REPORT OF THE SURVEY ON LIBERALIZATION OF AIR TRANSPORT WITH REGARD TO

AIR CARGO SERVICES, AIR CARRIER OWNERSHIP AND CONTROL, AND MARKET ACCESS1

INFORMATION RELATED TO

A40-WP/16 – PROGRESS REPORT ON THE DEVELOPMENT OF INTERNATIONAL AGREEMENTS ON THE LIBERALIZATION OF MARKET ACCESS, AIR CARGO AND

AIR CARRIER OWNERSHIP AND CONTROL

1 This material is available in English only.

SURVEY ON LIBERALIZATION OF INTERNATIONAL AIR TRANSPORT

1. INTRODUCTION

1.1 The ICAO Long-Term Vision for International Air Transport Liberalization was developed on the recommendation of the Sixth Worldwide Air Transport Conference (ATConf/6) and endorsed by the Council and the Assembly. The long-term vision was disseminated to States on 15 July 2015 via ICAO State letter 2015/54, to be used as inspirational guide to pursue their liberalization goals. The text of the long-term vision is:

We, the Member States of the International Civil Aviation Organization, resolve to actively pursue the continuous liberalization of international air transport to the benefit of all stakeholders and the economy at large. We will be guided by the need to ensure respect for the highest levels of safety and security and the principle of fair and equal opportunity for all States and their stakeholders.

1.2 The ICAO Secretariat conducted a survey on the liberalization of international air transport to receive feedback from Member States on experiences gained and/or issues encountered in the application of the long-term vision in their regulatory practices. The survey also sought the views of Member States on their policies, positions and practices on the liberalization of air transport, especially with regard to market access, air cargo services, and air carrier ownership and control. The survey questionnaire was posted on-line and Member States were informed on 23 November 2018 via ICAO State letter (SP 38/1-18/93).

1.3 As of June 2019, 55 Member States submitted duly completed questionnaires online or hard copies. The list of the 55 States is in Appendix A. The 55 submissions received represents 28.5% of the 193 ICAO Member States, but accounts for approximately 57.9% of the global international air traffic in terms of Revenue Tonne-Kilometre (RTK) based on 2017 traffic data. Table 1 shows a summary of the 55 States at both regional and global level. Figure 1 illustrates the response rate and traffic representation of the 55 States by region.

Table 1.1: Characteristics of respondents by region

Region States responding

Response rate by region

Traffic* representation by

region

Traffic representation

globally Africa 9 16.7% 13.4% 0.4% Asia/ Pacific 10 22.7% 50.7% 16.3% Europe 18 38.3% 40.3% 13.7% Latin America/Caribbean 12 36.4% 61.6% 2.4% Middle East 4 30.8% 85.5% 12.5% North America 2 100.0% 100.0% 12.7% Total 55 28.5% 57.9% 57.9%

Note: Traffic data in this table refers to the international air traffic in term of Revenue Tonne Kilometer (RTK) in year 2017.

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Figure 1.1: Response rate and traffic representation

1.4 Replies from States were analysed substantially with efforts to reflect the current status of international air transport liberalization globally and regionally, given that the traffic represented by the responding States account for over half of the global volume. Nevertheless, the overall low response rate (28.5%) makes it challenging to draw a robust conclusion on most of the items, especially taking into account the non-receipt of responses from some States with high-traffic volume and insufficient geographic representation in certain regions.

2. SUMMARY OF SURVEY FINDINGS

2.1 The summary of the survey findings is presented in the sequence of the questions posed in the survey questionnaire with regard to the following four areas:

a) ICAO long-term vision for international air transport liberalization; b) Air cargo services; c) Foreign investments in airlines (air carrier ownership and control); and d) Market access.

2.1.1 ICAO LONG-TERM VISION FOR INTERNATIONAL AIR TRANSPORT LIBERALIZATION

2.1.1.1 Questions 1 – Are you aware of ICAO long-term vision for international air transport liberalization?

2.1.1.1.1 Among a total of 55 responding States, 54 States, representing 98% of the total respondents, replied to this question. They all affirmed their awareness of the ICAO long-term vision as shown in Figure 2.1.

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Figure 2.1: Awareness of ICAO long-term vision

2.1.1.2 Question 2 – Is the vision being applied in your policy making and regulatory practices?

2.1.1.2.1 As shown in Figure 2.2, a vast majority of 52 States representing 94% of respondents confirmed that they applied the ICAO long-term vision in their policy-making and regulatory practices. Two (2) States, from Europe and Middle East, representing 4% of the total respondents, do not apply ICAO long-term vision in their policy- making and regulatory practices.

Figure 2.2: Application of the ICAO long-term vision

2.1.1.3 Question 3 – Has the vision inspired your State’s international air transport liberalization?

2.1.1.3.1 Forty-seven (47) States representing 85% of the total respondents recognized that they were inspired by the ICAO long-term vision for their international air transport liberalization. Seven (7) States representing 13% of the total respondents stated that their policies were already in place prior to the ICAO long-term vision. One (1) State did not provide an answer to the question. The responses are shown in Figure 2.3.

Figure 2.3: Inspiration by the ICAO long-term vision

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2.1.1.4 Question 4 – Other comments on the ICAO long-term vision for international air transport liberalization?

