CHAPTER 5: FREEDOM OF THE AIR

5.1

Introduction The freedoms of the air are a set of commercial aviation rights granting a country's airline(s) the privilege to enter and land in another country's airspace. Formulated as a result of disagreements over the extent of aviation liberalisation in the Convention on International Civil Aviation of 1944, (known as the Chicago Convention) the United States had called for a standardized set of separate air rights which may be negotiated between states but most of the other countries involved were concerned that the size of the U.S. airlines would dominate all world air travel if there were not strict rules. The convention was successful in drawing up a multilateral agreement in which the first two freedoms, known as the International Air Services Transit Agreement, or "Two Freedoms Agreement" were open to all signatories. As of the summer of 2007, the treaty is accepted by 129 countries. While it was agreed that the third to fifth freedoms shall be negotiated between states, the International Air Transport Agreement (or the "Five Freedoms Agreement") was also opened for signatures, encompassing the first five freedoms. Several other "freedoms" have since been added, although most are not officially recognised under international bilateral treaties they have been agreed by a number of countries; for example, Aer Lingus had fifth freedom rights through Manchester to various European destinations prior to EU liberalisation and Pan Am had rights through London for many years.

5.2

Background To achieve sovereignty, a state must be recognised as having both de facto and de jure control over all the land, sea and air space within defined territorial boundaries. Once a state comes into being, the concept of trespass applies to any part of the state entered without permission. Hence, whether it is an individual wishing to cross a land border, a ship aiming to enter or pass through territorial waters, or an aircraft seeking to overfly, prior consent is required. Those who do not seek permission will, at the very least, be liable to arrest and prosecution by the offended state. At worst, entry may be considered an act of war. For example, in 1983, Korean Air Flight 007 strayed into Soviet air space and was shot down. Fortunately, such misunderstandings are rare. Since World War II, most states have invested national pride in the creation and defence of airlines (sometimes called flag carriers or legacy airlines). Air transportation differs from many other forms of commerce, not only because it has a major international component, but also because many of these airlines were wholly or partly government owned. Thus, as international competition grew, various degrees of protectionism were imposed.

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5.3

First step towards a civil transport regime The Convention on International Civil Aviation (1944), signed at Chicago (Also called the Chicago Convention), was intended to prepare a framework within which civil air transport could develop (not military or other state activities whether in a piloted or drone craft). It introduced nine freedoms of the air for those states that have adopted the Convention and enter into bilateral treaties that may grant any of the following rights or privileges for scheduled international air services: To fly across the territory of either state without landing. To land in either state for non-traffic purposes, e.g. refueling without boarding or disembarking passengers. To land in the territory of the first state and disembark passengers coming from the home state of the airline. To land in the territory of the first state and board passengers travelling to the home state of the airline. To land in the territory of the first state and board passengers travelling on to a third state where the passengers disembark, e.g. a scheduled flight from the U.S. to France could pick up traffic in the UK and take all to France (sometimes termed beyond rights). To transport passengers moving between two other states via the home state of the airline, e.g. a scheduled flight on an American airline from the United Kingdom lands in the U.S. and then goes on to Canada on the same aircraft. To transport passengers between the territory of the granting State and any third State state without going through the home state of the airline, e.g. a scheduled flight on an American airline from the UK to Canada that does not connect to or extend any service to/from the U.S.. To transport cabotage traffic between two points in the territory of the granting State on a service which originates or terminates in the home state of the foreign carrier or (in connection with the so-called Seventh Freedom) outside the territory of the granting State (also known as consecutive cabotage), e.g. an American airline flies from the U.S., lands passengers in London and then boards passengers to fly to Manchester. To transport cabotage traffic of the granting State on a service performed entirely within the territory of the granting State (also known as stand alone cabotage), e.g. an British airline operates a service between Perth and Sydney in Australia).

Freedoms of the air apply to commercial aviation (carrying paying passengers, transporting cargo or mail). In the sections below, every freedom is explained thoroughly.

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Freedom Description 1st the right to fly over a foreign country, without landing there 2nd the right to refuel or carry out maintenance in a foreign country on the way to another country 3rd the right to fly from one's own country to another 4th 5th the right to fly from another country to one's own the right to fly between two foreign countries during flights while the flight originates or ends in one's own country the right to fly from a foreign country to another one while stopping in one's own country for non-technical reasons the right to fly between two foreign countries while not offering flights to one's own country the right to fly between two or more airports in a foreign country while continuing service to one's own country the right to do traffic within a foreign country without continuing service to one's own country

6th

7th

8th

Example Toronto - Mexico City, overflying the United States Toronto - Mexico City with a short-range aircraft that needs to be refuelled in the U.S. carrying passengers from Toronto to Chicago as a Canadian company carrying passengers from Chicago to Toronto as a Canadian company a Canadian company flies from Toronto to Chicago, picks up passengers there, then continues to Mexico City a U.S. company flying passengers from Toronto to Mexico while picking up or offloading passengers in Chicago a European airline that offers flights between Canada and the U.S. without offering any to Europe Cathay Pacific flights from Hong Kong to Penang via Kuala Lumpur all European airlines may use this right within the EU countries

9th

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Source:Copyright 1998-2007, Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University. For personal or classroom use ONLY.

