the COVID-19 pandemic

On 16 March 2020, the EC adopted guidelines for facilitating air cargo operations during the COVID-19

outbreak. The guidelines stressed that all EU internal borders should stay open to freight and that supply

chains for essential goods must be guaranteed. A series of temporary operational measures listed in

the guidelines include: granting, without delay, all necessary authorizations and permits for transport

from outside the EU; removing night curfews or slot restrictions at airports for essential air cargo

operations; facilitating the use of passenger aircraft for cargo-only operations, including for repositioning

of air cargo crew, medical staff, etc.; ensuring that air cargo crew are qualified as critical staff in cases

of lockdown; exempting asymptomatic transport personnel from travel restrictions; and encouraging

cargo and express airlines to exceptionally reserve capacity for the supply of essential goods.

f) Republic of Korea’s approval of cargo transportation in passenger cabins

On 9 April 2020, the government of the Republic of Korea introduced a safety operation standard for

cargo transportation in passenger cabins. The requirements include, inter alia, elimination of unreported

dangerous substances through full X-ray inspection; observing the loading weight and fixing method

recommended by the aircraft manufacturer; carriage onboard of emergency response instructions by

safety personnel; in-flight fire monitoring patrols every 15 to 20 minutes; additional installation of in-flight

1-30 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

fire extinguishers and shutting off unnecessary cabin power supply; procedural education and simulation

training for domestic and foreign cargo handlers and safety personnel. Since May 2020, both Korean

Air and Asiana Airlines have started using passenger aircraft for cargo transportation. On 1 September

2020, approval was granted to the application of Korean Air for remodelling of a passenger aircraft for

cargo transportation, i.e. removing seats and loading cargo in the passenger cabin, following safety

verification procedures, including a technical review by the manufacturer. In October 2020, the

government also approved cargo transportation plans using idle passenger aircraft submitted by three

LCCs, T-Way Air, Jeju Air, and Jin Air.

g) Exemption from the Competition Act to Norwegian transportation sector

In March 2020, the Norwegian government granted the transportation sector (air, land and maritime) a

three-month temporary exemption of anti-competitive agreements and practices from the Norwegian

Competition Act. The exemption did not go beyond what was strictly necessary, aiming to secure the

population access to necessary goods and services. Agreements and practices covered by the

exemption must, to the largest extent possible, further the efficient use of resources and the interests of

societies and consumers in very special situations. The Competition Authority was notified if the

exemption was granted.

h) Sustainable Pacific Air Connectivity Programme

On 4 December 2020, the Australian government announced the provision of AUD 304.7 million in new

funding for a COVID-19 response package to deliver temporary, targeted economic and fiscal

assistance for the Pacific Island Countries and Timor-Leste. Part of this funding would be used for a

Sustainable Pacific Air Connectivity Programme, which supports the re-establishment of safe, reliable,

affordable and financially sustainable air connectivity in the region. Under this programme, an immediate

AUD 2 million would be provided for the Pacific Aviation Safety Office (PASO) to ensure that PASO can

perform effective safety and security oversight functions across the Pacific region during the current

pandemic.

i) EC temporary relaxation in licensing rules, traffic rights restrictions and ground handling

The EC, in May 2020, permitted temporary measures that included an amendment of the air carrier

licensing rules in the event of financial problems caused by the pandemic; a simplification of the

procedures applying to the imposition of traffic rights restrictions; and more efficient award procedures

for ground-handling contracts.

Measures implemented by ICAO

1.6.6 In December 2020, ICAO produced Guidance on Economic and Financial Measures which summarizes a

range of possible measures that can be explored by States and the aviation companies to cope with the economic fallout

of the pandemic, to alleviate the imminent liquidity and financial strain on the industry and more importantly, to strengthen

the industry resilience to future crisis. It outlines the potential implications and constraints of each measure, while being

complemented by concrete examples to help decision-making of policymakers and industry leaders in accordance with

their unique circumstances and needs.

1.6.7 One of the areas addressed in the guidance is State regulatory support measures. The provision of

regulatory relief and operational flexibilities to companies could support their efforts in sustaining businesses and

operations in a low-demand environment. Regulatory support measures are highlighted in Table1- 6.

EUR-Lex - 32020R0696 - EN - EUR-Lex (europa.eu)

Chapter 1. Liberalization 1-31

Table 1-6: Highlights of State regulatory support measures

Form of measures

Effect/Implication

Constraint/Caution

(i)

Temporary

suspension of

airport slot

allocation rules

Provide flexibility for airlines to plan and

adjust schedules with appropriate levels to

respond to market conditions and changing

demand projections.

Decision on the timing of re-commencing

or extending suspension of slot allocation

rules requires assessment of the

changing situation and all-round

consideration.

(ii)

Temporary

alleviation of

regulatory

restrictions to air

cargo operations

Ensure the sustainability of supply chains,

prevent shortages of essential goods, and

help reduce additional costs incurred for air

cargo operations.

Operational flexibilities should be in line

with a State’s overall risk management

strategy, and be proportionate and

limited in time; abusing of dominant

position should be prohibited.

(iii) Temporary

exemption from

competition laws

Allow airlines to coordinate routes and flight

schedules through cooperative

arrangements to help maintain

transportation services under exceptional

circumstances.

Exemptions should be temporary and be

granted when deemed necessary;

effective oversight is required to pre-

empt potential negative impact on end-

users.

(iv)

Relaxation of

restrictions on

market and capital

access

Provide assurance of essential air

connectivity, widen the available pool of

investment capitals, and allow more

efficient use and allocation of capital and

capacity

Necessary link between the airline and

the designating State should be

preserved while regulatory controls and

oversight should be strengthened.

Source: ICAO

1.6.8 The ICAO Council Aviation Recovery Task Force (CART) was established to provide practical, aligned

guidance to governments and industry operators in order to restart the international air transport sector and recover from

the impacts of the COVID-19 pandemic on a coordinated global basis. A series of CART reports were published, providing

ten (10) key principles and twenty (20) recommendations on globally- and regionally-harmonized, mutually accepted

measures for a safe, secure and sustainable restart and recovery of the aviation sector. Economic-specific measures are

as follow:

a) CART Key Principle 8 — Support financial relief strategies to help the aviation industry. States

and financial institutions, consistent with their mandates, should consider the need to provide direct

and/or indirect support in various proportionate and transparent ways. In doing so, they should

safeguard fair competition and not distort markets or undermine diversity or access.

b) CART Key Principle 9 — Ensure sustainability. Aviation is the business of connections, and a driver

of economic and social recovery. States and industry should strive to ensure the economic and

environmental sustainability of the aviation sector.

c) CART Key Principle 10 — Learn lessons to improve resilience. As the world recovers, the lessons

learned have to be used to make the aviation system stronger.

1-32 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

d) CART Recommendation 10 — Member States should consider appropriate extraordinary emergency

measures to support financial viability and to maintain an adequate level of safe, secure and efficient

operations, which should be inclusive, targeted, proportionate, transparent, temporary and consistent

with ICAO’s policies, while striking an appropriate balance among the respective interests without

prejudice to fair competition and compromising safety, security and environmental performance.

e) CART Recommendation 16 — Member States are encouraged to consider the temporary lifting of

restrictions to air cargo operations, including but not limited to, granting extra bilateral rights, in particular

for all-cargo services, to foreign airlines to facilitate the transportation of essential goods, supplies and

COVID-19 vaccines.

f) CART Recommendation 20 — Member States should ensure that ICAO’s CART guidance is taken

into consideration by the wider State administration in the decision-making processes on national

recovery planning.

ICAO Guidance on Economic and Financial Measures

1.6.9 As part of its efforts in supporting the safe and efficient restart and recovery of the aviation industry, ICAO

developed Guidance on Economic and Financial Measures to help States and industry cope with the economic impact of

COVID-19 pandemic. The guidance is available in all ICAO official languages on the ICAO website at: Guidance on

Economic and Financial Measures (icao.int).

1.6.10 The guidance summarizes a range of measures that can be explored by States and industry to alleviate the

liquidity and financial strain due to the pandemic. It also outlines the potential implications and constraints of each measure,

which are further complemented with concrete examples to help policymakers and industry leaders make decisions in

accordance with their unique circumstances and needs.

1.6.11 Noting that States have the primary responsibility for their aviation recovery, the guidance also recommends

a set of key principles that States should follow when providing support to the industry, in order to safeguard fair

competition and avoid market distortion. These key principles include: a) well-defined objectives; b) data-driven evaluation;

c) broadly inclusive and non-discriminatory; d) targeted and proportionate; e) transparency and consultation; f) striking

appropriate balance among all stakeholders; and g) time-bound.

High-level Conference on COVID-19 (HLCC 2021)

1.6.12 The HLCC 2021 was held in October 2021 with an objective of reaching global consensus on a multilateral

approach, supported by political will and commitments of States to enable safe and efficient recovery of aviation from the

COVID-19 crisis and building a foundation to strengthen resilience in aviation and make it more sustainable in the future.

One hundred and twenty-nine (129) Member States and 38 international organizations attended the conference

1.6.13 During the conference, discussions were focused on challenges, issues, and current state and outlook of

the industry, including on CART Recommendations and guidance. The Ministerial Declaration of the HLCC 2021 was

adopted, which, among others, addressed the economic and financial aspects of the industry:

“We confirm the importance of support provided for the aviation sector, including economic

and financial support, to sustain operations and ensure the provision of essential services

while safeguarding fair competition and equal opportunities”

List of attendance can be retrieved via HLCC2021_22OCT_1220_Events - Attendances report.xlsx (icao.int)

Chapter 1. Liberalization 1-33

1.7 LIBERALIZATION OF “SOFT RIGHTS”

World Trade Organization — General Agreement

on Trade in Services (WTO-GATS)

1.7.1 “Air transport services” is the only service sector not included in the GATS. The exclusion of core air transport

services that relate to traffic rights (“hard rights”) and services directly related to the exercise of traffic rights is stated in

the GAT Annex on Air Transport Services. However, three air transport services, namely, aircraft repair and maintenance

services, selling and marketing of air transport services, and computer reservation system (CRS) services are included in

the GATS Annex on Air Transport Services. The GAT Annex also identifies four modes of supply, which are cross border

(Mode 1), consumption abroad (Mode 2), commercial presence (Mode 3) and presence of physical person (Mode 4).

ASEAN Framework Agreement on Services (AFAS)

1.7.2 Despite not being actively pursued globally, liberalization of “soft rights” did take place among several States.

In 1995, ASEAN Member States signed AFAS to liberalize trade in services by expanding the depth and scope of

liberalization beyond those undertaken by Member States under GATS. In 2020, ASEAN Member States signed the

ASEAN Trade in Services Agreement (ATISA) in pursuit of building free and open trade and regional economic integration

within the region.

1.7.3 ATISA consists of three sectoral annexes, which includes an annex on air transport

. The annex on air

transport identifies mutual air transport ancillary services to be liberalized under ATISA, and as follows:

a) aircraft repair and maintenance services;

b) selling and marketing of air transport services;

c) computer reservation system;

d) aircraft leasing without crew;

e) aircraft leasing with crew;

f) airfreight forwarding services;

g) cargo handling;

h) aircraft catering services;

“Soft rights” or “doing business rights” refers to rights granted by a State to designated air carrier(s) of the other State, to carry out

commercial activities in the territory of the other State. See the Manual on the Regulation of International Air Transport (Doc 9626), Part II,

Chapter 3.)

The other two are financial services and telecommunication services.

1-34 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

i) refuelling services;

j) aircraft line maintenance;

k) ramp handling;

l) baggage handling; and

m) passenger handling.

______________________

2-1

Chapter 2

CONNECTIVITY AND ECONOMIC DEVELOPMENT

2.1 BACKGROUND

2.1.1 Connectivity is based on the concept of the movement of passengers, mail and cargo, which involves:

a) minimum transit points;

b) shortest possible time;

c) optimal user satisfaction; and

d) minimum price possible.

2.1.2 The ICAO Secretariat has developed global quantitative indicators for evaluating the degree of liberalization

of international air services. These indicators track the development of liberalization in terms of number/percentage of

liberalized country-pair routes, track the development of liberalization in terms of scheduled passenger frequencies offered

on liberalized country-pair routes and compare the opportunities created by liberalization with the actual utilization of such

opportunities by airlines. Details can be obtained via Microsoft Word - GLOBAL QUANTITATIVE INDICATORS.doc

(icao.int).

2.1.3 ICAO proposed the inclusion of a utilization rate of connectivity opportunities by air carriers as an indicator

to measure the progress of policy development and effectiveness of the connectivity policy to promote sustainable tourism

Details are as per link SDG_Indicator_Connectivity.pdf (icao.int).

2.2 PASSENGER CONNECTIVITY

2.2.1 The continuous liberalization of the air transport market has an overall positive impact to air transport

connectivity, growth of traffic and the economy at large. In general, the global connectivity rose steadily between year

2016 and 2020 but dropped sharply in year 2021, mainly due to border closure brought by the COVID-19 pandemic.

Nevertheless, with various recovery initiatives, the global connectivity is slowly making a recovery in year 2022 (as at

May 2022).

2.2.2 As shown in Figure 2-1, the utilization rate has also increased over the years, which means airlines have

been utilizing the benefits of liberal air services arrangements that are made available to them. A drop in year 2021 was

mainly the impact of border closures due to COVID-19, which forced airlines to ground their operations. As a result, the

reactivation of some of the flights was not immediate as can be seen by slow recovery of global connectivity rates in year

2022 (as at May 2022).

ICAO participates in cross-industry efforts to promote sustainable synergies between air transport and tourism, which includes a

partnership with the UNWTO and through a cooperation In the framework of Uniting Travel with ACI, Cruise Line International

Association (CLIA), IATA, Pacific Asia Travel Association (PATA), World Economic Forum, (WEF), UNWTO and World Travel and

Tourism Council (WTTC).

2-2 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

2.2.3 In order to further optimize the utilization of the liberal arrangements made available via liberal and

transitional types of ASAs, strong collaboration between regulators/policymakers and airlines are required particularly to

ensure commercial market demand and regulatory requirements are at equilibrium and optimum utilization. Matching

commercial demand with accommodating the regulatory framework should be normalized, as it shall ultimately benefit all

parties in the air transport value chain and the economy at large.

Source: ICAO

Figure 2-1. Global connectivity by States between year 2016 and 2022

2.3 INTERMODAL CONNECTIVITY

2.3.1 Intermodal connectivity is a right-of-access granted by a State for use by a designated carrier of another

State to supplement air services by use of surface conveyances. Examples of surface conveyances used intermodally

include bus, hovercraft, launch, taxi, train and truck/road feeder service.

2.3.2 Air cargo tends to use more intermodal transport, which is more than one form of transport such as aircraft,

truck, rail or ship between origin and destination. Intermodal alliances with railways have also grown in Europe and North

America.

2.3.3 The business alliance or code-share agreements entered between airlines and rail providers are normally in

the form of either dedicated services, entire network access and re-protection agreements. The airline-rail re-protection

agreement serves as a backup service for airline cancellations, providing train tickets in lieu of flights to passengers to

their destination. Examples are Air Canada — Via Rail and Lufthansa — Deutsche Bahn.