2.1.1.4.1 Comments on the ICAO long-term vision were received from 15 States representing 27% of the total respondents. Many of them favoured bilateral agreements over multilateral agreements because bilateral agreements allow for flexibility in their negotiations and are therefore more beneficial to air carriers and the passengers and shippers. Some others expressed preference for the development of legal instruments and additional protocols to the liberalization framework. One (1) State said that it wants different liberalization regimes for passenger and all-cargo services.

2.1.1.4.2 Views were also expressed that the liberalization framework should be analyzed and further clarification should be provided in order to encourage more States to support and participate in the process. The synopsis of the comments received is as follows:

a) One (1) State from North America, representing 2% of the total respondents, stated that all Member States should be encouraged to embrace liberalization at their own pace and needs, consistent with the long-term vision;

b) One (1) State from Europe, representing 2% of the total respondents, stated that Member States do not perceive the concept of fair and equal opportunity mentioned in the long-term vision in the same way. Therefore, this concept should be clarified to facilitate implementation;

c) One (1) State from Europe, representing 2% of the total respondents, expressed preference for a legal instrument for liberalization that would allow States to establish a regime for exchange of traffic rights up to 4th Freedom of the Air. In addition, a protocol could be added for those States wishing to grant 5th Freedom traffic rights; and

d) Four (4) States from Europe and Africa, representing 7% of the total respondents, advocated for the inclusion of safeguards in the long-term vision to be considered, especially the issues of fair competition, social and environment matters.

2.1.2. AIR CARGO SERVICES

2.1.2.1 Question 1 - Do you have a more liberal national policy for air cargo services compared to passenger services?

2.1.2.1.1 As shown in Figure 2.4, 39 States or 71% of the total respondents stated that they have a more liberal national policy for air cargo services compared to passenger services, while 15 responding States or 27% of the total respondents do not have such policy. One (1) responding State did not provide any response to this question.

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Figure 2.4: More liberal national policy for air cargo services

2.1.2.1.2. Based on regional analysis of the responses, five (5) States from Africa, 10 States from Asia and Pacific, 12 States from Europe, nine (9) States from Latin America and the Caribbean, two (2) States from North America, and one (1) State from the Middle East stated that they have more liberal policies for air cargo services compared to passenger services. These responses are summarized in Table 2.1 and Figure 2.5.

Table 2.1: More liberal national policy for air cargo services by region (number of respondents)

More liberal national policy for air cargo services

Africa Asia and Pacific

Europe Latin America/ Caribbean

Middle East

North America

Total

Yes 5 10 12 9 1 2 39 No 4 5 3 3 15 No response 1 1

Figure 2.5: More liberal national policy for air cargo services by region (% of respondents)

2.1.2.2 Question 2 - Do you have air services agreements covering all-cargo services only?

2.1.2.2.1 Eight (8) States representing 14% of total respondents indicated that they have air services agreements (ASAs) covering all-cargo services only, while 46 responding States or 84% of total respondents stated that they do not have such ASAs. One (1) State did not provide any answer to the question. These responses are shown in Figure 2.6.

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Figure 2.6: All-cargo services only ASAs

2.1.2.2.2 As summarized in Table 2.2 and Figure 2.7, regional analysis shows that four (4) States from Asia and Pacific, and one (1) State each from Europe, Latin America and the Caribbean, North America, and the Middle East indicated that they have ASAs covering all-cargo services only. Nine (9) States from Africa, six (6) States from Asia and Pacific, 16 States from Europe, 11 States from Latin America and the Caribbean, three (3) States from the Middle East and one (1) State from North America specified that they do not have ASAs covering all-cargo services only.

Table 2.2: ASAs for all-cargo services only by regions (number of respondents)

All-cargo services only ASAs Africa Asia and Pacific

Europe Latin America/ Caribbean

Middle East

North America

Total

Yes 4 1 1 1 1 8 No 9 6 16 11 3 1 46 No response 1 1

Figure 2.7: ASAs for all-cargo services only by regions (% of respondents)

2.1.2.3 Question 3 - Which would be your preferred type of international agreement, currently under development by ICAO?

a) A stand-alone agreement applicable only to all-cargo services that includes the full panoply of articles found in standard air services agreements (ASAs); or

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b) A supplemental agreement that expands the rights of all-cargo airlines but otherwise relies upon existing ASAs.

2.1.2.3.1 As indicated in Figure 2.8, seven (7) States representing 13% of total respondents favoured a stand-alone agreement, while 42 States or 76% of total respondents, preferred a supplemental agreement. Six (6) States representing 11% of total respondents did not provide any comment.

Figure 2.8: Preferred type of international all-cargo services agreement

2.1.2.3.2 At the regional level, nine (9) States from Africa, seven (7) States from Asia and Pacific, 11 States from Europe, 10 States from Latin America and the Caribbean, three (3) States from the Middle East, and two (2) States from North America, preferred a supplemental agreement. Those respondents that favoured the other option of a stand-alone agreement were two (2) States from Asia and Pacific, three (3) States from Europe, and one (1) State each in Latin America and the Caribbean, and the Middle East. These are shown in Table 2.3 and Figure 2.9.

