Doc 9626

Approved by the Secretary General and published under his authority

Second

Edition

-2004

International

Civil Aviation

Organization

The main purpose of this Manual on the Regulation of International Air Transportis to meetan ever-increasingneed for a comprehensiveand objective source of information about the many facets of this dynamic activity. This needwas foreseen by the ICAO Assembly which, by Resolution A24-11, directed the preparation and publication of this manual. The need for and expectedusefulnessof this manual is not confined to any particular State or category of States, whether small or large,whether least developed,developing, or having developed economies. Rather, it was prepared to meet the needs of all ICAO Contracting States. The air transport authorities of these States may well become the most frequent users of this manual. Yet many others in these States may also find it very useful. International air transport evokes considerable interest of many people: those associated with airlines; airports and communities seeking new air services;usersof air transport; air carrier labour; aircraft manufacturers; certain international organizations; people involved with aviation financing, tourism development and trade; people in academia and the communications media; and, at times, members of the general public as well. This manual is intended to also meet the needs of and be useful to these broader constituencieswithin ICAO Contracting Statesand, in so doing, to increaseits value to air transport authorities who interact with such constituencies.

of definitions and explanations in a logical order of presentation derived from the topic itself. Regulation is the giving of authoritative direction to bring about and maintain a desired degree of orde1: All regulation involves regulatory process, various patterns of activity by people interacting to establishand maintain some desired result for the subject or entities being regulated. Similarly, all regulation involves regulatory structure, i.e. the organizations or other entities involved and the legal framework (such as licences, regulations and agreements). Finally, all regulation involves regulatory content, the particular subjects being regulated (such as market access, pricing and capacity). The process and structure of international air transport regulation have three distinct venues -national, bilateral and multilateral; therefore, each venue has been assigneda separatepart in this manual, i.e. Parts 1, 2, and 3, respectively. Regulatory contenttopics, which Statesdeal with in all three venues, are in Part 4. General terminology, i.e. that which is common or supplemental all parts of this manual, to forms Part 5. Appendicescontain certainreferencematerials.

As international air transport developed and became more complex over the past half century,so too has its regulation. Also, much new terminology evolved, often without widely accepted definitions (or with conflicting ones) and sometimes with more than one term applied to the same subject. Thus the approachtaken in the preparation of this manual has been to provide clear and adequateexplanations and guidance in a well ordered context. Each relatively short chapter is, in effect, a narrative composedlargely of a series

This manual is designedto be "user friendly" and to serve three distinct functions. First, it can be used as a dictionary of international air transport terms: each term listed in the Index has a definition or an explanation on the page indicated.On that page,the term is highlighted in bold italic and its definition or explanation is presented in italics. Second,it can be used as an encyclopedia. Each broad regulatory topic has its own chapter or section of a chapter in the manual, written to compress essentialfacts into one or a few pages.The Table of Contents assiststhe reader to determinethe location of material on broadertopics (e.g. the bilateral regulatory process,traffic rights, etc., eachofwhich may involve many related definitions and explanations).

(iii)

FOREWORD

(iv) Third, this manual as a whole canbe useful as a textbook for academic or other educational and training purposes. The scope of the manual is limited to the economic aspects of international air transport regulation as distinguished from the technical aspects thereof such as those involving navigation, safety and security. Nevertheless,these other areasof regulation are not totally separable from economic regulation and can affect such matters as airline licensing, airport accessand the structure of agreed routes. Although air transport regulators sometimes also regulate commercial non-transport operations,suchas aerial crop dusting and surveying, as well as non-commercial flying, such as overflight and landing by private, military and State aircraft, both topics are outside the scope of this manual. The term "aviation" is often used incorrectly in lieu of the term "air transport". While air transport is more specific,'referring to those aspectsrelated to the carriage by air (usually commercial air transport), aviation is generic and includes far more topics such as military, state and private flying, aircraft manufacturing, air navigation, noncommercial transport and specialty air services.

Manual on the Regulation of International Air Transport changes in the last ten years. This second edition has been updated and expandedto take account of the developments in international air transport and its regulation since 1996 when the manual was first published. This edition includes many new topics (e.g. State aids, competition laws, airline alliances, franchising, aircraft leasing, passenger rights, and privatization of airports), which are ernerging issues drawing increasing regulatory attention. A number of new air transport terms and definitions have been added,including many that were nonexistent when the first edition was published (e.g. megaalliance, e-cornmence, B2B, etc.). Additionally, new websites and e-mail addresses(primarily of air transportrelated international organizations and entities) have been added,enabling computer-equipped readersto vastly expand their knowledge base. The updating of established topics, as well as the addition of new infonnation, adds significantly to the manual's value as a user-friendly tool for those who are interested in knowing more about the regulatory aspectsof international air transport. This manual both complementsand supplementsICAO Doc 9587-Policy and GuidanceMaterial on the Economic Regulation of International Air Transport, which is a compendiumof all the formal policies and guidanceadopted by ICAO in this field (suchas Assembly resolutions, Council decisions, and conclusions and recommendations of air transport conferences).