5500

5600

5700

5800

5900

6000

6100

6200

6300

6400

6500

990

1000

1010

1020

1030

1040

1050

1060

1070

1080

1090

1100

2016 2017 2018 2019 2020 2021 2022

Total liberal and transitional ASAs in WASA Global connectivity by States

1 100

1 090

1 080

1 070

1 060

1 050

1 040

1 030

1 020

1 010

1 000

990

6 5

6 400

6 300

6 200

6 100

6 000

5 900

5 800

5 700

5 600

5 500

Chapter 2. Connectivity and economic development 2-3

2.3.4 See examples of intermodal services entered between airlines and rail service providers in Table 2-1.

Table 2-1. Examples of airlines intermodal services with rail service providers

Airline

Train company

Origin airport

Destination city

United Airlines

Amtrak

Newark Liberty International

Airport

New Haven, Philadelphia,

Stamford, Wilmington

China Eastern Airlines

CRH

Shanghai Hongqiao

International Airport

Shanghai-Hangzhou, Shanghai-

Wuxi

Luftahnsa, America Airlines,

Emirates

Deutsche Bahn Frankfurt Airport Stuttgart, Cologne, Siegburg,

Bonn, Kassel Wilhelmshohe,

Karlsruhe

Austrian Airlines

OBB

Vienna International Airport

Linz, Salzburg

Swiss International Airlines

SBB

Zurich Airport

Basel

Air France

SNFC

Paris-Charles de Gaulle Airport

Brussels-Midi, Strasbourg

KLM

Thalys

Amsterdam-Schiphol Airport

Antwerp-Centraal, Brussels-Midi

American Airlines

Thalys

Paris-Charles de Gaulle Airport

Brussels-Midi

2.4 AIR CARGO CONNECTIVITY

2.4.1 Pre-pandemic, air cargo accounted for approximately 35 per cent of global trade by value

. The global

aviation sector brings air connectivity to countries at all levels of development, plays a critical role in humanitarian missions,

and remains vitally important to global economic recovery given that e-commerce is expected to constitute 96 per cent of

international mail shipments by 2025.

2.4.2 COVID-19 initially caused a 98 per cent drop in global air travellers, and passenger checked cargo capacity

also became severely constricted due to the precipitous decline in overall flights

. Air cargo operations however have

shown much resiliency throughout the pandemic. The granting of traffic rights, such as the Seventh Freedom Rights for

all-cargo operations has helped to re-establish global air connectivity for cargo. Extended traffic rights granted by States

on an ad-hoc basis also enables sustainable connectivity that benefits the air cargo industry. Perhaps this arrangement

should be considered for a longer term, including by optimizing the role of e-commerce post-pandemic.

2.4.3 ICAO also collaborated with the United Nations Economic Commission for Europe (UNECE), as part of the

United Nations Development Account for Transport and Trade Connectivity in the Age of Pandemics project. ICAO’s role

in this project is to coordinate expertise and insights to support the development of new air cargo technical specifications

for electronic document and data exchange, provisions that will be aligned with the Multimodal Transport Reference Data

Model of UNECE subsidiary UN/CEFACT (United Nations Centre for Trade Facilitation and Electronic Business).

______________________

ICAO-PRIORITY-BRIEF_Air-Cargo_2021.04.19.indd

3-1

Chapter 3

COMPETITION POLICIES

3.1 BACKGROUND

3.1.1 The fundamental to establish an air transport industry based on equality of opportunity rooted from the Preamble

of the Chicago Convention, which affirms the commitments of States to agree 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.

3.1.2 The extensive deregulation and liberalization of air transport had amplified the obligation to provide a

structured regulatory framework in this area with an aim to balance, promoting healthy development of the industry and

the rights of passengers. The enhanced competition brought by deregulation of markets has led many airlines to consider

consolidation as a means by which to achieve economies of scale and scope and to respond to consumer demands for

more seamless service and global networks. With heightened competition and consolidation comes a potential risk of anti-

competitive behaviour.

3.2 AREAS OF COMPETITION UNDER AIR TRANSPORT

THAT ARE REGULATED

3.2.1 While general competition laws may be an effective tool in many cases, given the differences in competition

regimes, the differing stages of liberalization among States and the distinct regulatory framework for international air

transport, there may be a need for aviation-specific safeguards to prevent and eliminate unfair competition in international

air transport. This may be done by means of an agreed set of anti-competitive practices which can be used, and if

necessary modified or added to, by States as indications to trigger necessary regulatory action.

3-2 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

3.2.2 Four broad categories of anticompetitive behaviours relevant to international air transport industry that may

be distinguished under competition law are as Figure 3-1:

Source: ICAO

Figure 3-1. Categories of anti-competitive behaviours relevant to international air transport

3.3 ICAO’S WORK IN PREVENTING ANTI-COMPETITIVE

BEHAVIOURS IN INTERNATIONAL AIR TRANSPORT

3.3.1 One of the potential issues associated with the application of national competition laws is the differing,

sometimes even conflicting, regimes or practices employed by States. This may create certain complexities for airlines

operating international air services when they must comply with different rules or practices in different countries. In addition,

the disparity in the stages of development, geographical location, and competitive strength of air carriers may be taken

into consideration to ensure proper application and avoidance of disputes in applying them internationally.

• Commonly raised concerns in the international air

transport sector are related to predatory pricing or

capacity dumping by dominant market players.

• The concentration attained through mergers and

acquisitions might impede effective competition, in

particular as a result of the creation or

strengthening of a dominant position.

• Any aid or subsidies granted by a State or

through State resources may distort or threaten

to distort competition or create inefficiencies by

benefiting certain competitor(s).

• On the other hand, state aid/subsidies may

provide an important instrument to address

market failures such as providing essential air

services to communities to support economic

and social development.

• The most serious violations of competition law

would be “hard core cartel” when firms agree not to

compete with each other.

• As airlines enter into various commercial

relationships with domestic and international

entities, such agreements may have adverse

effects on users through preventing, restricting or

distorting competition in certain conditions if no

appropriate preventative control mechanisms are

put in place.

Anti-

competitive

agreements

State aid /

subsidy

Abuse of

dominance /

monopoly

Mergers and

acquisition

Chapter 3. Competition policies 3-3

3.3.2 Therefore, ICAO continues to provide support to States in delivering their regulatory functions on anti-

competitive practices in international air transport through various approaches as highlighted in Table 7.

Table 3-1. Highlights of ICAO’s support measures to States in the area of competition

ICAO guidance

ICAO competition compendium

ICAO instruments for dialogue and

exchange of information on

competitions

ICAO guidance serves to provide

harmonized policy and regulatory

approaches for States to adopt in

their national regulatory practices.

Guidance in the area of international

air transport competition can be

found in these documents:

a) Doc 9587; and

b) Doc 9626.

Doc 9587 also contains template of

provisions on competition that could

be adopted by States in their

bilateral and multilateral

arrangements.

This compendium contains a list of

competition laws, regulations,

practices and forms of cooperation in

the field of competition implemented

by Member States.

As at June 2022, the compendium

holds information from 129 States,

which represents 68 per cent of

ICAO membership.

It also contains information on

competition legal framework and

regional cooperation of regional

organizations such as ACAC,

AFCAC, ASEAN and EU.

The compendium can be accessed

via: ICAO Competition Compendium

Examples of ICAO platforms in the

field of international air transport

competition are as below:

a) Worldwide Air Transport

Conferences

b) Air Transport Regulation Panel

(ATRP).

c) ICAN.

Source: ICAO

3.4 IMPLEMENTATION OF COMPETITION REGULATORY

FRAMEWORK AT THE BILATERAL LEVEL

3.4.1 ICAO Template Air Services Agreements (TASA) as contained in Appendix 1 of Doc 9587 provides States

with recommended provisions to be adopted in their bilateral processes in deterring anti-competitive practices within the

operations of international air transport, which include aspects of fair competition and competition laws. For each aspect,

three possible draft provisions were provided to suit the type of bilateral or multilateral arrangements of either traditional,

transitional or full liberalization.

The Sixth Worldwide Air Transport Conference had addressed the fair competition aspects of the international air transport and

made the following recommendations:

(i) States should take into consideration that fair competition is an important general principle in the operation of international air

services;

(ii) States, taking into account national sovereignty, should develop competition laws and policies that apply to air transport. In

doing so, States should consider ICAO guidance on competition;

(iii) States should give due regard to ICAO guidance in ASAs and national or regional competition rules; and

(iv) States should encourage cooperation among national and/or regional competition authorities, including in the context of

approval of alliances and mergers.

3-4 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

Source: ICAO

Figure 3-2. Provisions provided in TASA in deterring anti-competitive practices within the operations of

international air transport

a) Operate — Indicates that each party shall ensure fair and equal opportunity for the designated airlines

to operate agreed services. This provision often contains a traditional type of agreement.

b) Compete — Indicates that each party shall allow fair and equal opportunity for the designated airlines

to compete in providing agreed services. This provision normally contains a transitional type of

agreement.

c) Competition clause — Inclusion of a special provision on fair competition. Even though a clause on

fair competition can often be found in the articles on capacity (based on the wording in Article 44 of the

Chicago Convention, which refer to “fair opportunity to operate international air services”), this item is

only indicated in TASA if there is an extended clause on fair competition setting out further principles.

d) Unfair practices — Deals with the commitment of each party to prevent unfair competition practices

adversely affecting the consumers’ benefit and/or competitive position of the airlines of the other party.

In addition, it may include the prevention of unfair or unreasonably discriminatory practices, such as with

regard to capacity, tariffs and the protection of consumers.

3.4.2 Based on WASA, there has been an increase in the number of ASA containing provisions on fair competition

and competition law since year 2016, as depicted in Figure 3-3. In aspect of fair competition, provisions on “fair opportunity

to operate” is more prevalent by 175 per cent than provisions on “fair and equal opportunity to compete”. Concerning

competition law, provisions to deter “unfair practice” is more than double the provisions on “competition clause”.

Fair

competition

Competition

laws

Competition

clause

Unfair practices

Fair opportunity

to operate

Fair and equal

opportunity to

compete

Chapter 3. Competition policies 3-5

Source: WASA, ICAO

Figure 3-3. Types of fair competition provisions in ASAs and related arrangements

3.4.3 The inclusion of anti-competitive provisions

in ASAs were also increased from 49.5 per cent of total ASAs

in years before 2016 to 52.5 per cent in June 2022.

Source: WASA, ICAO

Figure 3-4. Inclusion of provisions on fair competition in ASAs and their amendments

3.4.4 While the majority of States govern the anti-competitive activities through generic national regulatory regimes,

some States provide specific legal frameworks for competition for the aviation sector, by either exercising concurrent

powers with the national regulator agency responsible for competition or by an exclusive legal provision governed by the

civil aviation regulator. A few examples of this practice are as below:

Any of the four as stated in Figure 3-1.

0 200 400 600 800 1000 1200

Unfair practice

Competition clause

Operate

Compete

Before 1 Jan 2016 After 1 Jan 2016

ASAs and amendments that contains competition clause

Total ASAs and amendments

5,000

Before 1 Jan 2016

After 1 Jan 2016

1 940

2 107

3 919

4 010

ASAs and amendments that contains competition clause Total ASAs and amendments

3-6 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

a) Malaysia — From 1 March 2016 onwards, aviation services in Malaysia are governed by competition

law as provided for in the Malaysian Aviation Commission Act 2015, particularly Part VII (Competition)

of the Act

b) Singapore — The Civil Aviation Authority of Singapore (CAAS) issued Airport Competition Code 2009

pursuant to section 44 of the Civil Aviation Authority of Singapore Act 2009, which acts as binding

obligations on all airport licensees. It addresses issues related to agreements that prevent, restrict or

distort competition, abuse of dominance and mergers within airport services.

c) United Kingdom — The United Kingdom Civil Aviation Authority (CAA) has concurrent powers with the

Competition and Market Authority to enforce the prohibitions in the Competition Act 1998, as they relate

to airport operation services and the supply of air traffic services. The United Kingdom CAA has issued

Guidance on the Application of the CAA’s Competition Powers

and published prioritization principles

adopted in addressing competition issues.

3.5 IMPLEMENTATION OF COMPETITION REGULATORY FRAMEWORK AT

THE REGIONAL OR MULTILATERAL LEVEL

3.5.1 In line with the ongoing active liberalization of markets at the regional level, common competition policies

and legal frameworks are also often addressed at this level, most of the time to provide structured coordination for

consistent implementation. Updates on recent progress of several regional communities on competition legal frameworks

are shown in Table 3-2.

Act-771-Malaysian-Aviation-Commission-2015.pdf (mavcom.my)

Microsoft Word - AirportCompCode_010210.doc (caas.gov.sg)

CAP1235: Guidance on the Application of the CAA’s Competition Powers

Chapter 3. Competition policies 3-7

Table 3-2. Regional legal frameworks on competition

Regional

Organization

Regional Legal Frameworks on

Competition

Recent progress

Africa

AFCAC • Article 7 of the Yamoussoukro

Decision (YD) addresses

competition rules.

• Annex 5 of the YD addresses

regulations on competition in air

transport services within Africa

• Common Market for Eastern and

Southern Africa (COMESA) Air

Transport Liberalization

Programme

The 30th Ordinary Summit of the African Union Assembly

of Heads of States and Government summit held in 2018

adopted the Institutional and Regulatory Instruments of

the YD, which includes Competition Regulations.

Several capacity-building initiatives in the area of

competition regulations were organized between 2019

and 2021

as part of the capacity-building of senior

personnel and experts of Member States and regional

economic communities in order to expedite completion of

activities on the Single African Air Transport Market

(SAATM) Road Map.

COMESA Rules under Article 6 which discusses

alliances, states that “COMESA will as a policy

encourage intra-COMESA airline alliances and

commercial arrangements. However, any such alliances

or commercial arrangements that undermine the

COMESA rules and regulations of competition will not be

permitted.”

The Americas

Andean

Community

• Andean Sub regional Integration

Agreement ("Cartagena

Agreement"), Chapter X — Trade

competition (art. 93, 94) (1969).

• Decision 608 on the Rules for the

Protection and Promotion of

Competition in the Andean

Community ("normativa andina")

(2005).

In 2020, the CARICOM Competition Commission

launched a market study of scheduled air transport in

CARICOM to identify potential competition and consumer

protection issues

12.pdf (afcac.org)

https://www.comesa.int/comesa-infrastructure-development/legal-notice-no-2-of-1999/

The African Union Commission and AFCAC organized the first capacity-building workshop in 2019 in Addis Ababa that also saw the

dissemination of the English texts of the YD regulations to Member States present. A key recommendation of the continental

capacity-building workshop was to undertake similar workshops at the Regional Economic Communities (RECs) level and undertake

capacity-building workshops dedicated to African airlines. A second regional Workshop for Northern, Western and Central African

regions was organized in collaboration with UMA, ECOWAS, and ECCAS and was hosted by the Government of Niger in 2019.

The AUC, AFCAC and AFRAA organized a capacity-building workshop in 2021.

Article 6 < https://www.comesa.int/comesa-infrastructure-development/legal-notice-no-2-of-1999/ >

airline.pdf (caricomcompetitioncommission.com)

3-8 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

Regional

Organization

Regional Legal Frameworks on

Competition

Recent progress

• Treaty Creating the Court of Justice

of the Cartagena Agreement (1996).