Table 2.3: Preferred type of international agreement by region (number of respondents)

Preferred type of international all-cargo services agreement

Africa Asia and Pacific

Europe Latin America/ Caribbean

Middle East

North America

Total

A supplemental agreement 9 7 11 10 3 2 42 A stand-alone agreement 2 3 1 1 7 No response 1 4 1 6

Figure 2.9: Preferred type of international agreement by region (% of respondents)

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2.1.2.4 Question 4 - Which Freedom traffic rights should be covered by such agreement?

a) Unrestricted 1st, 2nd, 3rd and 4th freedom traffic rights for all-cargo services. b) Unrestricted 1st, 2nd, 3rd, 4th and 5th freedom traffic rights for all cargo services. c) Unrestricted 1st, 2nd, 3rd, 4th and 5th freedom traffic rights, as well as optional

7th freedom traffic rights for all-cargo services. d) Unrestricted 1st, 2nd, 3rd, 4th 5th and 7th freedom traffic rights for all-cargo

services.

2.1.2.4.1 In response to the question on which Freedom traffic rights should be covered by the international agreement for all-cargo services, 11 States or 20% of the total respondents preferred option a) Unrestricted 1st, 2nd, 3rd and 4th Freedom traffic rights for all-cargo services. Fifteen (15) States representing 27% of the total respondents opted for option b) Unrestricted 1st, 2nd, 3rd, 4th and 5th Freedom traffic rights for all cargo services. Fourteen (14) States or 25% of the total respondents favoured option c) Unrestricted 1st, 2nd, 3rd, 4th and 5th Freedom traffic rights, as well as optional 7th Freedom traffic rights for all-cargo services. Nineteen (19) States or 35% of the total respondents selected option d) Unrestricted 1st, 2nd, 3rd, 4th 5th and 7th Freedom traffic rights for all-cargo services. One (1) State did not give any response to this question. These responses are summarized in Figure 2.10.

Figure 2.10: Preference for traffic rights to be covered in the all-cargo services agreement

2.1.2.4.2 As indicated in Table 2.4 and Figure 2.11, analysis by region showed that three (3) States from Africa, two (2) States from Asia and Pacific, five (5) States from Europe, and one (1) State from Latin America and the Caribbean expressed preference for option a) Unrestricted 1st, 2nd, 3rd and 4th Freedom traffic rights for all-cargo services. Three (3) States from Africa, four (4) States from Asia and Pacific, five (5) States from Europe and one (1) State each from Latin America and Caribbean, North America and the Middle East selected option b) Unrestricted 1st, 2nd, 3rd, 4th and 5th Freedom traffic rights for all cargo services. Two (2) States each from Africa and the Middle East, four (4) States from Asia and Pacific, four (4) States from Europe, and one (1) State each from North America and Latin America & the Caribbean expressed support for option c) Unrestricted 1st, 2nd, 3rd, 4th and 5th Freedom traffic rights, as well as optional 7th freedom traffic rights for all-cargo services. Four (4) States from Africa, two (2) States from Asia and Pacific, three (3) States from Europe, nine (9) States from Latin America and the Caribbean, and one (1) State from the Middle East opted for option d) Unrestricted 1st, 2nd, 3rd, 4th 5th and 7th freedom traffic rights for all-cargo services. One (1) State from Europe did not provide any response.

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Table 2.4: Preference for traffic rights by region (number of respondents)

Preferred type of international all-cargo services agreement

Africa Asia and Pacific

Europe Latin America/ Caribbean

Middle East

North America

Total

a) Unrestricted 1st, 2nd, 3rd and 4th freedom traffic rights for all-cargo services.

3 2 5 1 11

b) Unrestricted 1st, 2nd, 3rd, 4th and 5th freedom traffic rights for all cargo services.

3 4 5 1 1 1 15

c) Unrestricted 1st, 2nd, 3rd, 4th and 5th freedom traffic rights, as well as optional 7th freedom traffic rights for all-cargo services.

2 4 4 1 2 1 14

d) Unrestricted 1st, 2nd, 3rd, 4th 5th and 7th freedom traffic rights for all-cargo services.

4 2 3 9 1 19

No response 1 1

Figure 2.11: Preference for traffic rights by region (% of respondents)

Note: Some respondents accepted more than one option. Therefore, the total shown for some regions may add to over 100 %.

2.1.2.5 Question 5 - Which specific provisions should be included in the agreement?

2.1.2.5.1 Responses received from States varied. These responses on specific provisions that were suggested in the all-cargo services agreement were as follows:

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Table 2.5: Suggested provisions by responding States

Suggested Provision Number of States % of Respondents Market access 5 12.7% Competition 4 7% Separate cargo protocol as part of comprehensive agreement 3 5% Traffic rights for all-cargo services 2 3.6% Cargo handling 2 3.6% Relations with other agreements 2 3.6% Designation criterion based on PPB 2 3.6% Protection of consignors and consignees in case of damage or delays in cargo

2 3.6%

Most favoured nation status 1 1.8% Templates 1 1.8% Route schedule 1 1.8% Code sharing 1 1.8% Wet/dry lease 1 1.8% Application of all freedoms to scheduled and non-scheduled all-cargo services

1 1.8%

No regressive provisions 1 1.8% Operational flexibility for all-cargo services 1 1.8% Environment provisions 1 1.8% Social clause 1 1.8%

2.1.3 FOREIGN INVESTMENTS IN AIRLINES

2.1.3.1 Question 1 - What is your national policy on foreign investment in your State’s airlines?

2.1.3.1.1 Responses from the States were grouped into three broad categories in terms of the maximum level of foreign ownership allowed, namely, the traditional approach allowing foreign ownership up to 49%; the restrictive approach with the acceptable level of foreign ownership less than the level allowed under the traditional approach; and the liberal approach with the acceptable level of foreign ownership higher than under the traditional approach.

