The Impact of EU Law on the Regulation of International Air Transportation

Martin Bartlik

• Publisher: Routledge
• Year: 2016
• Print ISBN: 9780754649519
• eBook ISBN: 9781351887953
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

On 5 November 2002, the European Court of Justice delivered its 'open-skies' judgment, a landmark decision which may be the beginning of a new era in the regulation of international air law. The consequences of this judgment may not only affect the European Union and its Member States; this book shows how it could change the future regulation of international aviation worldwide. The first part of this book describes the difficulties arising from the fact that the competence for the regulation of air transportation in Europe is divided between the EU and the Member States. This division of power will also affect the conclusion of air-service agreements made with countries outside of Europe. In the second part of the book, the author examines a subject that was not part of the 'open-skies' judgment, but which he believes will become a problematic consequence: the distribution of air-traffic rights within the European Union.

PART ONE
The Treaty-making Power to Conclude Air Service Agreements

Chapter 1
Introduction to International Air Law

Before the question is discussed, whether the European Community or the Member States have the treaty-making power to conclude air service agreement, for a better understanding a short overview of the relevant international public air law shall be given first. International public air law is dominated by the principle of sovereignty over the airspace above a State’s territory. This principle is not only explicitly laid down in Articles 1 and 2 of the Chicago Convention,¹ but is also part of international customary law. It is the basis of all other regulations in international public air law.² As a result of the application of the principle of sovereignty, every state decides autonomously to which extent, by whom and when its airspace is used. The permission to use a state’s airspace is formally called ‘air traffic right,’ but commonly also called ‘freedom’.³ Depending on the extent of the possibilities to use a state’s airspace, one can distinguish between eight freedoms in international air law:⁴

• The first freedom gives the right to overfly the territory of a state without any landings.⁵

• The second freedom grants the privilege to land in a foreign country for technical reasons.⁶

• The third freedom gives the right to fly passengers, mail and cargo from the registration state of the air carrier to a foreign state.⁷

• The fourth freedom correlates with the third freedom and grants the right to fly passengers, mail and cargo from a foreign state to the registration state of the air carrier.⁸

• The fifth freedom extends the third and fourth freedom and grants the right to fly passengers, mail and cargo between two foreign states, as long as the origin or the final destination of such a chain of air transportation services is in the registration state of the air carrier.⁹

• The sixth freedom is not an explicitly granted right, but describes a combination of the third and fourth freedom, independently granted to a state by two other states. The sixth freedom enables an air carrier to offer air transportation services between two foreign countries by making a stop-over in the home state of that air carrier. Thereby an airline makes use of the fourth freedom by country A and flies passengers, mail or cargo from country A into its home state, where it makes a stop-over, and continues the flight with the passengers, mail or cargo from country A to country B, thereby making use of the third freedom granted by country B.¹⁰ The sixth freedom is usually used to establish a hub-and-spoke system, but can be also applied, when necessary fifth freedom rights are not granted by two foreign states.

• The seventh freedom grants a right to operate between two foreign countries, which are both not the registration state of the operating air carrier. Unlike fifth freedom traffic, there is no link between the flights of the air carrier and its home country. The aircraft used to offer seventh freedom traffic is permanently stationed in one of the two foreign countries concerned.¹¹

• The eighth freedom, also called cabotage, grants a right to provide air transportation services within one single country.¹²

The first and second freedom are also called ‘technical freedoms’, while the remaining commercially more important air traffic rights are referred to as ‘economic freedoms’. In the recent past, in particular the fifth freedom has become quite important as it allows to combine several flight services and thus to use the capacities of aircrafts more efficiently. From a commercial perspective, this freedom may be even the most important freedom. If, for example, on flights between Australia and Europe an air carrier can make only use of the third and fourth freedom, it is limited to offer air transportation services between two destinations only, for example Sydney/Paris or Sydney/Frankfurt. If the same airline is also granted the fifth freedom, it can combine these flights to one single flight, for example Sydney/Frankfurt/Paris. At the same time it will be enabled to offer purely intra-Community flights. Not only will the airline safe one aircraft that it can use for different flight connections, it will also increase its load factor on the route between Australia and Europe. The fifth freedom thus allows for a more efficient and profitable use of an airlines fleet. Taking into account the increasing competition in the air transportation sector and the reduction of state aids as a result of the privatizations of airlines, the success and survival of an airline will depend very much on the efficiency and profitability it can achieve. The problem of the fifth freedom is that it must be granted by all countries that would be part of such a chain of flights. In the above mentioned example for an Australian air carrier to operate on the route Sydney/Frankfurt/Paris, Germany and France would have to grant the fifth freedom to Australia. If this fails, an airline might be able to bypass this disadvantage and still be able to increase its efficiency and profitability by combining its available third and fourth freedom, which leads to the above mentioned sixth freedom. The idea is that an airline coming from a third state and before continuing flying to another country, makes a stop-over in its own country. As a result it can transport passengers and cargo between two foreign countries. The disadvantage of this model compared to the fifth freedom is that an airline must always make a stop-over in its own country. Whether the sixth freedom can be applicable depends therefore to a large extent on the geographical location of a country. If, for example, Germany, France and Australia do not grant each other the fifth freedom, a German air carrier can still fly passengers, mail and cargo from Paris to Sydney, if it makes a stop-over in Frankfurt. An Australian air carrier, on the other hand, would have difficulties in selling tickets for a flight Paris/Frankfurt via Sydney.

