ICAO's Worldwide Air Transport Conference (Montreal, 1994), which examined the present and future regulation of international air transport, recommended that ICAO proceed with studies and develop recommendations on a number of important issues, including the development and refinement of a "safety net" arrangement, along with preventative measures to ensure safe and orderly development of international air transport.
ICAO's Air Transport Regulation Panel produced the following introductory explanatory note and recommendation, which were approved by the Council on 30 May 1997 for the guidance of and optional use by States:
The Conference had found the proposed "safety net" inadequate to ensure effective and sustained participation of all States in international air transport. The Panel therefore focused its efforts on developing participation measures which would exhibit some or all of the following characteristics:
- provide fair and equal opportunities for greater market access for air carriers;
- offer carriers equal opportunities while permitting levels of service among carriers to become and remain unequal, with service levels determined at least in part by traveller preference (i.e. competitive forces); and
- establish or maintain a floor level of participation for each State. (Each State will, in effect, define its minimum level of participation with each partner based on the degree of liberalization that it will accept, as well as number and type of participation measures and the types of regulatory controls it negotiates in the respective agreement.)
THE PANEL RECOMMENDS:
- that States which are moving toward the liberalization of international air services should consider using measures to ensure effective and sustained participation in international air transport; the following being an indicative list of potential measures:
- capacity - sharing capacity in terms of equal opportunity, to include matching a greater capacity of a competing airline or airlines; progressively allowing the traditional 50/50 exercise of capacity shares up to, for example, 70/30, in stages; allowing mutually agreed incremental capacity increases; using load factor or other general market criteria to trigger automatic increases in capacity; applying a system whereby an airline offering greater capacity may only increase this capacity by the same amount as an airline offering lesser capacity; allowing all-cargo capacity to be operated on the basis of forecasts of demand; setting seasonal capacity according to market forecasts and reassessing the appropriateness of the capacity so established after the fact based on the experience of the air carriers; allowing airlines to shift capacity between passenger and cargo operations; providing for exceptions to agreed capacity limits for new aircraft introduction and for seasonal service; treating codesharing differently than own-aircraft flights for purposes of capacity;
- tariffs - implementing flexible tariff systems to enhance fair and effective competition by allowing air carriers to respond to air transport markets; allowing tariff flexibility within pricing zones (recognizing that implementation is complicated); moving in stages from dual approval, to country of origin, to dual disapproval concepts; not regulating certain tariffs, such as cargo rates, non-scheduled (charter), premium and certain discount fares; allowing a fixed variation in fare levels;
- market access - increasing the number of airlines designated; moving from single to multiple designation; granting of multilateral 3rd, 4th and 5th freedom traffic rights in a regional arrangement; using forms of market access such as codesharing, alliances, wet-leasing of aircraft; providing a "head start" with respect to certain critical traffic points when market access restrictions are removed; having a protected start-up period for new entry; applying aircraft size restrictions only to regional services; allowing unilateral operation of airlines of foreign countries without any operation by national air carrier(s); removing restrictions on regional services; excluding cargo rights from all restrictions;
- other - facilitating nonscheduled flights for inbound tourists (subject to the national regulations of the receiving State); permitting non-reciprocal, extra-bilateral service (including cabotage and 5th freedom) to underserved cities or on underserved routes; phasing in more flexible regulation in key commercial areas in a coordinated fashion; assessing the economic results of bilateral agreements on a quantitative basis in view of market circumstances to enhance cooperation such as alliances between and among airlines serving the territory; and waiving the usual bilateral ownership and control provisions; and
- that ICAO should, drawing on the experience of States, keep the list of participation measures current and analyze, where possible, examples of their use by States.