2.1.3.1.2 In this regard, 32 responding States representing 58% of total respondents follow the traditional approach, 12 States or 22% of total respondents use the liberal approach, while six (6) States or 11% of total respondents have restrictive policies. Five (5) States or 9% of total respondents did not answer the question and some stated that they do not have national policy on foreign investment in their airlines. These responses are shown in Figure 2.12.

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Figure 2.12: National policies on foreign investment in State’s airlines

2.1.3.1.3 Analysis of responses on regional basis indicated that one (1) State each from Africa, Latin America and the Caribbean, the Middle East, and North America, and two (2) States from Asia and Pacific have restrictive national policies. Five (5) States each from Africa, Asia and Pacific, and Latin America & the Caribbean, 15 States from Europe and one (1) State each from the Middle East and North America use the traditional approach. Three (3) States each from Africa and Asia and Pacific, two (2) States from Europe, and four (4) States from Latin America and the Caribbean follow the liberal approach. One (1) State from Europe, two (2) States from Latin America and the Caribbean, and two (2) States from the Middle East did not provide any response to the question.

2.1.3.1.4 The number of respondents grouped by their policies (with their share in the respective region) is as shown in Table 2.6 and Figure 2.13.

Table 2.6: National policies foreign investment in State’s airlines by region (number of respondents)

National Policies Africa Asia and Pacific

Europe Latin America/ Caribbean

Middle East

North America

Total

Restrictive approach 1 2 0 1 1 1 6 Traditional approach 5 5 15 5 1 1 32 Liberal approach 3 3 2 4 12 No response 1 2 2 5

Figure 2.13: National policies on foreign investment in State’s airlines by region (% of respondents)

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2.1.3.2 Question 2 - In dealing with the designation of foreign airlines, how many bilateral or regional ASAs concluded by your State include the following criteria and are deemed acceptable by your State:

a) (i) Substantially (or majority) owned and effectively controlled by the designating party or its nationals (the traditional approach)? Please briefly explain; (ii) Please state the percentage of the shares to be substantially owned by the designating party or its nationals;

b) Substantially (or majority) owned and effectively controlled by one or more States that are parties to an agreement or within a predefined regional grouping (e.g. a “community of interest” carrier);

c) Incorporated and having its principal place of business or permanent residence in the territory of the designating party (without the ownership requirement);

d) Having its principal place of business in the territory of and effective control by the designating party (without the ownership requirement);

e) Having its principal place of business in the territory of and effective regulatory control by the designating party.

2.1.3.2.1 Among a total of 55 responding States, 52 States representing 95% of total respondents indicated that either all or part of their ASAs contain traditional requirement for substantial ownership and effective control by the designating party or its nationals - option a) which is considered as an indispensable requirement by many respondents when concluding ASAs. Forty (40) States or 73% of the total respondents acknowledged substantial ownership and effective control within a regional grouping, - option b). Twenty-eight (28) States or 51% of the total respondents have the designation criterion of incorporation and Principal Place of Business (PPB) or permanent residence - option c). Twenty-four (24) States or 44% of the total respondents use the criterion of PPB and effective control (without the ownership requirement) in at least one of their ASAs, - option d). Regarding the criterion of PPB and effective regulatory control in their ASAs, i.e. option e), 32 States or 58% of the total respondents have this option in place. Two (2) States did not provide an answer to this question.

2.1.3.2.2 Analysis of responses on regional basis showed that nine (9) States each from Africa and Asia and Pacific, 17 States from Europe, 12 States from Latin America and the Caribbean, and three (3) States from the Middle East and two (2) States from North America have in their ASAs substantial ownership and effective control - option a). Five (5) States from Africa, eight (8) States from Asia and Pacific, 13 States from Europe, 10 States from Latin America and the Caribbean, and two (2) States each from the Middle East and North America have in their ASAs option b) - substantial ownership and effective control within a regional grouping. Five (5) States from Africa, six (6) States from Asia and Pacific, eight (8) States from Europe, seven (7) States from Latin America and the Caribbean, and one (1) State each from the Middle East and North America use option c) - incorporation and Principal Place of Business (PPB) or permanent residence. Four (4) States each from Africa and Europe, five (5) States from Asia and Pacific, nine (9) States from Latin America and the Caribbean, and one (1) State each from the Middle East and North America have in place option d) - PPB and effective control (without the ownership requirement). Option e) - PPB and effective control was selected by five (5) States from Africa, seven (7) States from Asia and Pacific, eight (8) States from Europe, 10 States from Latin America and the Caribbean, and two (2) States from the Middle East. One (1) State each from Asia and Pacific, and the Middle East did not provide any response to the question. The responses by region for each criterion are summarized in Table 2.7 and Figure 2.14 below:

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Table 2.7: Designation criteria in ASAs by region (number of respondents)

Designating Criteria Africa Asia and Pacific

Europe Latin America/ Caribbean

Middle East

North America

Total

a) Substantial (majority) ownership and effective control

9 9 17 12 3 2 52

b) Substantial (majority) ownership and effective control within a regional grouping

5 8 13 10 2 2 40

c) Incorporation and PPB/permanent residence

5 6 8 7 1 1 28

d) PPB and effective control (without the ownership requirement)

4 5 4 9 1 1 24

e) PPB and effective regulatory control

5 7 8 10 2 32

No response 1 1 2

Figure 2.14: Designation criteria in ASAs by region (% of respondents)

2.1.3.3 Question 3 – What should the agreement or convention that ICAO is currently developing provide for?

a) A common criterion for airline designation and authorization that would supersede the corresponding provisions in the existing ASAs.

b) A waiver of the “nationality clause” (i.e. traditional approach) in existing ASAs.

2.1.3.3.1 As shown in Figure 2.15, views on the approach to be followed by the agreement or convention being developed are almost evenly divided. Twenty-four (24) States or 44% of the total respondents favoured a common criterion that would supersede the corresponding provisions in the existing ASAs, while 21 States or 38% would prefer a waiver of the traditional nationality clauses in existing ASAs. Three (3) respondents or 5% of the total respondents stated that they would accept both options. Seven (7) States or 13% of the total respondents provided no answer to this question.

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Figure 2.15: Preferred provision of the agreement/convention

2.1.3.3.2 At regional level, respondents supporting the view that the ICAO agreement/convention should include a common criterion were six (6) States each from Africa and Europe, four (4) States from Asia and Pacific, seven (7) States from Latin America and the Caribbean, and one (1) State from the Middle East. The respondent States that preferred the other option of a wavier were two (2) States each from Africa, the Middle East and North America, four (4) States from Asia and Pacific, seven (7) States from Europe, and four (4) States Latin America and the Caribbean. Two (2) States from Europe and one (1) State from Latin America and the Caribbean accepted both options. One (1) State each from Africa and the Middle East, two (2) States in Asia and Pacific and three (3) States from Europe did not provide any response to this question. The responses by region for each criterion are shown in Table 2.8 and Figure 2.16 below:

Table 2.8: Preferred role of the agreement/convention by region (number of respondents)

Preferred role of the agreement/convention

Africa Asia and Pacific

Europe Latin America/ Caribbean

Middle East

North America

Total

a) Common criterion 6 4 6 7 1 24 b) Waiver 2 4 7 4 2 2 21 Both a) and b) 2 1 3 No response 1 2 3 1 7

Figure 2.16: Preferred provision of the agreement/convention by region (% of respondents)

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2.1.4. LIBERALIZATION OF MARKET ACCESS

2.1.4.1 Question 1 - Can you briefly describe your national policy on market access?

The responses on national policies on market access were categorized into four categories namely:

a) Open Skies Agreements; b) Liberal Regional Agreements; c) Liberal Aviation policy; and d) Liberal/Restricted Policy depending on the States involved.

2.1.4.1.1 In this respect, six (6) States representing 11% of the total respondents have Open Skies regime, while 13 States representing 24% of total respondents have liberal regional agreements in line with the legislation or multilateral arrangements of their regions. Sixteen (16) States or 29% of the respondents replied that they have liberal aviation policy of up to 5th Freedom traffic rights for passenger services and 7th Freedom traffic rights for all-cargo services. Twenty (20) States from different regions or 36% of total respondents stated that they have both liberal and restricted aviation policies, depending on the States involved. The percentage representation for each option is shown in Figure 2.17.

Figure 2.17: National policies on market access

2.1.4.1.2 As indicated in Table 2.9 and Figure 2.18, analysis on regional basis shows that three (3) States from Latin America and the Caribbean, two (2) States from the Middle East and one (1) State from North America have Open Skies regime. Four (4) States from Africa, two (2) States from Asia and Pacific, eight (8) States from Latin America and the Caribbean and one (1) State each from Europe and the Middle East have in place liberal aviation policy. Three (3) States from Africa and 10 States from Europe have liberal regional agreements; and two (2) States from Africa, eight (8) States from Asia and Pacific, seven (7) States from Europe and one (1) State each from Latin America and the Caribbean, the Middle East and North America have liberal or restricted policies depending on the States involved. The number of respondents by each category is shown in Table 2.9 with their shares by region illustrated in Figure 2.18.

Table 2.9: Number of respondents by region

National Policies Africa Asia and Pacific

Europe Latin America/ Caribbean

Middle East

North America

Total

Open Skies 3 2 1 6 Liberal aviation policy 4 2 1 8 1 16 Liberal regional agreements 3 10 13 Liberal or restricted, depending on the partners

2 8 7 1 1 1 20

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Figure 2.18: National policies on market access by region

2.1.4.2 Question 2 - Which would be your preferred type of agreement, currently being examined by ICAO for its feasibility?

a) A comprehensive agreement superseding existing bilateral agreements between the Parties; or

b) A supplemental agreement providing rights that may not be in existing bilateral agreements already in force.