CARICOM • Revised Treaty of Chaguaramas

(RTC), Chapter 8 (Articles 168 to

183) (2001)

MERCOSUR

• Treaty Establishing a Common

Market between Argentina, Brazil,

Paraguay and Uruguay ("Treaty of

Asunción ") (Article 4)

• Additional Protocol to the Treaty of

Asunción on the Institutional

Structure of MERCOSUR (1994)

("Protocol of Ouro Preto")

• Protocol of the Defense of

Competition (1996) (“Fortaleza

Protocol”)

• Brasília Protocol for the Solution of

Controversies (1991)

• Decision CMC 43/2010 by the

Common Market Council (2010)

ACS

Article 13 (Fair Competition) of Air

Transport Agreement between the

Member States and Associate Members

of the Association of Caribbean States,

dated 12 February 2004.

Asia and Pacific

ASEAN

• ASEAN Multilateral Agreement on

Air Services signed in 2009 (Article

12 — Fair Competition and Article

13 —Safeguard against Anti-

competitive Practices)

In 2010, ASEAN published the Regional Guidelines on

Competition Policy, which serves as a reference for

ASEAN Member States that are in the process of drafting

or introducing competition law for the first time.

• ASEAN Regional Guidelines on

Competition Policy

The revised Regional Guidelines were published in

2020

to serve as a general framework for the ASEAN

Member States to continue to introduce, implement,

The Fortaleza Protocol was signed only by two Member States (Brazil and Paraguay).

isi (icao.int)

ASEAN Regional Guidelines on Competition Policy and Law 2020.pdf (asean-competition.org)

Chapter 3. Competition policies 3-9

Regional

Organization

Regional Legal Frameworks on

Competition

Recent progress

enforce and develop competition policy and law in

accordance with the specific legal and economic context

of each ASEAN Member State.

• Air Transport Agreement between

ASEAN Member States and China

In 2019, 90% of ASEAN Member States

had

established competition authorities to regulate their

national competition regulatory regimes.

This agreement between ASEAN Member States and

China states under Article 11 that all Contracting States

shall allow a fair and equal opportunity for the designated

airlines to compete in providing international air services,

take action to eliminate all forms of discrimination and/or

anti-competitive practices by a Contracting Party and/or

its designated airlines.

• Pacific Islands Air Services

Agreement (PIASA) of the Pacific

Islands Forum

Article 13 of the Agreement, which has laid down rules

with respect to fair competition, states that aeronautical

authorities of States are to allow each designated airline

to determine the frequency and capacity of the

international air transport. No unilateral limitations on the

volume of traffic, frequency or regularity of service, or the

aircraft type or types operated by the designated airlines

of other Member States is to be imposed.

Member States shall not impose on another State’s

designated airlines a first-refusal requirement, uplift ratio,

no-objection fee, or any other requirement with respect to

capacity, frequency, or traffic.

Europe

• Articles 101 to 109 of the Treaty on

the Functioning of the European

Union (TFEU) and Protocol No. 27

on the internal market and

competition.

• The EU rules on competition

specifically applicable to the air

transport sector in the internal

In December 2018, a directive to empower the

competition authorities of the Member States to be

enforcers that are more effective and to ensure the

proper functioning of the internal market was published

In April 2019, Regulation (EU) 2019/712 of the European

Parliament and of the Council of 17 April 2019 on

safeguarding competition in air transport

was published

and entered into force on 30 May 2019. This regulation

https://cil.nus.edu.sg/wp-content/uploads/2017/07/2010-Air-Transport-Agreement-between-the-Governments-of-the-Member-

States-of-the-Association-of-Southeast-Asian-Nations-and-the-Government-of-the-People.pdf

The nine ASEAN Member States with competition authorities are Brunei Darussalam, Indonesia, Lao People's Democratic Republic,

Malaysia, Myanmar, Philippines, Singapore, Thailand and Viet Nam.

http://www.paclii.org/pits/en/treaty_database/2003/1.html

EUR-Lex - 32019L0001 - EN - EUR-Lex (europa.eu)

EUR-Lex - 32019R0712 - EN - EUR-Lex (europa.eu)

3-10 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

Regional

Organization

Regional Legal Frameworks on

Competition

Recent progress

market are contained in the

Regulation (EC) No 1008/2008 of

the European Parliament and of the

Council of EU on common rules for

the operation of air services in the

Community.

• Regulation (EU) 2019/502 of the

European Parliament and of the

Council of 25 March 2019 on

common rules ensuring basic air

connectivity with regard to the

withdrawal of the United Kingdom of

Great Britain and Northern Ireland

from the Union.

empowered the EC to launch investigations and take a

decision on measures if a practice that distorts

competition has caused injury or poses a clear threat of

injury to an EU carrier.

The agreement has laid down rules for the constitution of

an independent competition authority. Article 19

discusses Fair Competition policies between the carriers

of the European Union and the United Kingdom.

Middle East

ACAC

Agreement for the Liberalization of Air

Transport between the Arab States

(2004):

• Article 9 (Competition and non-

discrimination).

• Article 19: Governmental Subsidies

to Airlines.

• Annex 2 (Rules of Competition).

The Governments of the Organisation for Economic

Cooperation and Development (OECD)

and the

Governments from the Middle East and North Africa

region, participating in the MENA-OECD Ministerial

Conference on Governance and Competitiveness for

Development on 1 April 2021 had issued a Ministerial

Declaration

which among others commits to:

• Affirming the importance of close collaboration with

other international and regional organizations and

financial institutions, as well as strong donor

coordination.

• Welcoming the ongoing cooperation between the

OECD, United Nations Economic and Social

Commission for Western Asia (ESCWA) and the

United Nations Conference on Trade and

Development (UNCTAD) to promote competition law,

policy reform and open and digital government.

Source: ASEAN, EU, OECD, UNCTAD

The MENA-OECD Initiative covers Algeria, Bahrain, Djibouti, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco,

Oman, Palestinian Authority, Qatar, Saudi Arabia, Syrian Arab Republic, Tunisia, United Arab Emirates and Yemen.

Ministerial-Declaration-2021.pdf (oecd.org)

22. OECD defines digital government as utilization of information and communication technologies (ICTs) to embrace good government

principles and achieve policy goals:

Digital government - OECD

OECD defines open government as strategies and initiatives made by government that are based on the principles of transparency,

integrity, accountability and stakeholder participation:

Open government - OECD

Chapter 3. Competition policies 3-11

3.5.2 Some regional cooperation on competition were also established by several regional organizations.

Examples of this is listed in Table 3-3.

Table 3-3. Regional cooperation on competition

Region

Regional

Organization

Framework

Recent works

Africa

CEMAC

Joint Competition

Regulation adopted

on 25 June 1999.

The UNCTAD in 2017 had embarked on a project aimed at

strengthening competition and consumer protection for

CEMAC, funded by the European Union within the wider Trade

and Economic Integration Programme (PACIE), focusing on

Cameroon, Central African Republic, Chad, Democratic

Republic of the Congo, Gabon, Republic of the Congo,

Equatorial Guinea and São Tome and Principe

COMESA —

EAC —

SADC

Common Draft

Regulations on

Competition adopted

in 2004 (Joint Air

Transport Competition

Rules).

In 2009, the SADC Heads of State and Government signed the

SADC Declaration on Regional Cooperation in Competition

and Consumer Policies, which signified the regional agreement

to cooperate on competition and consumer policies.

The Declaration also established the SADC Competition and

Consumer Law and Policy Committee (CCOPOLC) that was

tasked to foster cooperation and dialogue among competition

authorities.

The CCOPOLC in June 2018 undertook a review of the SADC

Regional Cooperation Framework on Competition Laws and

Policies, as well as Consumer Protection Laws and Policies.

Asia and

Pacific

ASEAN ASEAN Experts

Group on

Competition

(AEGC)

EAGC issued ASEAN Competition Action Plan (ACAP) 2016-

2025, which will guide the work of the EAGC to, among others,

establish effective competition regimes by putting in place

competition laws for all remaining ASEAN Member States that

do not have them, and effectively implement national

competition laws in all ASEAN Member States based on

international best practices and agreed-upon ASEAN

guidelines.

Europe

European Competition

Network (ECN)

ECN made several recommendations on investigative and

decision-making powers, among which are as listed below:

• Investigative powers, enforcement measures and

sanctions in the context of inspections and requests for

information.

UNCTAD receives One Million Euros to strengthen Competition Laws in Central African countries | UNCTAD

In 2007, the ASEAN Economic Ministers endorsed the establishment of AEGC as a regional forum to discuss and cooperate on

competition policy and law.

European Competition Network (europa.eu)

3-12 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

Region

Regional

Organization

Framework

Recent works

• Power to impose structural remedies.

• Power to set priorities.

Source: ASEAN, OECD, UNCTAD

______________________

4-1

Chapter 4

CONSUMER PROTECTION POLICIES

4.1 BACKGROUND

4.1.1 Aviation is a service-driven industry, with its performance depending, among other factors, on passengers’

satisfaction in terms of air connectivity, quality of services and ease of travel. The continuous market liberalization efforts

undertaken by many States have amplified the necessity to strike a balance between protecting consumer rights and

maximizing true economic potentials of the industry.

4.1.2 The various health and travel restrictions imposed by States on international mobility due to the COVID-19

pandemic had devastating impacts across the aviation sector. In addition to creating significant operational and financial

strains on airlines and other air transport service providers, these restrictions also caused critical difficulties and

inconveniences to passengers around the globe, with a plethora of consumerism issues, including flight cancellations,

ticket refunds and many other travel uncertainties. Among observations made on the impact of the COVID-19 pandemic

are inconsistent COVID-19 related rules imposed on passengers by States, inter alia, inconsistent and frequently updated

information on travel requirements, insufficient information on passenger rights during flight schedule disruptions and

inconsistent application of rules regarding flight changes, refunds, voucher policies and cash refunds.

4.1.3 Government authorities have the flexibility to develop consumer protection regimes which strike an

appropriate balance between protection of consumers and industry competitiveness and which take into account States’

different social, political and economic characteristics without prejudice to the safety and security of aviation. National and

regional consumer protection regimes should:

a) reflect the principle of proportionality;

b) allow for consideration of the impact of massive disruptions; and

c) be consistent with international treaty regimes on air carrier liability established by:

1) The Convention for the Unification of Certain Rules Relating to International Carriage by Air

(Warsaw, 1929); and

2) The Convention for the Unification of Certain Rules for International Carriage by Air (Montreal,

1999).

4.1.4 Consumer protection regimes are generally prescribed based on the following aspects:

4-2 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

Table 4-1. Areas of air transport consumer rights and protection

Flow of travel

experience

Type of event

Rights of consumers

Others

• Pre flight

• During flight

• After flight

•

Denied boarding

• Flight delay

• Flight cancellation

• Baggage lost,

damaged or

delayed

•

Rights to

information

• Complaint

management

• Consumer

awareness

• Service level and

standard of

performance of service

providers (airlines,

airport operators and

ground handlers)

Source: ICAO

4.2 ICAO’S WORK ON CONSUMER PROTECTION

4.2.1 One of the fundamental works of ICAO in supporting States with their regulatory responsibilities in the field

of air transport is providing a platform for multilateral regulation, guidance in formulating national policy and regulations

and providing fora for continuous exchange of information among States. Key milestones of ICAO’s work in the field of

consumer protections are shown in Figure 4-1.

Source: ICAO

Figure 4-1. Timeline of ICAO’s work on consumer protection

1929

• Warsaw Convention

1999

• Montreal

Convention

2015

• ICAO Core

Principles on

Consumer

Protection

2016

• ICAO

Compendium on

Consumer

Protection

2019

• ICAO Compendium

on Emergency

Response Plan

Chapter 4. Consumer protection policies 4-3

ICAO Core Principles on Consumer Protection

4.2.2 The Core Principles were adopted by the Council in 2015 to create a coordinated and harmonized approach

in responding to States’ proliferated regulations pertaining to consumer protection. The Core Principles addresses rights

of passengers at each segment of travel experience — pre, during and after a flight journey. Considering its guiding

functions to States and industry stakeholders, States are urged to give regard to, and apply, these ICAO high-level, non-

binding, non-prescriptive core principles on consumer protection in policy-making and regulatory and operational practices.

ICAO Compendium on Consumer Protection

4.2.3 ICAO also continues to update the Compendium on Consumer Protection to improve information sharing

among States on national regulatory regimes related to consumer protection. The compendium now holds information

from 189 Member States and four regional organizations namely AFCAC, ASEAN, EU and LACAC. The Compendium

can be accessed via Consumer Protection Rules (icao.int).

ICAO Guidance Material on Emergency Response Plan (ERP)

4.2.4 In the matter of responses to, and coordination of, massive airport/airline disruptions, ICAO continues to

update the Compendium on States’ ERPs, which currently hold information on best practices from 28 Member States.

States are encouraged to update the ICAO Secretariat on their national emergency and contingency plans in case of

aviation system disruption.

4.3 IMPLEMENTATION OF CONSUMER

PROTECTION POLICIES AMONG STATES

4.3.1 While some States regulate their consumer protection via a generic national consumer protection legal

framework, some other States establish exclusive regulatory regimes for air transport consumers. Examples of recent

developments in this area are as listed below:

a) Canada — In May 2018, the Canadian Transportation Agency began developing air passenger

protection regulations to establish airline obligations toward passengers, including minimum

compensation levels and standards of treatment in different circumstances. The new Canadian Air

Passenger Bill of Rights will take effect on 8 September 2022, which, among others, protect passengers

from cancelled and delayed flights

b) China — The Provisions on the Management of Flight Regularity took effect from 1 January 2017, which

addresses flight cancellations and delays within the domestic sectors.

c) India — Civil Aviation Requirements, Section 3 – Air Transport, Series ‘M”, Part IV, Issue 1, dated 6th

August, 2010, revisions effective 1st August, 2016, revision 3 dated 27th Feb, 2019, passed by the

Director General of Civil Aviation addresses facilities to be provided to passengers due to denied

boarding, cancellation and delays in flights

Air Passenger Protection Regulations | Canadian Transportation Agency (otc-cta.gc.ca)

Home | Directorate General of Civil Aviation | GoI (dgca.gov.in)

4-4 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

d) Iran (Islamic Republic of) — Civil Aviation Directive 2040, Passenger Rights in Domestic Flights,

March 2018 and Civil Aviation Directive, Passenger Rights in International Flights, June 2019

e) Malaysia — Malaysia Aviation Consumer Protection Code 2016

is the first legal framework exclusive

to protecting air passenger rights in Malaysia. The Code is derived from the Malaysian Aviation

Commission Act 2015.

f) Mexico — Civil Aviation Law, 1995 amended 2017. The amendment involved new obligations imposed

on air carriers, which includes the obligation to inform passengers on their fares, to ensure that

information and publicity on their fares are accurate, exact, ascertainable and clear and the need for

fares to be applied on equal terms to all passengers without discrimination.

g) Saudi Arabia — General Authority of Civil Aviation Regulation, Consumer Protection Rights Regulation,

23 February 2017 provides consumers with protection, such as in cases of denied boarding,

downgrading, flight cancellations, flight delays, submission of complaints, loss of baggage and refund

of tickets

h) United Kingdom — From 1 January 2021, EU rules on air passenger rights do not apply to cases of

denied boarding, cancellations or delays to flights from the United Kingdom to the EU if a United

Kingdom carrier or another non-EU carrier operated the flight. However, EU rules continue to apply from

1 January 2021 if an EU carrier operated the flight from the United Kingdom to the EU, unless a

compensation or benefits under United Kingdom law is already received.

