ICAO's Role in Facilitating Air Transport Liberalization  

Presented by the ICAO Secretariat
1. Introduction
 
     1.1      This paper describes the role of the International Civil Aviation Organization (ICAO) in the regulation of international air transport and highlights how it will pursue the process of further liberalization.
 
2. The Role of ICAO in Economic Regulation 
 
     2.1      Pursuant to its constitutional role and responsibilities as laid down in the Chicago Convention, ICAO's activity in the economic regulatory field has intensified in recent years. ICAO, through worldwide conferences and expert panels, has developed comprehensive guidance material and model clauses for international air transport regulation which have helped States in adapting to rapid changes in the regulatory environment and brought a certain harmonization to regulatory policies.
 
     2.2      Existing ICAO policy guidance includes certain key aspects of market access such as ensuring participation and fair competition in international air transport, regulation of capacity and tariffs, broadened criteria for airline ownership and control, leasing of aircraft, computer reservation systems, and airline commercial matters including competitive ground handling arrangements (see S/C/W/63 presented by the ICAO Secretariat on 23 October 1998). Following a worldwide conference in June this year ICAO has revised its policies on the economic regulation of airport and air navigation services to reflect a more commercial approach while guarding against potential abuse of monopoly, and has prepared guidance on infrastructure capacity management and slot allocation. ICAO's guidance is used by many of ICAO's 185 Contracting States in formulating national policies and in their bilateral and regional relations.
 
     2.3      Over the years, ICAO's policies have been reviewed and developed at the highest level, by its Assembly, which has recognized the particular characteristics of international air transport and has emphasized ICAO's primary role in the development of policy guidance giving due regard to safety and security and to the participation of all Contracting States. These policies have been emphasized by the ICAO Council in its Resolution on Trade in Services Negotiations adopted on 25 November 1999 and distributed to both the WTO's Third Ministerial Conference in Seattle and the Council for Trade in Services.
 
     2.4      Air transport has been undergoing a major transformation in respect of marketplace and regulatory approach which has led to a growing convergence of economic, safety, security, liability and environmental issues. ICAO is unquestionably recognized as the body for setting global safety, security and environmental standards. The mandate given to ICAO under the 1997 Kyoto Protocol in relation to greenhouse gas emissions, the adoption of the 1999 Montreal Convention on liability, and increasing concerns regarding the safety implications of "virtual" airlines and of outsourcing ground handling, are all illustrations of the close linkage amongst regulatory issues in civil aviation and of the need to keep regulatory reform related to civil aviation under the same global umbrella.
 
3. ICAO's Current Work in Facilitating Regulatory Change 
 
     3.1      ICAO is intensifying its efforts to assure universal adherence to the International Air Services Transit Agreement through which overflight freedoms are granted multilaterally. This agreement is currently ratified by 118 Contracting States, up by 17 States in the past five years.
 
     3.2      ICAO is presently preparing a broad programme dealing with a wide variety of aspects of air transport liberalization including: a comprehensive study on ownership and control (encompassing inter alia right of establishment, inward investment, management, leasing, alliances, code-sharing, franchising and safety aspects - a survey of States' policies and practices has already been initiated); a re-examination of market access issues with emphasis on traffic rights, designation of carriers, capacity, and airport access; a review of earlier work on tariff regulation, product distribution, conditions of carriage and competition law; and an analysis of safeguard measures for the sustainability of air carriers and to ensure the participation of developing countries. Building on existing material and recent experience, the ICAO Secretariat is also developing a template air services agreement for liberalization, including safety and security as well as market access elements and safeguards, for selective or comprehensive, optional use by States, either bilaterally or multilaterally; this should inter alia facilitate harmonized evolution and extension of agreements.
 
     3.3      The ICAO Council is currently considering the convening of a worldwide meeting of ICAO Contracting States to address issues and policy options in the field of air transport regulation.
 
4. Relations with International Organizations Dealing with Aviation
 
     4.1      ICAO has worked very closely with the WTO Secretariat to provide the necessary input in preparation for the current review exercise by the Council for Trade in Services. In the first session of this review which took place in September, ICAO presented a brief overview of the current trends in economic regulation and the progress made by States, on a bilateral or regional level, in opening up the air transport sector. ICAO is willing to share its expertise and participate actively in the WTO's future work on the classification of international air transport activities for the purposes of negotiation or application of the GATS to air transport.
 
     4.2      ICAO will continue to monitor actively air transport regulatory developments worldwide and to participate as needed in other major fora where international air transport is being discussed, with the aims of promoting avoidance of conflict of regulatory regimes and potential duplication of work, and of ensuring that regulatory reform is pursued in a safe and orderly manner and to the benefit of all ICAO Contracting States and the community at large.
 
5. Conclusion 
 
     5.1      ICAO will continue to play an active role in its pursuit of safeguarded liberalization of international air transport. ICAO's paramount objective is to ensure that safety is not compromised by economic considerations and consequently that safety and economic regulation are not treated in isolation.