2.1.4.2.1 As indicated in Figure 2.19, 36 States or 65% of the total respondents preferred a supplemental agreement, while 16 States or 29% of the total respondents, favoured a comprehensive agreement. Three (3) responding States did not provide answer to this question.

Figure 2.19: Preference for type of agreement

2.1.4.2.2 Further analysis of the responses based on regions, showed that six (6) States from Africa, seven (7) States from Asia and Pacific, nine (9) States each from Europe and Latin America and the Caribbean regions, three (3) States from the Middle East and two (2) States from North America indicated preference for a supplemental agreement. For the comprehensive agreement, three (3) States each from Africa and Asia and Pacific, eight (8) States from Europe and one (1) State each from Latin America and the Caribbean, and the Middle East, expressed preference. The responses by region are summarized in Table 2.10 and Figure 2.20 below:

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Table 2.10: Preference for agreement type by region (number of respondents)

Options Africa Asia and Pacific

Europe Latin America/ Caribbean

Middle East

North America

Total

a) Comprehensive agreement 3 3 8 1 1 16 b) Supplemental agreement 6 7 9 9 3 2 36 No response 1 2 3

Figure 2.20: Preferred type of agreement by region

2.1.4.3 Question 3 – Which “freedom of the air” should be covered by such agreement?

a) Unrestricted 1st, 2nd, 3rd and 4th freedom traffic rights; b) Unrestricted 1st, 2nd, 3rd, 4th and 5th freedom traffic rights; c) Unrestricted 1st, 2nd, 3rd, 4th, 5th and 7th freedom traffic rights; or d) Unrestricted 1st, 2nd, 3rd, 4th and 5th freedom traffic rights as well as a 7th

freedom traffic right for all-cargo services.

2.1.4.3.1 Analysis of the responses received to this question showed that 21 States representing 38% of the total respondents preferred option a) with unrestricted 1st, 2nd, 3rd and 4th Freedom traffic rights to be covered in such agreement. Seven (7) States representing 13% of the total respondents opted for option b) with up to 5th Freedom traffic right. Six (6) States representing 11% of the total respondents chose option c) with 7th Freedom traffic rights in addition to the Freedoms offered in options a) and b). Lastly, 22 States or 40% of the total respondents favoured option d) with up to 5th Freedom traffic rights as well as 7th Freedom traffic right for all-cargo services. The preferences for the options are indicted in Figure 2.21.

Figure 2.21: Preference for traffic rights covered in the agreement

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2.1.4.3.2 On regional basis, five (5) States from Africa, three (3) States from Asia and Pacific, 10 States from Europe and one (1) State each from Latin America and the Caribbean, the Middle East and North America chose option a) - unrestricted 1st, 2nd, 3rd and 4th Freedom traffic rights. Three (3) States each from Asia and Pacific, and Europe, and one (1) State from the Middle East favoured option b) - unrestricted 1st, 2nd, 3rd, 4th and 5th Freedom traffic rights. Five (5) States from Latin America and Caribbean, and one (1) State from the Middle East desired option c) - unrestricted 1st, 2nd, 3rd, 4th, 5th and 7th Freedom traffic rights. Lastly, five (5) States from Africa, four (4) States from Asia and Pacific, five (5) States from Europe, six (6) States from Latin America and the Caribbean, and one (1) State each from the Middle East and North America preferred option d) - unrestricted 1st, 2nd, 3rd, 4th and 5th Freedom traffic rights as well as a 7th Freedom traffic right for all-cargo services. However, one (1) State each from Africa, Asia and Pacific, Latin America and Caribbean, stated that they accept more than one option. The preferences for the options by region are in Table 2.11 with shares illustrated in Figure 2.22.

Table 2.11: Preference for traffic rights by region (number of respondents)

Preferred traffic rights covered in the agreement

Africa Asia and Pacific

Europe Latin America/ Caribbean

Middle East

North America

Total

a) 1st, 2nd, 3rd and 4th freedom

5 3 10 1 1 1 21

b) 1st, 2nd, 3rd, 4th and 5th freedom

3 3 1 7

c) 1st, 2nd, 3rd, 4th, 5th and 7th freedom

5 1 6

d) 1st, 2nd, 3rd, 4th, 5th freedom and as well as 7th freedom for all-cargo services

5 4 5 6 1 1 22

No response 1 1 2

Figure 2.22: Preference for traffic rights by region (% of respondents)

Note: Some respondents accepted more than one option. Therefore, the total shown for some regions may add to over 100 %.

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2.1.4.4 Question 4 - With regard to designation and authorization provisions, are the following option(s) acceptable as criterion for the agreement?

a) Traditional nationality clause (i.e. substantial ownership and effective control by the designating Party or its nationals);

b) Principal Place of Business (PPB) and effective regulatory control; c) Substantial ownership and effective control by a member of a group of States or

its nationals; or d) Substantial ownership and effective control by any Party to the Agreement or

their nationals.