4.4 IMPLEMENTATION OF CONSUMER PROTECTION POLICIES

WITHIN BILATERAL, REGIONAL AND MULTILATERAL ARRANGEMENTS

Bilateral

4.4.1 States have the flexibility to develop consumer protection regimes. However, States are urged to give due

regard to and apply the ICAO Core Principles on consumer protection in their consultation with States and major industry

stakeholders. Based on data gathered from WASA, the percentage of ASAs that contain specific provisions on consumer

protection is relatively low when compared to other operating provisions. As of June 2022, only one per cent of total ASAs

registered in WASA contained a specific provision on consumer protection.

4.4.2 The matter of consumer rights and protection are present in other ASA provisions, based on TASA, as

highlighted in Table 4-2.

Civil Aviation Directive 2040, Passenger Rights in Domestic Flights, March 2018 and Civil Aviation Directive, Passenger Rights in

International Flights, June 2019

Consumer Protection | Malaysian Aviation Commission (MAVCOM)

GACAE.pdf (multiscreensite.com)

Chapter 4. Consumer protection policies 4-5

Table 4-2. Consumer aspects in TASA

Preamble of TASA

• Indicates the commitments of Contracting States to recognize the welfare of consumers in operating air services

pursuant to rights agreed in the agreement.

Code-sharing

• Indicates the rights of passengers to receive information in flights, operators, intermediate stops and changes of

aircraft, airlines and airports.

Computer Reservation System (CRS)

• Contains, in Option 3 of Article 29, text that mentions the need to ensure that the interests of the consumer are

protected from any misuse of such information.

Non-scheduled / charter operations

• Contains, in Sections 2 and 3 of Annex II, text that mentions the need to secure passengers’ protection

on situations of cancellation of flights and refund.

Source: ICAO

Regional

4.4.3 Some regional organizations also provide for a consumer protection regulatory framework or cooperation

through either generic consumer protection or specific focus on air transport passengers. Table 4-3 highlights selected

recent progress made by these regional groupings.

Table 4-3. Regional frameworks on aviation consumer protection

Region

Regional

Organization

Framework

Recent works

Africa

AFCAC

African Civil Aviation

Policy (AFCAP)

During the 30th Ordinary Session of the AFCAC Assembly

held in 2018, the African Union Regulations on the

Protection of Consumers of Air Transport Services

was

adopted as Annex 6 to the Yamoussoukro Decision.

The Regulation, among others, prescribes rights of

consumers of air transport services within Africa and lays

down responsibilities of air transport undertakings.

AFCAP.pdf (afcac.org)

11.pdf (afcac.org)

4-6 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

Region

Regional

Organization

Framework

Recent works

Asia and

Pacific

ASEAN

ASEAN Strategic Action

Plan for Consumer

Protection 2016-2026

One of its goals is to

create a common ASEAN

consumer protection

framework.

In 2021, ASEAN launched the Report of ASEAN Consumer

Empowerment Index 2020 Pilot Project as envisioned

under the ASEAN Strategic Action Plan for Consumer

Protection 2016-2026.

Europe

• Regulations (EC) No

261/2004.

• Regulations (EC) No

1107/2006.

Through Resolution of 17 July 2020

, the EU coordinated

action to combat the COVID-19 pandemic and its

consequences, in which Parliament called on the

Commission to see that its Interpretative Guidelines on EU

passenger rights regulations in the context of the

developing situation with COVID-19, published on 18 March

2020, were properly implemented.

The

Americas

LACAC

Multilateral Open Skies

Agreement for Member

States of the Latin

American Civil Aviation

Commission (LACAC)

dated 4 November 2010.

Provisions on consumers are contained in:

• Article 2 — Granting of rights

• Article 17 — Rates

• Article 24 — Code-sharing and cooperation

arrangements

Source: AFCAC, ASEAN, EU and LACAC

Multilateral

4.4.4 The first multilateral arrangements to address air passenger related issues is the Convention for the

Unification of Certain Rules Relating to International Carriage by Air (Warsaw Convention) signed in 1929. It was ratified

by 152 States and entered into force on February 1933. It was later amended in 1955 in the Hague and in 1971 in

Guatemala City.

THE STRATEGIC ASEAN ACTION PLAN FOR CONSUMER PROTECTION (SAAPCP): MEETING THE CHALLENGES OF A

PEOPLE-CENTERED ASEAN BEYOND 2015 (aseanconsumer.org)

Texts adopted - EU coordinated action to combat the COVID-19 pandemic and its consequences - Friday, 17 April 2020 (europa.eu)

Chapter 4. Consumer protection policies 4-7

Figure 4-2. Signatory States to Warsaw Convention

–

Source: ICAO

4-8 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

4.4.5 In 1999, the Warsaw Convention was replaced by the Convention for the Unification of Certain Rules for

International Carriage by Air (Montreal Convention). As of June 2022, 137 States ratified the Montreal Convention.

Figure 4-3. Signatory States to Montreal Convention

______________________

–

Source: ICAO

5-1

Chapter 5

SPACE TRANSPORTATION SYSTEMS

5.1 BACKGROUND

5.1.1 “Space transportation systems” is an area that has been rapidly progressing during the past decade as it is

no longer limited to governmental activities; it has recently seen active involvement from commercial operators. The first

space tourist traveled to the International Space Station (ISS) in 2001, when an American business person, aboard a

Russian spacecraft, spent eight days as a crew member of the ISS

. In 2021, commercial operators, such as the Blue

Origin and Virgin Galactic, made several space travels for tourism.

5.2 POLICY AND REGULATIONS — RECENT DEVELOPMENT

Multilateral

5.2.1 Since the first artificial satellite “Sputnik-1” was launched into Earth’s orbit by the Union of Soviet Socialist

Republics (USSR) in October 1957, the first United Nations (UN) General Assembly Resolution on outer space was

adopted. It recognized the common interest of humankind in outer space and adopted Resolution 1348 (XIII) entitled

“Question of the Peaceful Use of Outer Space”

5.2.2 The first Legal Principles governing outer space (Resolution 1962 (XVIII) – “Declaration of Legal Principles

Governing the Activities of States in the Exploration and Uses of Outer Space”) were adopted by the UN General Assembly

on 13 December 1963, which lays the foundation of an entirely new body of law, which is the space law.

5.2.3 Several multilateral treaties were adopted by the UN General Assembly to enable the orderly conduct of

activities in outer space as listed below:

a) Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space,

including the Moon and Other Celestial Bodies, 1967;

b) Agreement on the Rescue of Astronauts, the Return of Astronauts and the Return of Objects Launched

into Outer Space, 1968;

c) Convention on International Liability for Damage Caused by Space Object, 1972;

d) Convention on Registration of Objects Launched into Outer Space, 1975; and

e) Agreement Governing the Activities of States on the Moon and Other Celestial Bodies, 1979.

A History of Space (unoosa.org)

ARES_13_1348E.pdf (unoosa.org)

5-2 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

5.2.4 In 2019, the United Nations Office for Outer Space Affairs (UNOOSA) established the Space Law for New

Space Actors projects to help States enhance their capacity to develop national legislation in line with international space

law.

5.2.5 UNOOSA and ICAO organized several Aerospace Symposia with the first one being held in Montréal in 2015,

followed by Abu Dhabi in 2016 and in Vienna in 2017. The symposia provided platforms for observations, conclusions and

recommendations, with perspectives on, inter alia:

a) Latest trends in aviation, space activities, commercial space transportation and suborbital operations.

b) Sustainability of aerospace activities.

c) Regulatory and practical perspectives for aerospace operations, cooperation, and coordination with

aerospace stakeholders.

d) Air traffic management and future space traffic management.

5.2.6 ICAO also addresses technical challenges of civil spaceflight through several initiatives, as below:

a) Guidance material on Best Practices (2015), which contains material developed by States with viable

space sectors as a starter kit for both regulators and industry.

b) Integrate Civil Space into ICAO Global Plans (2016).

c) Aviation System Block Update (ASBU) Guidance Material (2018), which contains updated circular

mapping of existing aviation technologies and procedures employed for space travel.

5.2.7 No specific economic regulatory framework on space transportation systems was developed at a multilateral

level.

States’ policy and regulatory framework

5.2.8 Development of policies and regulatory framework for commercial space transportation systems have

generally improved as compared to the years before 2016. Some of the recent progress is listed below:

Chapter 5. Space transportation systems 5-3

Table 5-1. Example of recent policy and regulatory framework

implemented by States on space transportation systems

State

Recent works

The EU and the European Space Agency (ESA) signed a joint declaration in 2016 on the “Shared Vision

and Goals for the Future of Europe in Space”.

In 2021, the EU adopted the Space Programme for the European Union, which, among others, aims at

optimizing and greening transport through a combination of enhanced communication capabilities and a

highly accurate satellite positioning that contributes to a modern and reliable transport sector for cars,

planes, and ships.

India

In June 2021, India issued the draft National Space Transportation Policy

, which provides guidelines

and procedures, including an approval mechanism for space transportation services.

United

Kingdom

The United Kingdom enacted the Space Industry Act 2018 which regulates spaceflight activities,

including licensing of the operator and spaceport

United

States

In 2013, the National Space Transportation Policy

was updated to provide guidance to federal

departments and agencies on the development and use of commercial and governmental space

transportation systems.

The Policy also reiterates the pro-business direction to facilitate multiple United States commercial

providers with space transportation services across a range of launch vehicle classes and to pursue

policy, regulatory, and other measures to foster the development of United States commercial spaceflight

capabilities serving the emerging commercial human spaceflight market.

Source: EU and respective State’s governmental agencies

______________________

draft_national_space_transportation_policy.pdf (isro.gov.in)

Space Industry Act 2018 (legislation.gov.uk)

national_space_transportation_policy_11212013.pdf (archives.gov)

6-1

Chapter 6

UNMANNED AVIATION

6.1 REGULATORY FRAMEWORK FOR

UNMANNED AIRCRAFT SYSTEM (UAS)

6.1.1 While technical aspects of UAS is being addressed by various regulatory agencies, including ICAO through

the published ICAO Model UAS Regulations and Advisory Circulars

, economic policy and regulatory guidance on UAS

operations are still absent.

6.1.2 At the 40th Session of the ICAO Assembly, the Economic Commission considered an information paper on

the Economic Regulatory Consideration for Unmanned Aircraft, presented by Japan. The paper generated a lot of interest

and robust discussions, with suggestions that the issues raised in the paper be referred to the Air Transport Regulation

Panel (ATRP).

6.1.3 Since the conclusion of the 40th ICAO Assembly, the operations of UAS, including the Remotely Piloted

Aircraft System (RPAS), has continued to evolve. Unmanned aircraft is now being used in different areas and sectors,

including agriculture, real estate, film and broadcasting, oil and gas, and construction, among others, in addition to the

increasing use of drones for delivery services. This continuous growth in innovation and operations of unmanned aircraft

have again raised the need to examine whether specific policy guidance in economic regulation would be required for the

use of these types of aircrafts for international operations.

6.1.4 The ATRP during its Sixteenth Meeting, held in April 2022, recommended to the ATC to consider running an

in-depth assessment to examine whether there is a need to develop specific policy guidance on economic regulation for

international operations of UAS. The Committee endorsed this recommendation.

ICAO Model UAS Regulations

6-2 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

6.2 STATES’ POLICY AND REGULATORY FRAMEWORK

6.2.1 Some examples of States’ policy and regulatory framework on the operation of UAS are as below:

Table 6-1. Example of recent policy and regulatory framework implemented by States on UAS

State

Recent works

China

China issued Regulations on Real-name Registration of Civil UAS in 2018.

India

In March 2021, India published the UAS Rules, 2021

with a vision to potentially emerge as the global drone

hub by 2030. Several key features of the rules are:

• No permission is required for operating drones in green zones. A green zone means the airspace up to a

vertical distance of 400 feet or 120 metres that has not been designated as a red zone or yellow zone on

the airspace map; and the airspace up to a vertical distance of 200 feet or 60 metres above the area

located between a lateral distance of 8 and 12 kilometres from the perimeter of an operational airport.

• No restriction on foreign ownership in Indian drone companies.

• Coverage of drones under Drone Rules, 2021, increased from 300 kg to 500 kg. This will cover drone

taxis.

EU The Commission Implementing Regulation (EU) 2019/947 of 24 May 2019 on the rules and procedures for

the operation of unmanned aircraft

was adopted in 2019. It, among others, addresses cross-border

operations or operations outside the State of Registry.

Source: Respective State’s governmental agencies

______________________

https://pib.gov.in/pressreleasepage.aspx?prid=1749154

EUR-Lex - 32019R0947 - EN - EUR-Lex (europa.eu)

7-1

INDUSTRY DEVELOPMENTS

Chapter 7

INDUSTRY RESPONSES

7.1 BACKGROUND

The air transport industry has gone through a robust transformative period during the last decade, which made air travel

more efficient than ever. Besides stemming from liberalization, these transformations were also facilitated by the

advancement of technology, commercial strategies in responding to increased competition and environmental factors.

7.2 TECHNOLOGY

7.2.1 The past decade has witnessed a rapid advancement of technology in aviation, which resulted in changes

in the way air travel is managed and conducted, as listed below:

a) New aircraft type

Introduction of a more fuel-efficient, twin-engined aircraft that became capable of flying farther, has

accelerated growth of air transport by allowing airlines to increase frequency and operating routes. In

2019, Qantas completed a 19-hour and 19-minute non-stop flight from London to Sydney on a

Boeing 787 Dreamliner.

The market has also shifted its trends from jumbo jet aircraft to mid-size aircraft types, as many airlines

retired their jumbo jets, such as Delta Airlines and United Airlines. However, some airlines retained their

fleet of jumbo jets, which became their main business strategy, such as the United Arab Emirates.

b) E-tickets

E-tickets have largely replaced the multilayer ticketing systems, with some airlines now imposing a

charge for issuing paper tickets. The use of e-tickets has allowed for various enhancements to the

checking-in process, as air travel, in the past decade, has moved toward paperless transactions.

c) Self-service check-in

Self-service check-in is becoming a norm for air travel as passengers are now offered several options

to do so via online, phone call or self-service kiosks available at airports. Passengers are able to

complete early online check-in, and print boarding passes from home or at airport kiosks or other

locations. Passengers may also receive boarding passes via either the self-management system (SMS)

or email through a mobile device.

7-2 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

d) In-flight connectivity — Wi-Fi

Many airlines are offering wireless internet services available on their flights, either charging a fee or on

a free-of-charge basis.

e) Biometrics

The use of biometrics in air travel has increased significantly, from improving aviation security to

ensuring seamless passenger journeys, such as the recent ICAO visible digital seals for non-

constrained environments (“VDS-NC”) for travel-related public health proofs in dealing with the

COVID-19 pandemic.

f) Importance of data

Uses of passenger data collected from frequent flyer accounts, credit cards, smartphone applications,

and more, has enabled airlines to individually tailor more for passengers, from special offers and prices,

to help finding a taxi.