The granting of the different freedoms depends very much on the type of the air transportation services offered. In international air transportation a distinction is made between commercial and non-commercial flights. In the following, non-commercial flights, due to their limited significance for this work, will not be further taken into regard. As far as commercial aviation is concerned, another distinction is made between non-scheduled international air services and scheduled international air services. Scheduled international air services are defined pursuant to Articles 5, 6, 96(a) Chicago Convention as ‘public and planned air transportation of passengers, cargo and mail’. When it comes to non-scheduled air transportation, international law does not provide for any regulation and national laws contain only a few provisions in respect of this mode of transportation.¹³ A comprehensive and coherent set of regulations comparable to the one existing for schedule air transportation does not exist.¹⁴ It lacks, in particular, a positive definition of what is to be understood as non-scheduled air transportation. This is because non-scheduled air transportation covers all kinds of different services, for example taxi flights, sightseeing flights, medical flights, advertisement flights or flights as part of holiday packages.¹⁵ Therefore, non-scheduled flights are only negatively defined as not being scheduled air transportation.¹⁶ The difference between both modes of transportation arises from the two features ‘planned’ and ‘public’ contained in the definition of scheduled air services. Air transportation services are planned, if the flights are repeated in a pre-determined order and the users can rely on the existence of a regular transportation service.¹⁷ While this is the case with scheduled flights, non-scheduled air transportation services are undertaken only, if there is an actual demand.¹⁸ The second feature of scheduled air transportation services distinguishing it from non-scheduled flights is that the flights must be made available to the general public, which means everybody must have the opportunity to make use of the air transportation services offered. Of course, not everybody asking for a seat on a flight must be also served, as capacities are limited. Still, a customer can be only refused for objective reasons that are equally valid for everybody, but not based on subjective criteria.¹⁹ Unlike non-scheduled airlines, air carriers offering scheduled flights are obliged to contract. Non-scheduled flight services, on the other hand, are not available to the general public, but only to a limited group of persons characterized by specific subjective criteria.²⁰ Non-scheduled airlines are also not burdened with an obligation to contract.²¹

Air traffic rights, which are, as indicated above, indispensable for the carrying out of international air transportation services, are granted partly in multilateral treaties and partly in bilateral agreements. The two most important multilateral treaties in this respect were concluded in 1944 and are the Chicago Convention and the Transit Agreement. According to Article 5(1) Chicago Convention the signatory states grant the first and second freedom to all air carriers engaged in international non-scheduled air transportation. This category includes commercial non-scheduled air transportation and private, non-commercial traffic. Flights with state aircrafts do not fall under this definition as pursuant to Article 3 a they are completely excluded from the scope of the Chicago Convention. The more important economic freedoms are also granted to non-scheduled air carriers pursuant to Article 5(2) Chicago Convention, but additional conditions up to total restrictions can be imposed by every single state on the exercise of these freedoms. Air carriers offering schedules international air transportation services require pursuant to Article 6 Chicago Convention a particular permission for any kind of use of a state’s airspace. This regulation contained in Article 6 Chicago Convention is considered as the basis for the conclusion of numerous bilateral agreements, in which states regulated the details of international scheduled air transportation that is to be conducted between their territories.²² These agreements are the factual as well as the legal basis for international air transportation. Apart from the exchange of air traffic rights, these agreements contain various other clauses that are important for international aviation. It can include provisions on how many air carriers each country is allowed to designate to make use of the air traffic rights that are granted, which aircrafts shall be used and thus how much capacity is offered in a market, how often and when exactly flights have to take place (frequency) or which fares airlines are allowed to charge.²³ The content of air service agreements can vary in every single case and depends very much on the states involved.²⁴ Air service agreements can be very restrictive and contain detailed regulations, leaving the airlines with only few possibilities to structure their operations. such an agreement will allow the designation of only one or very few air carriers, the frequency and the type of aircrafts to be used will be pre-determined and the fares to be charged will be also fixed. The reason for such an approach is the desire of a state to protect its national airlines from too much competition.²⁵ However, since the end of the 1970s a global trend to more liberalization in commercial aviation has set in, when the United states of America decided to deregulate not only their domestic air transportation sector, but also to push for more liberalization of international air transportation.²⁶ According to this approach, economic questions should no...

Table of contents

• Cover
• Half Title
• Dedication
• Title Page
• Copyright Page
• Table of Contents
• Preface
• Acknowledgements
• Abbreviations
• Introduction
• Part One The Treaty-Making Power to Conclude Air Service Agreements
• Part Two The Distribution of Air Traffic Rights
• Bibliography
• Index