2.1.4.4.1 Regarding the preference for either the traditional national clause or the Principal Place of Business (PPB) and effective regulatory control criterion, 10 States or 18% of the total respondents supported option a) - traditional nationality clause, and 23 States or 42% of the total respondents opted for option b) - Principal Place of Business criterion. Nineteen (19) States or 35% of the total respondents expressed preference for both criteria.

2.1.4.4.2 On the question of ownership and control, 31 States or 56% of the total respondents, chose option c) - substantial ownership and effective control by a member of a group of States or its nationals. Twenty (20) States representing 36% of the total respondents selected option d) - substantial ownership and effective control by any Party to the agreement or their nationals. The acceptance of each criterion is shown in Figure 2.23.

Figure 2.23: Acceptance of designation criterion (% of respondents in aggregate)

2.1.4.4.3 At regional level, two (2) States from Africa, three (3) States each from Asia and Pacific, and Europe, and two (2) States from North America opted for option a) - traditional nationality clause. Five (5) States from Africa, three (3) States from Asia and Pacific, seven (7) States from Europe, and eight (8) States from Latin America and the Caribbean favoured option b) - Principal Place of Business (PPB) criterion. Three (3) States from Africa, four (4) States from Asia and Pacific, five (5) States from Europe, four (4) States from Latin America and the Caribbean, and three (3) States from the Middle East expressed preference for both criteria.

2.1.4.4.4 On option c) - substantial ownership and effective control by a member of a group of States or its nationals, six (6) States each from Africa and Asia and Pacific, 11 States from Europe, five (5) States from Latin America and the Caribbean, two (2) States from the Middle East, and one (1) State from North America selected this criterion. Five (5) States from Africa, three (3) States from Asia and Pacific, six (6) States from Europe, five (5) States from Latin America and Caribbean, and one (1) State from the

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Middle East, chose option d) - substantial ownership and effective control by any Party to the Agreement or their nationals, criterion. The choices for each criterion are shown in Table 2.12 and Figure 2.24.

Table 2.12: Acceptance of designation criterion by region (number of respondents)

Accepted Designating Criteria Africa Asia and Pacific

Europe Latin America/ Caribbean

Middle East

North America

Total

a) Traditional nationality clause 2 3 3 2 10 b) PPB and effective regulatory control

5 3 7 8 23

Both a) and b) 3 4 5 4 3 19 c) Substantial ownership and effective control by a member of a group of States or its nationals

6 6 11 5 2 1 31

d) Substantial ownership and effective control by any Party to the Agreement or their nationals

5 3 6 5 1 20

Figure 2.24: Acceptance of designation and authorization criterion

2.1.4.5 Question 5 - If a comprehensive agreement is pursued, should it include a provision to allow adhering States to conclude any other additional “side agreements”?

2.1.4.5.1 With respect to the question of flexibility allowed for States to conclude any additional “side agreements” if a comprehensive agreement is pursued, 41 States or 74% of the total respondents supported the inclusion of a provision for “side agreement” in the comprehensive agreement. Thirteen (13) States or 24% of the total respondents preferred that such provision should not be included. One (1) State did not provide any response to the question. These responses are illustrated in Figure 2.25.

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Figure 2.25: Support to include provision to allow for side agreements

2.1.4.5.2 On regional basis, eight (8) States from Africa, six (6) States from Asia and Pacific, 13 States from Europe, 10 States from Latin America and the Caribbean, three (3) States from the Middle East and one (1) State from North America expressed support for the inclusion of a “side agreement” provision in the comprehensive agreement. Four (4) States from Asia and Pacific, five (5) States from Europe, two (2) States from Latin America and the Caribbean, one (1) State each from the Middle East and North America preferred that such provision should not be included. The responses are as shown in Table 2.13 and Figure 2.26.

Table 2.13: Acceptance of “side agreements” provision by region (number of respondents)

Provision to allow “side agreements”

Africa Asia and Pacific

Europe Latin America/ Caribbean

Middle East

North America

Total

Yes 8 6 13 10 3 1 41 No 4 5 2 1 1 13 No response 1 1

Figure 2.26: Acceptance of “side agreements” provision by region (% of respondents)

2.1.4.6 Question 6 - Should the comprehensive agreement have specific provisions on safeguards against unfair practices?

2.1.4.6.1 As shown in Figure 2.27, on the subject of whether the comprehensive agreement should have specific provisions on safeguards against unfair practices, 43 States or 78% of the total respondents

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supported that specific safeguards provisions should be included in the comprehensive agreement. This was viewed by most of these respondents as a fundamental part of such an agreement. Twelve (12) States or 22% of the respondents stated that such specific provisions on safeguards should not be included.

Figure 2.27: Support to include specific provisions on safeguards (% of respondents)

2.1.4.6.2 At regional level, eight (8) States from Africa, seven (7) States from Asia and Pacific, 16 States from Europe, nine (9) States from Latin America and the Caribbean, two (2) States from North America, and one (1) State from the Middle East, supported the inclusion of safeguards provision in the comprehensive agreement. However, one (1) State from Africa, three (3) States each from Asia and Pacific, Latin America and the Caribbean, and the Middle East, and two (2) States from Europe are of the view that it is not necessary to include such provision. The responses are as shown in Table 2.14 and Figure 2.28.