7.3 AIRLINES’ COMMERCIAL STRATEGY

7.3.1 Increased competition brought by liberalization and supported with advancement in technology has changed

the way airlines react commercially. Some of the major changes to airlines’ commercial strategies are as below:

a) Enhanced business class with international first class becoming more of a scarcity

Many airlines chose to strengthen their business class products and reduced their offerings for first

class.

Some airlines even attempted offering a mono-class configuration flight, which consists of only business

class. One example is Singapore Airlines, which offered this configuration on its Newark, New Jersey–

Singapore non-stop flight in 2018 on an Airbus A340, but suspended it due to high operating costs. The

relaunched flight, which began service in October 2018, was on an Airbus A350-900ULR, offering a

dramatically better financial performance. The aeroplane was later configured with business class and

premium economy and no coach seats.

b) Premium economy

Premium economy is a new cabin configuration that is neither business nor economy. It however offers

more leg room and different meals for an additional cost to that of economy, but a fraction of the price

of a business class ticket. Even though this cabin configuration is offered mostly on international flights,

there have been some airlines that offer this cabin configuration on their selected domestic flights such

as American Airlines (selected flights to Alaska and Hawaii)

and United Airlines (on selected flights in

transcontinental and Hawaii markets)

Premium Economy − Travel information − American Airlines (aa.com)

Economy Plus | United Airlines

Chapter 7. Industry responses 7-3

c) Ancillaries fees — unbundling of fares

Originally, ticket unbundling and ancillary charges were one of the main characteristics of low-cost airline

operations. However, more and more airlines have shifted from all-inclusive fares to unbundling

strategies by introducing fees for baggage, seat selection, changes and cancellation of tickets and other

services, such as priority boarding, bag drop, priority check in and priority bag return.

d) Direct sales — no travel agents

With the availability of direct booking platforms, made available via airlines’ websites, booking or

purchasing a ticket via a travel agent has become less common.

7.4 ENVIRONMENT

7.4.1 Advancement of technology has allowed for modern jet engines to use biofuels as part of their initiatives in

reducing greenhouse gas emissions. Airlines such as United, KLM, and Singapore have all operated commercial flights

using biofuels.

7.4.2 In 2016, the first ever global market-based measure for an entire sector, the Carbon Offsetting and Reduction

Scheme for International Aviation — CORSIA, was adopted. With this decision, ICAO Member States demonstrated an

unprecedented level of leadership on environmental protection and confirmed their commitment to progress collectively

towards the aspirational goal of carbon neutral growth from 2020, with the implementation of CORSIA requirements on

monitoring, reporting and verification (MRV) from 1 January 2019.

______________________

8-1

Chapter 8

AIRLINE ALLIANCES

8.1 BACKGROUND

8.1.1 Airline alliances remain in the industry despite not being actively expanding in terms of numbers of its

members over the last decade. In the early days of airline alliance formation, the focus was to pool resources in order to

expand connectivity within the alliance. However, the focus has now expanded to enable seamless travel experiences

across the alliances’ members. The alliances also act as a platform for their airline members to voice their position and

opinions to their stakeholders. For example, in November 2020, oneworld, SkyTeam and Star Alliance issued a

consolidated statement to fully support the ICAO CART report and urged the governments to implement the report

guidelines

and in December 2020 issued another statement to urge governments to implement recommendations for

slot relief measures in response to the impact of the COVID-19 pandemic

8.1.2 Airline alliances also proved to be considerably valuable during the global health crisis, as experienced

during the early months of the COVID-19 pandemic. Amid mass flight suspensions, travel restrictions, and fleet groundings,

carriers have found it challenging to operate specific routes. Therefore, airlines have been relying on alliance partners to

help get passengers to their destinations. Furthermore, affected passengers were able to benefit from re-ticketing across

other member airlines. Subsequently, the initial airline operator could swap the booking with the alternative flight.

8.1.3 The cooperation established under airline alliances varied from a limited form of interlining to a joint venture

that involves revenue and cost sharing that is almost similar to merger-like integration. Hence, regulators around the globe

pay close attention to aspects of antitrust in most airlines alliances.

8.1.4 Star Alliance, oneworld and SkyTeam remain the major airline alliances. Details are shown in Table 8-1 and

Figure 8-1.

Table 8-1. Global airline alliances

Alliance

Date of

formation

Members

Recent updates

Star Alliance

(26 members)

May 1997

Aegean Airlines (2010), Air Canada (1997), Air

China (2007), Air India (2014), Air New Zealand

(1999), All Nippon Airways (1999), Asiana

Airlines (2003), Austrian Airlines (2000), Avianca

(2012), Brussels Airlines (2009), Copa Airlines

(2012), Croatia Airlines (2004), Egyptair (2008),

Ethiopian Airlines (2011), Eva Air (2013), LOT

Polish Airlines (2003), Lufthansa (1997),

Scandinavian Airlines (1997), Shenzhen Airlines

3 Global Airline Alliances Call For Global Testing Standard | oneworld

Three global airline alliances support slot relief measures | oneworld

8-2 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

Alliance

Date of

formation

Members

Recent updates

(2012), Singapore Airlines (2000), South Africa

Airways (2006), Swiss International Airlines

(2006), TAP Air Portugal (2005), Thais Airways

International (1997), Turkish Airlines (2008) and

United Airlines (1997).

Oneworld

(13 members)

February

1999

American Airlines (1999), British Airways (1999),

Cathay Pacific (1999), Finnair (1999), Iberia

(1999), Japan Airlines (2007), Malaysia Airlines

(2013), Qantas (1999), Qatar Airways (2013),

Royal Jordanian (2007) and Sri Lankan Airlines

(2014).

• Royal Air Maroc joined in

April 2020.

• Alaska Airlines joined in

March 2021

• Oman Air planned to join for

2024

• LATAM Airlines Group

ended its membership in

oneworld effective 1 May

2020

• Air Berlin ceased operations

in 2017.

SkyTeam

(18 members)

June 2000 Aerolineas Argentinas (2012), Aeromexico

(2000), Air Europa (2007), Air France (2000),

China Airlines (2011), China Eastern Airlines

(2011), Czech Airlines (2001), Delta Airlines

(2000), Garuda Indonesia (2014), Kenya Airways

(2007), KLM Royal Dutch Airlines (2004), Korean

Air (2000), Middle East Airlines (2012), Saudia

Airlines (2012), TAROM (2010), Vietnam Airlines

(2010) and XiamenAir (2012).

• ITA Airways joined in 2021.

• Aeroflot was suspended

from the alliance in 2020.

• Alitalia ceased to operate in

2021.

• China Southern Airlines left

the alliance in 2019.

Source: Star Alliance, oneworld and SkyTeam

Alaska Airlines Officially Joins oneworld | oneworld

Oman Air To Join oneworld | oneworld

| oneworld

Chapter 8. Airline alliances 8-3

Figure 8-1. Three major alliances and the current fleet size of their home carriers

(excluding subsidiaries, cargo and connecting partners, as of 1 May 2020)

8.2 STAR ALLIANCE

8.2.1 In 2020, Star Alliance was reported to operate in 195 countries with more than 19 000 daily departures with

a fleet strength of 5 013 and carrying 762.27 million passengers per annum

8.2.2 The alliance increased its focus on adding connectivity to the alliance without having to become a full

member through the Connecting Partners initiative. Several new Connecting Partners joined the alliance such as Avianca

Brazil (2015)

, Juneyao Airlines (2017) and Thai Smile (2020).

8.2.3 Star Alliance has also entered into an intermodal arrangement with a German railway provider; Deutsche

Bahn in August 2022, which allows members of Star Alliance to assign their flight numbers for train services.

25f43ec9-aef9-91a5-39e8-6ee22dc22e99 (staralliance.com)

Avianca Brasil exits from the alliance in 2019.

The 3 major airline alliance with their current fleet size

(excluding subsidiaries, cargo and connecting partners)

Star Alliance

Sky Team

Oneworld

SINCE

MAY 2020

Source: By SCZMGE — Own work, CC BY-SA 4.0,

https://commons.wikimedia.org/w/index.php?curid=89653384

8-4 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

8.3 ONEWORLD

8.3.1 In 2018, similar to Star Alliance, oneworld Connect was introduced and Fiji Airways was the first to join.

8.3.2 In 2019, oneworld is reported to operate to 1 000 destinations in 170 territories with daily departures of

13 000 flights carrying 490 million passengers per annum. The combined total fleet under this alliance is 3 300 fleet with

a majority (1 547) operated by American Airlines

8.4 SKYTEAM

8.4.1 SkyTeam is reported to operate to more than 1 036 destinations in more than 170 countries, with more than

15 000 daily departures, carrying 676 million passengers per annum

8.4.2 SkyTeam had pursued commercial collaboration beyond air travel to enhance benefits to its stakeholders,

as per the examples below:

a) In 2018, SkyTeam partnered with a global car rental company, Hertz, to offer car hire benefits to

Frequent Flyers plus the opportunity to earn miles when renting a vehicle.

b) In 2017, SkyTeam, signed a Memorandum of Understanding with Fliggy, an Alibaba travel platform

previously known as Alitrip, marking the start of a partnership that will deliver benefits to Chinese

consumers. As part of the deal, SkyTeam is to open a flagship webstore on Fliggy, offering customers

access to services across the alliance’s member airlines. SkyTeam will also launch travel products tailor-

made for customers in China.

c) In 2017, SkyTeam launched a customized product targeting the Marine & Offshore industry by offering

tailored travel solutions for seafarers and offshore workers alike, to deliver a seamless travel experience.

8.5 OTHER NEW ALLIANCES

8.5.1 Several other new airline alliances were also formed, as listed below:

a) Vanilla Alliance — formed in 2015 between several airlines based in the Indian Oceans. The members

are Air Austral, Air Mauritius, Air Madagascar, Air Seychelles and Int'Air Îles.

b) FLY Alliance — formed in 2016 by several LCCs affiliated with HNA Group Co. Ltd in China. The

members are HK Express

, Lucky Air, Urumqi Air and West Air.

c) Value Alliance — formed in 2016 and considered as the world’s largest alliance of LCCs. It currently

has five members: Cebu Pacific, Cebgo, Jeju Air, Nok Air and Scoot Airlines.

______________________

| oneworld

eng-us_skyteam-factsheets_skyteam_2019.pdf

HK Express became a subsidiary of Cathay Pacific in 2016 and left the alliance.

9-1

Chapter 9

MERGERS AND ACQUISITIONS

9.1 BACKGROUND

9.1.1 Market deregulation resulted in increased competition that lead to various airline strategies, which include

mergers and acquisitions. Among the main motives for airline mergers and acquisitions are the following:

a) strengthening or protecting a market position;

b) gaining access to additional capacity;

c) aids in diversification and operational effects;

d) acquire a lower-cost operation or a management team; and

e) improve financial standing.

9.1.2 Mergers and acquisitions may also impose challenges such as:

a) reverse synergies may reduce the net value of the combined entity;

b) adverse financial effects; and

c) antitrust action delaying or preventing a proposed merger.

9.1.3 The active mergers and acquisitions that took place in the past decade has resulted in the consolidation of

the airline industry, which in turn resulted in a smaller number of airlines/enterprises. Similar to airline alliances, mergers

and acquisitions may impose implications to the existing competitive environment that pose direct impacts on passengers

and consumers. Hence, it is not a surprise for these activities to be heavily regulated by regulators around the globe.

9.2 RECENT MERGERS AND ACQUISITIONS

9.2.1 The aftermath of the COVID-19 pandemic has also resulted in several airline mergers and acquisitions.

Some of the most recent airline mergers and acquisitions are shown in Table 9-1.

9-2 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

Table 9-1. Recent airline mergers and acquisitions

Year

Airlines

Details

2015

TNT Express

Merged into FedEx

2016

Atlas Air

Merged with Southern Air to form Atlas Air Worldwide

2017

Tiger Air

Merged into Scoot

2017

Delta Airlines

Acquired 10% shares of Air France –KLM and 32% of Aeromexico to

total a stake of 49%

2018

Alaska Airlines

Acquired Virgin America

2019

American Airlines

Acquired 3% shares in China Southern Airlines

2019

Vanilla Air

Merged into Peach Aviation

2019

United Airlines (Via ManaAir)

Merged with Expressjet Airlines

2019

Southern Airways

Merged with Mokulele Airlines

2020

Delta Airlines

Acquired 20% of LATAM Airlines Group

In progress

Abra Group

Acquisition of Avianca, GOL, Viva and Sky Airline

In progress

Frontier Airlines

Merger with Spirit Airlines

In progress

Southern Airways

Merger with Air Choice One (Multi-Aero)

In progress

Korean Air

Acquisition of63.88% of Asiana Airlines. The acquisition was approved

by Korean Fair Trade Commission in February 2022.

In progress Tata Group Merger of AirAsia India and Air India Express through acquisition of

16.3% of AirAsia India by Tata Group. Tata Group also owns Air India

Express.

In progress

Airdo

Merger with Solaseed Air

In progress

Silk Air

Merge into Singapore Airlines

In progress

Pan-African airline

Merger between Air Tanzania, Uganda Airlines and RwandAir

Source: ICAO

Creating a leading inter-American air transportation group (abragroup.net) and Press-release_EN_FINAL-1.pdf (abragroup.net)

Chapter 9. Mergers and acquisitions 9-3

9.3 CROSS BORDER MERGERS AND ACQUISITIONS:

ICAO DRAFT CONVENTION ON FOREIGN INVESTMENT IN AIRLINES

9.3.1 While most of the airline mergers and acquisitions occurred between airlines from the same State, cross

border mergers and acquisitions has started to take place in the past decade.

9.3.2 At the ATRP/16 held in April 2022, the Panel discussed a revised draft Convention on Foreign Investment in

Airlines. The Convention aims to enable airlines access to larger capital markets, which include foreign investment. Based

on the Panel’s recommendations, the ATC during its 226th Session endorsed the continuation of the work to progress the

development of the draft Convention on Foreign Investment in Airlines.

______________________

10-1

Chapter 10

HUBS

10.1 BACKGROUND

10.1.1 ICAO Doc 9626 describes a hub airport or hub, when used in a general context, as any airport having

numerous inbound and outbound flights and a high percentage of connecting traffic. While in the context of scheduling

and marketing from a hub-operating air carrier’s perspective, it denotes an airport where many of its inbound and outbound

schedules are coordinated with the aim of producing the most convenient connections and/or trans-shipment for

passengers, freight and/or mail. The same airport may serve as a hub for more than one air carrier although this is

exceptional.

10.1.2 Several types of hubs are described below:

a) Major hub — one with a large volume of connecting traffic, usually a centrally located airport served by

more than one airline with long-haul connections;

b) Regional hub — a hub that serves a region of a State or a region comprising more than one State;

c) Interline hub — hub at which connections or transferring of traffic are chiefly made between different

flights of different carriers;

d) Online hub — a hub at which connections or transferring of traffic are mostly made between different

flights of the same airline;

e) Mini hub — a secondary hub set up by a carrier;

f) Mega hub — also known as a super-hub is a very large hub; and

g) Second country hub — a hub set up by an air carrier in a foreign country, typically to allow it to

interconnect traffic between numerous points in its home country and numerous third countries.