Because only the first five "freedoms" have been officially recognised by international treaties, the ICAO considers the remaining "freedoms" "so-called". Civil transport open skies The last twenty-five years have seen significant changes in airline regulation. The U.S. began pursuing Open Skies agreements in 1979 and, by 1982, it had signed twenty-three bilateral air service agreements worldwide, mainly with smaller nations. That was followed in the 1990s by agreements with some individual European states. A huge step was taken in 1992 when The Netherlands signed the first open skies agreement with the United States, in spite of objections posited by European Union authorities. The agreement gave both countries unrestricted landing rights on each others' soil. Normally landing rights are granted for a fixed number of flights per week to a fixed destination. Each adjustment takes a lot of negotiating, often between governments rather than between the companies involved. The United States was so pleased with the independent position that the Dutch took versus the EU that it granted anti-trust immunity to the alliance between Northwest Airlines and KLM Royal Dutch Airlines which started in 1989 (when Northwest and KLM agreed to code sharing on a large scale) and which actually is the first large alliance still functioning. Other alliances would struggle for years to overcome transnational barriers or still do so. In 2001 the United States signed the Multilateral Agreement on the Liberalization of International Air Transportation (MALIAT) with Brunei, Chile, New Zealand, and Singapore. The U.S. has enjoyed a powerful negotiating position but the European Commission, as a supranational body, negotiated with the United States government on a community Air Service Agreement. These negotiations led to the text of an agreement being initiated on 2 March 2007. Contending issues are: cabotage opening up the hub and spoke networks on both sides of the Atlantic would be contentious; the U.S. rules on foreign ownership. These are partly designed to protect their own carriers but also to satisfy the U.S. military which maintains the Civil Reserve Air Fleet by drawing on commercial fleets for airlift during national emergencies. The airlines, as a quid pro quo, benefit through a priority over the carriage of military and government personnel. (tackling of) the tax free position of EU-U.S. aviation. the provisions of the Fly America Act. there might also be problems in harmonising the framework of antitrust policy (e.g. to protect against predatory behavior).

The EU-US Open Skies Agreement was amongst one of the most significant open skies agreements concluded in recent years, covering civil aviation traffic between two of the world's three biggest markets. The Asian market, considered one of the fastest growing, remains relatively regulated at present,[1] although the phased introduction of the ASEAN open skies agreement covering ten 4

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countries in Southeast Asia from 2008 has prompted major Asian markets (including Japan,[2] China and India[3]) to consider similar initiatives. Key open skies provisions Most of the existing civil agreements include: 1. Free market competition: No restrictions on international route rights; number designated airlines; capacity; frequencies; and types of aircraft. Pricing determined by market forces: of

A fare can be disallowed only if both governments concur "doubledisapproval pricing" and only for certain, specified reasons intended to ensure competition. 2. Fair and equal opportunity to compete: For example: All carriers designated and non-designated of both countries may establish sales offices in the other country, and convert earnings and remit them in hard currency promptly and without restrictions. Designated carriers are free to provide their own ground-handling services "selfhandling" or choose among competing providers. Airlines and cargo consolidators may arrange ground transport of air cargo and are guaranteed access to customs services. User charges are nondiscriminatory and based on costs; computer reservation system displays are transparent and non-discriminatory. 3. Cooperative marketing arrangements: Designated airlines may enter into code-sharing or leasing arrangements with airlines of either country, or with those of third countries, subject to usual regulations. An optional provision authorizes code-sharing between airlines and surface transportation companies. 4. Provisions for dispute settlement and consultation: Model text includes procedures for resolving differences that arise under the agreement. 5. Liberal charter arrangements: Carriers may choose to operate under the charter regulations of either country. 6. Safety and security: Each government agrees to observe high standards of aviation safety and security, and to render assistance to the other in certain circumstances. 7. Optional seventh freedom all-cargo rights: 5

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Provide authority for an airline of one country to operate all-cargo services between the other country and a third country, via flights that are not linked to its homeland.