Table 2.14: Support to include specific provisions on safeguards by region (number of respondents)

Inclusion of Safeguards Africa Asia and Pacific

Europe Latin America/ Caribbean

Middle East

North America

Total

Yes 8 7 16 9 1 2 43 No 1 3 2 3 3 12

Figure 2.28: Support to include specific provisions on safeguards by region (% of respondents)

2.1.4.7 Question 7 – If your answer to question 6 is yes, please give details.

2.1.4.7.1 As indicated in Figure 2.29, 42 States, or 98% of the 43 States that supported the inclusion of specific provisions on safeguards in the comprehensive agreement, underscored the

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importance of fair competition and anti-competitive practices as integral provisions of the agreement. Non-exhaustive anti-competitive practices including unfair opportunity to compete, abuse of dominant market position, State subsidies, and failure to correct anti-competitive behaviours, inter alia, were listed. Nine (9) States from Europe suggested the inclusion of provisions on social and labour issues as well as environmental protection.

Figure 2.29: Safeguards requested by respondents

2.1.4.8 Question 8 - Which other specific provisions should be included in the comprehensive agreement?

2.1.4.8.1 Provisions that States would like to include in the comprehensive agreement are listed in Table 2.15.

Table 2.15: Provisions suggested by responding States

Suggested Provision Number of States %age of Respondents Traffic rights 7 12.7% Environment 5 9 % Social and labour issues 4 7% Inter-modality 4 7% Commercial opportunities for airlines like wet/dry lease agreements, third-country code-sharing

3 5%

Non-discrimination provisions 2 3.6% Safeguard measures 2 3.6% Consumer protection 2 3.6% A waiver of visa requirements for crew member 1 1.8% Pricing freedom 1 1.8% Reservations 1 1.8% Avoidance of double taxation 1 1.8% Safety and security 1 1.8% Unscheduled flights 1 1.8% Side Agreements 1 1.8% Aviation insurance policy 1 1.8%

3. CONCLUSION

3.1 The above responses by 55 Member States on the use of the ICAO Long-Term Vision for International Air Transport Liberalization, national and preferred multilateral agreements on air cargo services, air carrier ownership and control, as well as market access revealed that on:

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a) ICAO Long-Term Vision for International Air Transport Liberalization: fifty-four (54) States representing 98% of the total respondents are aware of the existence of the ICAO Long-Term Vision for International Air Transport Liberalization. Additionally, 52 States representing 94% of the total respondents confirmed that they applied the ICAO long-term vision in their policy-making and regulatory practices.

b) Air cargo services: Eight (8) States representing 14% of total respondents indicated

that they have Air Services Agreements (ASAs) covering all-cargo services only, while 46 States or 84% of total respondents stated that they do not have such ASAs. Interestingly, only seven (7) States representing 13% of total respondents favoured a stand-alone agreement, while 42 States or 76% of total respondents preferred a supplemental agreement that expands the rights of all-cargo airlines, but relies upon existing ASAs.

c) Foreign investment in airlines: thirty-two (32) States representing 58% of total

respondents follow the traditional approach on the issue of national policies on foreign investment in their airlines, 12 States or 22% of total respondents adopt the liberal approach, while six (6) States or 11% of total respondents have more restrictive policies. On the approach to be followed by the agreement or convention being developed by ICAO, 24 States or 44% of the total respondents, favoured a common criterion that would supersede the corresponding provisions in the existing ASAs, while 21 States or 38% preferred a waiver of the traditional nationality clauses in existing ASAs.

d) Market Access: thirty-six (36) States or 65% of the total respondents expressed

preference for a supplemental multilateral agreement, while 16 States or 29% of the total respondents favoured a comprehensive multilateral agreement. Twenty-two (22) States or 40% of the total respondents indicated that the agreement should have unrestricted 1st, 2nd, 3rd, 4th and 5th Freedom traffic rights as well as a 7th freedom traffic right for all-cargo services, while 21 States representing 38% of the total respondents preferred unrestricted 1st, 2nd, 3rd and 4th Freedom traffic rights to be covered in such agreement.

3.2 The outcome of the survey will assist in:

a) the future work on the review of the ICAO Long-Term Vision for International Air Transport Liberalization;

b) the on-going work on the development of a convention on foreign investment in airlines; and

c) the consideration of the future development of multilateral agreements on market access and air cargo services.

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Appendix A

Responding States by Region

Africa Asia and Pacific Europe Latin America and the Caribbean Middle East North America Benin Australia Austria Argentina Bahrain Canada Democratic Republic of the Congo Cambodia Azerbaijan Brazil Kuwait United States Equatorial Guinea China Belgium Chile Qatar

Ghana Japan Cyprus Costa Rica United Arab Emirates Morocco Kyrgyzstan Czechia Dominican Republic

Namibia Myanmar Georgia El Salvador Nigeria Pakistan Hungary Guyana Seychelles Philippines Iceland Mexico Uganda Singapore Ireland Nicaragua

Thailand Italy Paraguay

Luxembourg Uruguay

North Macedonia Venezuela (Bolivarian Republic of)

Poland

Portugal

Spain

Switzerland

Turkey

Ukraine

— END —