10.1.3 Hubbing can be an effective schedule-based marketing tool providing wider market spread, generating

increased revenues and resulting in market dominance on many routes. However, the economics of hubbing are quite

complex, since it imposes certain cost penalties on the operating airlines. These are largely of two kinds: those associated

with the extra flying required and those arising from the passenger handling that is involved compared with direct flights.

The introduction of a more modern fleet of better fuel consumption with longer flying range has somehow influenced

airlines’ strategies of hubbing as point-to-point operations gain popularity among airlines.

10.1.4 The economics of hubbing hinges on whether the operating and passenger related cost of indirect services

via a hub are off-set by the ability to operate larger aircraft with a lower unit costs. The emergence of small but regional

jets able to offer low-cost point-to-point services on thin routes joining the spokes of a radial network has made the cost

economies of hubbing for short-haul services more precarious.

10-2 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

10.1.5 The economics of hubbing also depend largely on having sufficient local traffic from each spoke to the hub,

paying a premium price to compensate for the lower yield on hub transfer traffic. This means the hub, which is itself a

major traffic generator or attractor, has a distinct advantage.

10.1.6 Most global major hubs exhibit the following attributes:

a) central geographical position in relation to markets it is to serve;

b) ample runway capacity;

c) single terminal building for the hub airlines;

d) resilient local demand to and from the hub; and

e) strong hub-based airline.

10.2 RECENT DEVELOPMENT

10.2.1 Hubbing continues to play a significant role for airlines business strategies with some airlines increasing the

number of their hubs. Examples of this is as per Table 10-1 below.

Table 10-1. Comparison of hubs by airlines — increase

Airline

Hubs in year 2016

Hubs in Year 2022

Air India

Delhi, Mumbai

Delhi, Mumbai, Chennai, Kolkata, Bengaluru, Hyderabad

Ethiopia Airlines

Addis Ababa

Addis Ababa. Lome, Lilongwe, Liege

Aero Mexico

Mexico City

Mexico City, Monterrey, Guadalajara

Air France

Paris, Lyon

Paris, Lyon, Orly

China Eastern

Shanghai, Kunming, Xi’an

Shanghai, Kunming, Xi’an, Beijing

Korean Air

Seoul

Seoul, Busan, Jeju

Source: oneworld Alliance, Star Alliance and Sky Team

10.2.2 However, some airlines were moving towards de-hubbing by reducing the number of hubs and instead

capitalize on the connectivity offered through other commercial arrangements, such as code-sharing or even via airline

alliances. Examples are below:

a) Aegean Airlines

b) Air Canada

c) Air New Zealand

d) Garuda Indonesia

Chapter 10. Hubs 10-3

Table 10-2. Comparison of hubs by airlines — de-hubbing

Airline

Hubs in year 2016

Hubs in Year 2022

Aegean Airlines

Athens, Larnaca, Thessaloniki

Athens

Air Canada

Calgary, Montréal, Toronto, Vancouver

Montréal, Toronto, Vancouver

Garuda Indonesia

Jakarta, Makassar, Denpasar, Medan, Balikpapan

Jakarta, Denpasar

Air New Zealand

Auckland, Wellington, Christchurch

Auckland, Los Angeles

Source: oneworld Alliance, Star Alliance and Sky Team

10.2.3 List of major airlines’ hubs based on the alliances are simplified in Table 10-3.

Table 10-3. Hubs of airlines of major alliances

oneworld Alliance

Airline

City

Airport

Code

Alaska Airlines

Seattle

Seattle Tacoma International

SEA

San Francisco

San Francisco International

SFO

Los Angeles

Los Angeles International

LAX

Portland (Oregon)

Portland International

PDX

Anchorage

Ted Stevens Anchorage International

ANC

American Airlines

Charlotte

Charlotte Douglas International Airport

CLT

Chicago

O’Hare International Airport

ORD

Dallas/Fort Worth

Dallas/Fort Worth International Airport

DFW

Miami

Miami International Airport

MIA

New York

John F. Kennedy International Airport

JFK

LaGuardia Airport

LGA

Philadelphia

Philadelphia International Airport

PHA

Phoenix

Phoenix Sky Harbor International Airport

PHX

Washington DC

Ronald Reagan Washington National Airport

DCA

British Airways

London

Gatwick Airport

LGW

London Heathrow Airport

LHR

Cathay Pacific

Hong Kong

Hong Kong International Airport

HKG

Finnair

Helsinki

Helsinki Vantaa Airport

HEL

Iberia

Madrid

Adolfo Suarez Madrid-Brajas Airport

MAD

10-4 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

oneworld Alliance

Airline

City

Airport

Code

Japan Airlines

Tokyo

Haneda International Airport

HND

Narita International Airport

NRT

Osaka

Kansai International Airport

KIX

Osaka International Airport

ITM

Nagoya

Nagoya Airport

NKM

Okinawa

Naha Airport

OKA

Malaysia Airlines

Kuala Lumpur

Kuala Lumpur International Airport

KUL

Qantas

Sydney

Sydney Airport

SYD

Brisbane

Brisbane Airport

BNE

Melbourne

Melbourne Airport

MEL

Adelaide

Adelaide Airport

ADL

Perth

Perth Airport

PER

Singapore

Singapore Changi International Airport

SIN

Qatar Airways

Doha

Hamad International Airport

DOH

Royal Jordanian

Amman

Queen Alia International Airport

AMM

Royal Air Maroc

Casablanca

Mohammed V International

CMN

Sri Lankan Airlines

Colombo

Bandaranaike International Airport

CMB

Star Alliance

Airline

City

Airport

Code

Aegean Airlines

Athens

Eleftherios Venizelos International

ATH

Air Canada

Toronto

Toronto Lester B. Pearson International Airport

YYZ

Montréal

Montréal-Pierre Elliot Trudeau International Airport

YUL

Vancouver

Vancouver International Airport

YVR

Air China

Beijing

Beijing Capital International Airport

PEK

Chengdu

Chengdu Shuangliu International Airport

CTU

Shanghai

Shanghai Pudong International Airport

PVG

Air India

Delhi

Indira Ghandi International Airport

DEL

Mumbai

Chhatrapati Shivaji International Airport

BOM

Chennai

Chennai International

MAA

Kolkata

Netaji Subhash Chandra Bose International Airport

CCU

Bengaluru

Kempegowda International Airport

BLR

Chapter 10. Hubs 10-5

oneworld Alliance

Airline

City

Airport

Code

Hyderabad

Rajiv Ghandi International

HYD

Air New Zealand

Auckland

Auckland Airport

AKL

Los Angeles

Los Angeles International

LAX

All Nippon Airways

Tokyo

Haneda International Airport

HND

Narita International Airport

NRT

Asiana Airlines

Seoul

Gimpo International Airport

GMP

Incheon International Airport

ICN

Austrian

Vienna

Vienna International Airport

VIE

Avianca

Bogota

El Dorado International Airport

BOG

San Salvador

Monsenor Oscar Arnulfo

Romero International

Airport

SAL

San

Salvador

Lima

Jorge Chavez International

LIM

Brussels Airlines

Brussels

Brussels Airport

BRU

Copa Airlines

Panama City

Panama’s Tocumen International Airport

PTY

Croatia Airlines

Zagreb

Franjo Tudman Airport

ZAB

Egypt Air

Cairo

Cairo International Airport

CAI

Ethiopian Airlines

Addis Ababa

Bole International Airport

ADD

Lome

Lome-Tokoin Airport

LFW

Lilongwe

Lilongwe International

LLW

Liege

Liege Airport

LGG

Eva Air

Taipei

Taiwan Taoyuan International Airport

TPE

LOT Polish Airlines

Warsaw

Warsaw Chopin Airport

WAW

Lufthansa

Frankfurt

Frankfurt Airport

FRA

Munich

Munich Airport

MUC

SAS

Copenhagen

Copenhagen Airport

CPH

Oslo

Oslo Gardermoen Airport

OSL

Stockholm

Stockholm Arlanda Airport

ARN

Shenzhen Airlines

Shenzhen

Shenzhen Bao’an International Airport

SZX

Guangzhou

Guangzhou Baiyun International Airport

CAN

Singapore Airlines

Singapore

Singapore Changi Airport

SIN

South African

Airways

Johannesburg

OR Tambo International Airport

JNB

10-6 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

oneworld Alliance

Airline

City

Airport

Code

Swiss

Zurich

Zurich-Kloten Airport

ZRH

Geneva

Geneva International

GVA

TAP Air Portugal

Lisbon

Lisbon Humberto Delgado Airport

LIS

Thai Airways

International

Bangkok

Suvarnabhumi Airport

BKK

Turkish Airlines

Istanbul

Istanbul Ataturk Airport

IST

Ankara

Esenboga International Airport

ESB

United Airlines

Chicago

O’Hare International Airport

ORD

Denver

Denver International Airport

DEN

Houston

Houston George Bush Intercontinental Airport

IAH

Los Angeles

Los Angeles International Airport

LAX

Now York/Newark

Newark Liberty International Airport

EWK

San Francisco

San Francisco International Airport

SFO

Washington

Washington Dulles International Airport

IAD

Guam

Antonio B. Won Pat International Airport

GUM

Sky Team

Airline City Airport Airport

Code

Aerolineas

Argentinas

Buenos Aires

Buenos Aires Mistro Pistarini International Airport

EZE

Buenos Aires Aeroparque Jorge New Berry Airport

AEP

Mexico City

Mexico City Benito Juarez International Airport

MEX

Aero Mexico

Monterrey

Monterrey International Airport

MTY

Guadalajara Miguel Hidalgo y Costilla Guadalajara International

Airport

GDL

Mexico City

Mexico City Benito Juarez International Airport

MEX

Air Europa

Madrid

Madrid Barajas International Airport

MAD

Air France

Paris

Paris Charles de Gaulle Airport

CDG

Air France

Paris

Paris Charles de Gaulle Airport

CDG

Lyon

Lyon-Saint Exupery Airport

LYS

Orly

Paris Orly Airport

ORY

Airports and terminal maps (united.com)

SkyTeam Hubs | Hub Cities | SkyTeam

Chapter 10. Hubs 10-7

oneworld Alliance

Airline

City

Airport

Code

China Airlines

Taipei

Taiwan Taoyuan International Airport

TPE

China Eastern

Beijing

Beijing Capital International Airport

PEK

Kunming

Kunming Changshui International Airport

KMG

Shanghai

Shanghai Pudong International Airport

PVG

Shanghai Hongqiao International Airport

SHA

Xi’an

Xi’an Xianyang International Airport

XIY

Czech Airlines

Prague

Vaclav Havel Airport Prague

PRG

Delta

Atlanta

Atlanta Hartsfield-Jackson International Airport

ATL

Boston

Boston Logan International Airport

BOS

Newark

Newark Liberty International Airport

EWR

LaGuardia

LaGuardia Airport

LGA

New York

John F. Kennedy

JFK

Salt Lake City

Salt lake City International Airport

SLC

Detroit

Detroit Metropolitan Wayne County Airport

DTW

Minneapolis

Minneapolis-Saint Paul International Airport

MSP

Seattle

Seattle-Tacoma International Airport

SEA

Los Angeles

Los Angeles International Airport

LAX

Garuda Indonesia

Jakarta

Jakarta Soekarno-Hatta International Airport

CGK

Denpasar

Bali Denpasar-Ngurah RAI International Airport

DPS

ITA Airways

Milan

Milan Malpensa Airport

MXP

Milan Linate Airport

LIN

Rome

Rome Fiumicino Leonardo da Vinci International Airport

FCO

Kenya Airways

Nairobi

Nairobi Jomo Kenyatta International Airport

NBO

KLM Royal Dutch

Airlines

Amsterdam

Amsterdam Schiphol Airport

AMS

Korean Air

Seoul

Seoul Incheon International Airport

ICN

Busan

Busan Gimhae International Airport

PUS

Jeju

Jeju International Airport

CJU

Middle East Airlines

Beirut

Beirut-Rafic Hariri International Airport

BEY

Saudia

Jeddah

King Abdulaziz International Airport

JED

Riyadh

King Khalid International Airport

RUH

Tarom

Bucharest

Bucharest Henri Coanda International Airport

OTP

10-8 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

oneworld Alliance

Airline

City

Airport

Code

Vietnam Airlines

Hanoi

Noi Bai International Airport

HAN

Ho Chi Minh

Tan Son Nhat International Airport

SGN

Xiamen Air

Xiamen

Xiamen Gaoqi International Airport

XMN

Fuzhou

Fuzhou Changle International Airport

FOC

Source: oneworld Alliance, Star Alliance and Sky Team

______________________

11-1

Chapter 11

PRIVATIZATION

11.1 BACKGROUND

11.1.1 Privatization refers to the transfer of ownership and control of government of State assets, firms and

operations to private investors, most often driven by strategic and financial reasons. While the public sector could mitigate

the risks of natural monopolies by being a reliable provider of public goods, market-specific conditions necessitate for

national disinvestment particularly in obtaining access to private sector capital, management and efficiencies.

11.1.2 For the aviation industry, privatization is often regarded as a combination of political and economic choices.

An act to de-nationalize an airline is sometimes perceived as a retreat of the State from participating in the economic

sector, which lead to questions on national pride, public service and labour. Economically, privatization can also be

challenged by limited access to capital, economic cycles and poor labour relationships.

11.2 AIRLINE PRIVATIZATION

11.2.1 The airline industry has always been a State-centred issue, consisting of strategic interests, national pride

and the international air transport regulation system itself. Hence, the issue of nationality within the ownership structure of

an airline remains a major consideration for many airlines around the globe, though it may vary from one region to another.

In North America, ownership of airlines are dominated by the private sector. Similarly, in Europe, almost every major

European airline is privatized even though some governments retain their stake at minimum level, with the exception of

Eastern Europe where privatization is taking a slower path and most national airlines are still State-owned. In the Middle

East, the major airlines are growing without the participation of the private sector.

11.2.2 The most common approach for privatization of airlines are through share issuance and strategic partnership.

While share issuance may raise capital, strategic partnerships allow for induction of other intangible investments such as

management skills, contacts and industry-specific knowledge.

11.2.3 The impact of the COVID-19 pandemic has forced many States to consider re-nationalization of their airlines.

Examples of the most recent developments of airline privatization and re-nationalization around the globe are as provided

below:

a) Africa

1) South African Airways (SAA)

The Ministry of Public Enterprises of South Africa in May 2022 issued a statement

on the disposal

of 51 per cent shares in SAA to Takatso Consortium; an identified private sector consortium, which

will lead to a relaunch of SAA. The Government will cease from contributing any finance measures

to the new airline and instead will receive dividends as a preferential shareholder, while also

obtaining a “golden share”.

MINISTER GORDHAN CLARIFIES THE TERMS OF THE DISPOSAL OF THE 51% STAKE IN SAA SOC LTD (dpe.gov.za)

11-2 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

2) Cabo Verde Airlines

The Government of Cabo Verde signed an agreement with Loftleidir Icelandic in 2019, which

resulted in a 51 per cent ownership by Loftleider Carbo Verde and 49 per cent by the State of Cabo

Verde

. However, in June 2021, the Government made an announcement to reverse the

privatization

3) Kenya Airways

The Government of Kenya in 2019 decided to nationalize Kenya Airways in effort to address the

airline’s financial standing.

b) Asia and Pacific

1) Air India

The Government of India, in 2017, approved the privatization of Air India which, in October 2022,

was acquired by Talace Private Limited, a special purpose vehicle (SPV) of Tata Sons and officially

handed over to Tata Group in January 2022.

2) Nepal Airlines

In 2017, the Nepal Government seeked a strategic partnership from foreign investors in Nepal

Airlines. The Nepal Supreme Court in July 2021 issued an interlocutory order to the Government of

Nepal for the Nepal Airlines privatization process to be put on hold.

3) Sri Lanka Airlines

Sri Lanka Government, in May 2022, was considering privatizing Sri Lanka Airlines.

c) Europe and North Atlantic

1) Air Serbia

In 2020, the Government of Serbia increased its ownership share in Air Serbia from 51 per cent to

82 per cent, while the remaining 18 per cent is owned by Etihad Airways

2) Brussels Airlines

Brussels Airlines is almost 100 per cent owned by the SN Airholding (1 811 308 shares out of

1 811 309 actions). Since December 2016, SN Airholding is 100 per cent owned by Deutsche

Lufthansa AG

History - Cabo Verde Airlines

Government will appoint new board of directors of CVA and begin restructuring (expressodasilhas.cv)

Retrieved from Air Serbia press release dated 31 December 2020 — “Republic of Serbia increases its share in Air Serbia”

Organisation | Brussels Airlines

Chapter 11. Privatization 11-3

11.3 AIRPORT PRIVATIZATION

11.3.1 In the context of airports, privatization connotes either full ownership or majority ownership of facilities and

services by the private sector, while private participation or private involvement refers to situations in which the private

sector plays a role in the ownership or management, or both, of the airport, but the majority ownership remains with the

government.

11.3.2 The private sector’s involvement in airport ownership began in the 1980s and amplified in the 1990s

especially in Asia, Europe and Latin America. In most States, private participation and privatization of airport services has

taken place in stages. Evidence suggests that States have generally benefited from a gradual change in ownership and

management structure.

11.3.3 For States considering privatization of their airports, it is important to consider that Article 28 of the Chicago

Convention places on each Contracting State the responsibility for the provision of airports and air navigation services in

its territory in accordance with ICAO SARPs. Thus, the ownership and management of airports or air navigation services

may be delegated to the private sector, but the overall responsibility for the provision of services in compliance with the

ICAO SARPs remains with States. In addition to the Chicago Convention, other international agreements, such as bilateral

or regional air services agreements, may impose obligations on signatory States with respect to the provision of airports

or air navigation services.

11.3.2 According to Airports Council International (ACI), of the top 100 airports for passenger traffic, the number

with private sector participation grew to 51 in 2017, five more than in 2016 and of the top 500 airports in 2017, 39 per cent

had private sector participation. Examples of latest development of airport privatization trends are as below:

a) Brazil

The latest privatization was in 2021 involving 22 airports, which is part of Brazil’s privatization effort that

took place since 2012 that aims to modernize transport infrastructure.

b) Kazakhstan

In 2020, TAV Airport Holding of Türkiye owns Almaty Airport.

c) Japan

In January 2020, the operation of all runways and other facilities at seven airports in Hokkaido was

handed to Hokkaido Airports Co. Ltd. to be run as a single entity.

______________________

12-1

Chapter 12

INTERNATIONAL AIR CARGO TRANSPORTATION

12.1 COMMERCIAL TRENDS OF THE AIR CARGO

INDUSTRY BETWEEN 2016 AND 2021

a) E-commerce

The rapid development of e-commerce around the globe has continuously revolutionized the airfreight

industry. Airfreight logistics providers are forced to adapt to meet demand and capture business value.

To manage this, many airfreight providers established cooperation with a third-party logistics company

(3PLs) to augment their in-house resources and capabilities.

b) Technology

Development of technology has helped to digitize airfreight, particularly in increasing its efficiency via

automation, Big Data and artificial intelligence. The implementation of electronic Air Waybill is an

example.

c) More efficient aircraft

The introduction of a new generation of aircraft into the airfreight market, which mostly replace the fleet

that had reached its useful life cycle, has significantly improved airfreight operations. These new aircraft

significantly improve fuel efficiency and emissions that are critical for airlines’ financial standings and

allow airlines to maximize their operational range and payload.

d) Electric aircraft

In the last few years, the trend for aircraft has moved towards electric vertical take-off and landing

(eVTOL) aircraft, powered by electric motors. In 2021, DHL Express was reported to order 12 fully

electric cargo planes that are able to fly with a single pilot carrying 1 200 kilograms of load, with a flying

range up to 815 kilometres

e) Light-weight unit load devices (ULD)

Light-weight pallets and containers for consolidated carriage of loose shipments is now available, which

helps airlines to save fuel. The light-weight ULD also enables more shipments to be made, hence

increasing its efficiency.

DHL Express orders first electric cargo planes - Logistics Business® Magazine

12-2 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

f) Passenger to freighter conversion (P2F)

The booming of e-commerce and the impact of the COVID-19 pandemic has resulted in the emerging

trend of conversion of passenger aircrafts to freighters in order to meet the increasing demand of

airfreight. An example is the A330P2F and A321P2F, which are passenger aircrafts that have been

converted into a freighter.

g) Air cargo and Sustainable Development Goals (SDGs)

Air cargo is a key driver towards the achievement of United Nations Agenda 2030 SDGs. Air cargo plays

a role as a trade facilitator for small island developing States (SIDS), landlocked developing countries

(LLDCs) and least developed countries (LDCs), offering an opportunity to link remote markets and to

connect them across continents as well as to the global supply chain.

The tangible benefits of international trade in poverty reduction, as well as in the informal economy, are

widely acknowledged. According to both the World Trade Organization and the World Bank, trade

contributes directly to poverty reduction by opening up new employment opportunities. For example,

international trade benefits agricultural producers by expanding export sectors and by bringing about

structural changes in the economy that increase employment of low-skilled, underprivileged workers, in

the informal sector. Trade also provides better access to external markets for the goods that the

underprivileged workers produce. Here is where air cargo plays a significant role in battling poverty.

______________________

13-1

Chapter 13

COMMERCIAL SPACE TRANSPORTATION

13.1 LATEST COMMERCIAL UPDATES

ON THE SPACE TRANSPORTATION INDUSTRY

a) Space X

In May 2020, Space X became the first private company to send humans into orbit and to the ISS. Its

first all-civilian crew successfully docked the ISS in April 2022.

b) Virgin Galactic

Virgin Galactic is an aerospace and space travel company that is currently developing a spaceflight

system for space tourism purposes. In July 2021, the company successfully launched its first test flight

with a full crew in the cabin

. The company received approval from the United States Federal Aviation

Administration in June 2021 to fly passengers/customers to space

______________________

https://www.virgingalactic.com/news/virgin-galactic-successfully-completes-first-fully-crewed-spaceflight

https://www.virgingalactic.com/news/virgin-galactic-receives-approval-from-faa-for-full-commercial-launch

14-1

Chapter 14

COMMERCIAL OPERATIONS OF

UNMANNED AIRCRAFT/VEHICLES

14.1 LATEST COMMERCIAL UPDATES OF

THE UNMANNED AIRCRAFT/VEHICLES INDUSTRY

14.1.1 Traditional aviation continues to undergo a fundamental evolution in light of the increasingly widespread use

of UAS, as well as related modernization trends associated with digital communications and the emergence of advanced

air mobility operators and other new entrants. Some of the latest developments of UAS are as below

1234

a) China

In 2018, one of China's biggest online retailers, JD.com, planned to increase services to rural areas by

building 185 drone airports in southwest China. JD.com hoped the new drone airports would allow

agricultural products from Sichuan to be delivered anywhere in China within 24 hours, and cut costs by

up to 70 per cent.

b) Germany

The State of Hesse decided to implement the use of drones in police work, including at accident sites

and crime scenes. The unmanned aircraft will be used to provide images of accidents and help secure

evidence. To ensure safety, the drones will be flown by line-of-sight at 50 metres, and never at night or

above large crowds of people.

c) Israel

To compensate for declining bee populations and overcome labour shortages due to the COVID-19

pandemic, farmers in Israel have used multiple unmanned aircraft (UA) flying simultaneously to

dispense pollen from the air during the critical palm tree pollination period, between February and April

2020.

d) Japan

Japan Airlines reported using an 80-kilogram UA during two beyond visual line-of-sight (BVLOS) flights

to establish new logistic networks in remote islands. The UA transported fresh fish (20kg) from Kamigoto

airport to Saiki city (35km).

ICAO UA Bulletin 2020 1a.pdf

ICAO_UA-Bulletin_2018-09-10.pdf

ICAO_UA-Bulletin_2018-02-2.pdf

ICAO_UA-Bulletin_2018-01.pdf

14-2 Overview of Regulatory and Industry Developments in International Air Transport (ICAO Secretariat)

e) New York, United States

The State of New York has announced the creation of a 50-mile UAS corridor to connect the cities of

Rome and Syracuse, New York. The corridor is expected to allow government agencies and first

responders to operate UAS BVLOS for emergency response, as well as medical and test-kit deliveries

between hospitals and labs.

f) Poland

In April 2020, a pilot project was carried out to transport samples for testing for the presence of the

COVID-19 virus using a cargo UA and supported by Pansa UTM, managed by the Polish Air Navigation

Services Agency. The flight was operated BVLOS between two hospitals in Warsaw.

g) Rwanda

In 2018, Zipline, a United States start-up, partnered with the Rwandan government to launch the world’s

first commercial drone delivery service, ferrying vital medical supplies to its distant hospitals by air. Since

December 2016, the company dispatched more than 4 000 units of blood products to 12 hospitals —

red blood cells, platelets, and plasma that would have otherwise needed to travel by a treacherously

tangled road network, losing precious hours in the race to save lives.

h) Vanuatu

In 2018, the Ministry of Health of Vanuatu, with support from the United Nations International Children's

Emergency Fund (UNICEF), is exploring the use of UA, as a quick, reliable, and effective mode of

transportation to deliver vaccines from main health facilities to dispensaries, aid posts, and mobile

vaccination teams.

i) Oil and gas industry

Companies incurring significant time and money on manual inspection tasks. To address this, UA are

increasingly utilized in the oil and gas industries for inspecting pipelines, storage tanks and offshore

platforms.

______________________

A-1

APPENDIX A

LIST OF REGIONAL MULTILATERAL

LIBERALIZATION ARRANGEMENTS

Arrangements in place

(All arrangements pre 2016)

New arrangements

(enacted post 2016)

Level of liberalization

Significant features

Key updates since 2016

Africa

Yamoussoukro Decision (YD)

Relating to the Implementation

of the Yamoussoukro

Declaration Concerning the

Liberalization of Access to Air

Transport Markets in Africa

(Ministerial Decision) of the

African Union (AU, then

Organization of African Unity

(OAU)

Liberalized until Fifth

Freedom Rights of air

traffic

This Decision establishes the

arrangement among State Parties

for the gradual liberalization of

scheduled and non-scheduled intra-

Africa air transport services. This

Decision has precedence over any

multilateral or bilateral agreements

on air services between State

Parties which are incompatible with

this Decision.

As per Global Quantitative Indicators for Evaluating the Degree of Liberalization, +PLUS: Ownership and Control: PPOB

https://afcac.org/en/images/Documentation/yd_eng.pdf

A-2 Overview of Regulatory and Industry

Developments in International Air Transport (ICAO Secretariat)

Arrangements in place

(All arrangements pre 2016)

New arrangements

(enacted post 2016)

Level of liberalization

Significant features

Key updates since 2016

Common Market for Eastern

and Southern Africa

(COMESA) Air Transport

Liberalization Programme

Liberalized until Fifth

Freedom Rights of air

traffic

As per the official COMESA

website

Eswatini, Somalia and Tunisia

have become Member States

of COMESA.

The United Republic of

Tanzania and Eswatini have

ceased to be members of

COMESA.

Agreement on Air Transport of

the Economic and Monetary

Community of Central Africa

(CEMAC)

Common Program on Air

Transport of the West African

Economic and Monetary Union

(WAEMU)

Banjul Accord Group (BAG)

Agreement

Multilateral Air Service

Agreement (MASA) for the

BAG

https://www.comesa.int/comesa-infrastructure-development/legal-notice-no-2-of-1999/

https://www.comesa.int/members/

Annex A. List of regional multilateral liberalization arrangements A-3

Arrangements in place

(All arrangements pre 2016)

New arrangements

(enacted post 2016)

Level of liberalization

Significant features

Key updates since 2016

Declaration on the

Establishment of a

Single African Air

Transport Market

(SAATM)

Liberalized until Fifth

Freedom Rights of air

traffic

The Declaration on the

establishment of a Single Africa Air

Transport Market was adopted by

the African Union (AU) Assembly in

2015.

SAATM was formally

established and launched on

29 January 2018 by African

Heads of States and

Government.

The Americas

Decision on Integration of Air

Transport of the Andean

Community (CAN, then

Andean Pact until 10 Mar

1996)

Liberalized until Fifth

Freedom Rights of air

traffic

As per this agreement, member

countries grant each other the free

exercise of the third, fourth and fifth

air freedoms for regular passenger,

cargo and mail flights within the

subregion.

Multilateral Air Services

Agreement (MASA) of the

Caribbean Community

Liberalized until Fifth

Freedom Rights of air

traffic

This Agreement seeks, within the

framework of the Revised Treaty to

establish a single market for air

transport services within the

Community in furtherance of the

undertaking of Member States

under paragraph 1 of Article 33 and

paragraph 1 of Article 37 of the

Revised Treaty to remove barriers

to the right of establishment of

Community nationals and the right

of Community nationals to provide

services within the Community.

https://au.int/en/articles/single-african-air-transport-market

https://www.iata.org/contentassets/44c1166a6e10411a982b2624047e118c/saatm-handbook.pdf

http://www.sice.oas.org/trade/junac/decisiones/dec297e.asp

https://caricom.org/wp-content/uploads/MASA-Agreement-FINAL-22-February-2018-parchment.pdf

A-4 Overview of Regulatory and Industry

Developments in International Air Transport (ICAO Secretariat)

Arrangements in place

(All arrangements pre 2016)

New arrangements

(enacted post 2016)

Level of liberalization

Significant features

Key updates since 2016

Agreement on Sub-regional Air

Services (Fortaleza

Agreement) of the Southern

Common Market

(MERCOSUR)

The Sub-regional Air Services

Agreement, commonly known as

Fortaleza Agreement, aims to

enable new subregional regular air

services in routes different from

those effectively operated under

Bilateral Agreements. The purpose

of this Agreement is to promote and

develop new markets.

Air Transport Agreement

among the Members States

and Associate Members of the

Association of Caribbean

States (ACS)

Liberalized until Fifth

Freedom Rights of air

traffic

Latin America Air

Cargo Liberalization

(2020) — 10 States

(Brazil, Chile,

Dominican Republic,

Ecuador,

Guatemala,

Panama, Paraguay,

Peru, Uruguay and

Venezuela)

This agreement aims at the

development and emergence

of the Latin American Civil

Aviation Commission’s

(LACAC) new multilateral

agreement to liberalize air

cargo services in the region.

https://www.anac.gov.br/en/air-services/sub-regional-agreement-fortaleza-agreement

http://www.acs-aec.org/sites/default/files/19SCTDirRep_Ann2.pdf

https://www.icao.int/Newsroom/NewsDoc2020/COM.95.20.EN.pdf?msclkid=bc01bbfbd09211ecbeb0f44479f59a67

Annex A. List of regional multilateral liberalization arrangements A-5

Arrangements in place

(All arrangements pre 2016)

New arrangements

(enacted post 2016)

Level of liberalization

Significant features

Key updates since 2016

Asia Pacific

ASEAN Multilateral Agreement

on the Full Liberalization of Air

Freight Services, May 2009

Liberalized until Fifth

Freedom Rights of air

traffic

The arrangement aims to liberalize

the movement of airfreight services

and their related activities across

States signatory to this

arrangement. The arrangement

provides for unlimited access to first

to Fifth Freedoms Rights.

ASEAN Multilateral Agreement

on Air Services

Liberalized until Fifth

Freedom Rights of air

traffic

The arrangement aims for a

strategic liberalization of passenger

services in the ASEAN region.

Parties who are signatories to this

arrangement shall enjoy access to

first to Fifth Freedom Rights.

Enactment of Protocol 3:

Domestic Code-Share Rights

Between Points Within the

Territory of any other ASEAN

Member States.

Enactment of Protocol 4: Co-

Terminal Rights between Points

within the Territory of Any Other

ASEAN Member State

CLMV Multilateral Agreement

on Air Services

Arrangement signed between

Cambodia, Lao People’s

Democratic Republic, Myanmar and

Viet Nam.

The arrangement aims to promote

air transport liberalization between

the signatories, cooperation and

development of standard rules and

practices to ensure harmonious

http://agreement.asean.org/media/download/20140119020939.pdf

http://agreement.asean.org/media/download/20140119030138.pdf

Ratification-Status-of-Air-Transport-Agreements-as-of-July-2022.pdf (asean.org)

A-6 Overview of Regulatory and Industry

Developments in International Air Transport (ICAO Secretariat)

Arrangements in place

(All arrangements pre 2016)

New arrangements

(enacted post 2016)

Level of liberalization

Significant features

Key updates since 2016

development of aviation between

the regions, the expansion of the

aerial route network to foster better

air traffic.

Memorandum of

Understanding on Expansion of

Air Linkages (IMT-Growth

Triangle)

This arrangement aims at

expansion and strengthening of air

services between Indonesia,

Malaysia and Thailand.

Amended on 9 November

2018.

The amendment revised the

MoU on Air Linkages to provide

for increased intra IMT-GT air

services.

The following clauses of the

original agreement were

amended:

Clause 6.2, 6.2.1 with Article 2.

Clause 7 with Article 3.

MoU on Air Linkages amended

by Article 4.

https://complain.mot.go.th/prproject/files_upload/publishonweb/affairs_files/04%20IMT-GT%20Protocol%20to%20Amend%20the%20MoU%20on%20Air%20linkages.pdf

Annex A. List of regional multilateral liberalization arrangements A-7

Arrangements in place

(All arrangements pre 2016)

New arrangements

(enacted post 2016)

Level of liberalization

Significant features

Key updates since 2016

Memorandum of

Understanding on Expansion of

Air Linkages (BIMP-East

ASEAN Growth Area (EAGA)

Liberalized until Fifth

Freedom Rights of air

traffic

The arrangement is aimed at

Member States to provide full

commitment, cooperation and

coordination and adopt a practical

and pragmatic approach for the

accelerated development of air

linkages among the designated

points within the BIMP-EAGA, and

to pursue intra-regional

cooperation.

Pacific Islands Air Services

Agreement (PIASA) of the

Pacific Islands Forum

Liberalized until Fifth

Freedom Rights of air

traffic

The arrangement aims to establish

a framework for the gradual

integration of aviation services of

the members of the Pacific Islands

Forum in a way that is fully

supportive of sustainable

development of the Forum Island

Countries.

The arrangement further aims to

establish a single aviation market

among the Member States.

Air Transport Agreement

between ASEAN Member

States and China

Liberalized until Fifth

Freedom Rights of air

traffic

This arrangement provides for

unlimited air passenger and cargo

services between ASEAN Member

States and China.

The agreement was further

amended by Protocol 3

granting full Fifth Freedom

Rights to all Member States.

https://bimp-eaga.asia/sites/default/files/publications/MOU%20of%20BE%20AirLinkages%20120107.pdf

http://www.paclii.org/pits/en/treaty_database/2003/1.html

https://cil.nus.edu.sg/wp-content/uploads/2017/07/2010-Air-Transport-Agreement-between-the-Governments-of-the-Member-States-of-the-Association-of-Southeast-Asian-

Nations-and-the-Government-of-the-People.pdf

Ratification-Status-of-Air-Transport-Agreements-as-of-July-2022.pdf (asean.org)

A-8 Overview of Regulatory and Industry

Developments in International Air Transport (ICAO Secretariat)

Arrangements in place

(All arrangements pre 2016)

New arrangements

(enacted post 2016)

Level of liberalization

Significant features

Key updates since 2016

ASEAN-European

Union Air Transport

Agreement

Liberalized until Fifth

Freedom Rights of air

traffic

As per this agreement, airlines of

ASEAN and the EU will have

greater opportunities to operate

passenger and cargo services

between and beyond both regions.

Airlines of ASEAN and the EU will

be able to fly any number of

services between both regions.

ASEAN-Republic of Korea Air

Service Agreement

Liberalized until Fifth

Freedom Rights of air

traffic

The agreement aims to promote a

more liberal and mutually beneficial

traffic rights exchange to further

enhance air connectivity between

and beyond ASEAN and the

Republic of Korea.

Europe and North Atlantic

Single Aviation Market of the

European Union (EU, then

European Community until

31 October 1993)

Amendments to this legislation

were carried out in 2018

2019

and 2020

primarily to introduce the

European Union Air Safety

Agency and introduce

measures during the COVID-19

pandemic.

https://transport.ec.europa.eu/news/aviation-asean-and-eu-conclude-worlds-first-bloc-bloc-air-transport-agreement-2021-06-

04_en?msclkid=abb31229cfa711ecb60c67ef40edb208

https://asean.org/wp-content/uploads/2021/11/JMS_12th-ATMROK_FINAL.pdf

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32018R1139

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32019R0002

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32020R0696

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32020R2114

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32020R2115

Annex A. List of regional multilateral liberalization arrangements A-9

Arrangements in place

(All arrangements pre 2016)

New arrangements

(enacted post 2016)

Level of liberalization

Significant features

Key updates since 2016

Agreement on the European

Economic Area (EEA), Annex

13 Transport

Changes to the treaty were

incorporated pursuant to the

decisions by the European

Union Council and European

Union Aviation Safety Agency.

The latest text can be found

here.

Agreement between the

European Community and

Swiss Confederation on Air

Transport

Liberalized until Fifth

Freedom Rights of air

traffic. However, the

agreement gives scope

for future liberalization

beyond Fifth Freedom

Rights including

cabotage rights

The agreement integrates

Switzerland with the European

Union (EU) internal aviation market

as part of a package of agreements

covering seven different sectors of

EU activities;

Additionally, it extends the

application of EU aviation

legislation to Switzerland — the

annex to the agreement lists all the

EU legislation that Switzerland

applies, including applicable

adaptations.

This document has been

amended multiple times on the

following dates (dates

mentioned below are

hyperlinked):

01/02/2022

01/08/2021

01/02/2021

01/07/2020

01/02/2020

01/09/2019

01/02/2019

01/02/2018

01/02/2017

15/05/2016

Multilateral Agreement on the

Establishment of a European

Common Aviation Area (ECAA)

The aim of this Agreement is the

creation of a European Common

Aviation Area, hereinafter referred

to as the ECAA.

The said agreement’s Articles

1, 2 and 3 were amended in

2018.

Details of the original

text can be found here.

https://www.efta.int/media/documents/legal-texts/eea/the-eea-agreement/Annexes%20to%20the%20Agreement/annex13a.pdf

https://eur-lex.europa.eu/EN/legal-content/summary/eu-switzerland-air-transport-agreement.html

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32018D0145

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A42006D0682

A-10 Overview of Regulatory and Industry

Developments in International Air Transport (ICAO Secretariat)

Arrangements in place

(All arrangements pre 2016)

New arrangements

(enacted post 2016)

Level of liberalization

Significant features

Key updates since 2016

The ECAA shall be based on free

market access, freedom of

establishment, equal conditions of

competition, and common rules

including in the areas of safety,

security, air traffic management,

social and environment.

Agreement between the

European Community and the

West African Economic and

Monetary Union on certain

aspects of air services

Regulation (EU)

2018/1139 of the

European

Parliament and of

the Council of 4 July

2018 on common

rules in the field of

civil aviation and

establishing a

European Union

Aviation Safety

Agency

Regulation 2018/1139 was

introduced in July 2018. The

amendment called for the

establishment of a European Union

Aviation Safety Agency.

Regulation (EU)

2019/502 of the

European

Parliament and of

the Council of

This Resolution discusses common

rules ensuring basic air connectivity

with regard to the withdrawal of the

United Kingdom of Great Britain

and Northern Ireland from the

https://www.icao.int/sustainability/Documents/Compendium_FairCompetition/Practices/EU-UEMOA-OSA.pdf

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32018R1139

Annex A. List of regional multilateral liberalization arrangements A-

Arrangements in place

(All arrangements pre 2016)

New arrangements

(enacted post 2016)

Level of liberalization

Significant features

Key updates since 2016

25 March 2019 on

common rules

ensuring basic air

connectivity with

regard to the

withdrawal of the

United Kingdom of

Great Britain and

Northern Ireland

from the Union

European Union. The Resolution

has provided for definitions

regarding United Kingdom carriers,

the bifurcation of traffic rights,

aircraft leasing, operating

authorizations, operation plans and

schedules.

This regulation was amended vide

Regulation (EU) 2019/1795 of the

European Parliament and of the

Council of 24 October 2019

amending Regulations (EU)

2019/501 and (EU) 2019/502 as

regards their periods of

application.

Agreement With

Respect To Time

Limitations On

Arrangements For

The Provision of

Aircraft With Crew

This agreement states that No

Party shall impose, including by

statute or regulation, time

limitations on the operation of any

wet lease pursuant to Article 10(9)

of the U.S.-EU ATA, including as

applied by the Four Part ATA,

provided that such wet lease

complies with all terms and

conditions of said Article 10(9).

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:32019R0502#:~:text=Regulation%20(EU)%202019%2F502,(Text%20with%20EEA%20relevance.)

https://eur-lex.europa.eu/eli/reg/2019/1795/oj

https://www.state.gov/agreement-to-remove-time-constraints-on-air-carrier-leases-of-aircraft-with-crew-between-the-u-s-eu-iceland-and-norway/

A-12 Overview of Regulatory and Industry

Developments in International Air Transport (ICAO Secretariat)

Arrangements in place

(All arrangements pre 2016)

New arrangements

(enacted post 2016)

Level of liberalization

Significant features

Key updates since 2016

EU-Ukraine Air

Service Agreement

Liberalized until Fifth

Freedom Rights of air

traffic

This Agreement opens the way for

a ‘Common Aviation Area’ between

the EU and Ukraine, based on

common high standards in

important areas such as aviation

safety, security and air traffic

management.

Middle East

Damascus Convention (2004)

Liberalized until Fifth

Freedom Rights of air

traffic

The Damascus Convention is the

multilateral agreement for the

liberalization of air transport

between Arab countries. It was

adopted by the Council of Arab

Transport Ministers in 2004 where

13 Arab States signed the

Convention and entered into force

in 2007 after being ratified by 8

States: Jordan, Lebanon, Morocco,

Oman, Palestine, Syrian Arab

Republic, Yemen, and the United

Arab Emirates.

The EU-Qatar Air

Service Agreement

Liberalized until Fifth

Freedom Rights of air

traffic

The agreement sets a new global

benchmark by committing both

sides to fair competition, and by

including social and environmental

protection.

https://transport.ec.europa.eu/news/aviation-eu-and-ukraine-sign-milestone-aviation-agreement-2021-10-12_en

https://www.aaco.org/policy/liberalization

https://ec.europa.eu/commission/presscorner/detail/en/ip_21_5344

Annex A. List of regional multilateral liberalization arrangements A-

Arrangements in place

(All arrangements pre 2016)

New arrangements

(enacted post 2016)

Level of liberalization

Significant features

Key updates since 2016

EU-Oman

Comprehensive Air

Service Agreement

Liberalized until Fifth

Freedom Rights of air

traffic

The agreement paves the way for

flight increases on existing routes,

and for Omani carriers Oman Air

and Salam Air to add other

European destinations to their

networks.

Other Regional Agreements

Multilateral Agreement on the

Liberalization of International

Air Transportation (MALIAT,

“Kona” agreement)

Liberalized until Fifth

Freedom Rights of air

traffic

This agreement was signed to

promote the concept of open skies

between the signatories of this

agreement.

Declaration on The Sustainable

Development of Air Transport

in Africa: Key Milestones

This declaration is a strategic

initiative that aims at building a

dynamic and sustainable air

transport sector in Africa.

The second meeting was

conducted in March 2017 in

Acara, Ghana. Through this

strategic document,

participants from 34 States,

international organizations and

aviation stakeholders, decided

to take action for the

sustainable development of air

transport in Africa.

https://transport.ec.europa.eu/news/aviation-eu-and-sultanate-oman-initial-aviation-agreement-2021-12-01_en

https://www.maliat.govt.nz/

https://www.icao.int/sustainability/Documents/Declarations%20and%20Statements/Final.Madagascar.Declaration.EN.Rev.pdf

https://www.icao.int/Meetings/SUSDEV-AT/Pages/default.aspx ;

A-14 Overview of Regulatory and Industry

Developments in International Air Transport (ICAO Secretariat)

Arrangements in place

(All arrangements pre 2016)

New arrangements

(enacted post 2016)

Level of liberalization

Significant features

Key updates since 2016

Framework Agreement for the

Integration of Priority Sectors

(Sectoral Integration Protocol

for Air Travel) of ASEAN

(commitments)

The objective of this Protocol is to

lay down priniciples to enable the

progressive, expeditious and

systematic integration of the air

travel sector.

Statement on the Development

of Air Transport in North

America, Central America, the

Caribbean and South

America

This conference was hosted to

review the current situation in the

aviation market and implement

sustainable measures for the

development of the sector.

Declaration on The

Development of Air Cargo in

Africa: Key Milestones

This meeting was held to foster the

liberalization process of air cargo

services as per the Yamoussoukro

Decision.

— END —

20140119112244.pdf (asean.org)

https://www.icao.int/sustainability/Documents/Declarations%20and%20Statements/Statement-DevelopmentAirTransport.pdf