WHAT IS NEW IN THE SECOND EDITION

Along with the trend of globalizationand liberalization, internationalair transporthas also undergone significant

TABLE OF CONTENTS

Page Part 1 -NATIONAL REGULATION

2.2 Structure BilateralRegulation. of

-Basic
-Typical

1.0 Introductionto NationalRegulation. 1.1 Process NationalRegulation. of

-The Ad Licensing Legislative hoc Authorization Component. Component. Component

DocumentTypes
Provisions Bilateral (Services) of Bilateral Air on Agreements Agreements.

..:.
Subjects

2.2-]
2.2-2 2.2-4

-Types Transport of

Closely

Related

to

Air

Transport.

-Comity

and

Reciprocity.

1.1-2 1.1-3

2.3 Key Issues of Bilateral Regulatory Process andStructure

-Balancing -Shortcomings Environment Benefits of in a Liberalizing Bilateral Regulatory

,2 Structure of National Regulation. The OrganizationalComponent The Legal Component. 1.3 Key Issues of National Regulatory Process andStructure
The Relationship and Between LQcation Interested Air of Parties. the Transport

1.2-1
1.2-1

1.2-2

-Bilateral Structure. Relations

Involving

Groups

2.3-3 2.3-4
.

-Application of States.

of

Competition

Laws

to

1.3-1
-Effects AirTransport State of Aids and Subsidies.

2.3-5 2.3-6

The Regulators Optimum

International Function.

Air

Transport

Regulatory

2.4 Types of International Air Services Negotiations

2.4-1

3-2
Part 3 -MULTILATERAL REGULATION

Part 2 -BILATERAL

REGULATION

3.0 Introductionto Multilateral Regulation.

-A Brief History of the Multilateral Regulation of International

3.0-1

2.0 Introductionto BilateralRegulation.

-Evolution of the Bilateral Regulationof InternationalAir Services.

2.0-]

AirTransport

3.0-2

2.1 Process BilateralRegulation. of

-Initiation of and and Preparation Negotiations: for a Fonnal Types of

2.1-1
2.1-] 2.1-4

Process Multilateral Regulation. of

-Process -Fonnal Multilateral Fonnal Meetings. within International

3.1-]
3.1-1

-Consultations BilateraiConsultation

-The

Organizations Multilateral

Treaty

Process.

...

3.1-3 3.1-3

-Consultations Meetings

and

and Negotiations: Documents.

Strategic

3.2 Structureof Multilateral Regulation.

-Conclusion, and Tactical Implementation, Considerations. Management,

2.1-5
-Basic Elements of the Organizational of the Legal -Basic Component Terminology

Dispute

Resolution,

Amendment Termination of

and

(Exceptionally) an Agreement

2.1-7

Component

3.2-2

(v)

3.2-1 3.2-1 3.1 2.0-1 1.3-1 2.3-1 2.3-1 1.1-11.1-1 ,0-1 2.2-1 Page

(vi)

Manual on the Regulation of International Air Transporl

Page
The The Chicago Warsaw Conference System and Documents. the Montreal ... .

3.2-3
3.2-4

-Main -The

Components Organizational lATA

of

the

lATA Structure.

Traffic Stnicture. Conference

3.8-1
3.8-1 3.8-2 3.8-3

Regional Other ConventionofI999 Multilateral Instruments. Agreements. Air Law

3.2-5 3.2-5 3.3 Key Issues Multilateral Regulatory of Process Structure. and
Possible the Why Processes Multilateral in Approach? the Quest for a

-Trade Tariff ~

Coordination Association

Activities. Process.

3.9 Non-governmental Organizations.

l.~ Air Other Carrier Aviation Organizations. Organizations. ...

3.9-1 3.9-2 3.9-3

-Other The NewMultilateralism Generic Likely Structural Elements

Organizations AirTransport

Interested

in

3.3-2 3.3-3 3.3-4

of

New

Multilateral Agreement

Air on

Transport Trade in

The Agreement. General

Part 4 -REGULATORY

CONTENT

Services

(GATS)

and

its

Air

Transport

4.0 Introduction to Regulatory Content 4.1 Basic Market Access.

4.0-1 4.1-1

Annex. 3.4 InternationalCivil Aviation Organization(ICAO)

-ICAO -Air -Policy Transport Policy, Development Guidance Bureau Bodies.and Infomlation.

3.4-1
3.4-1

-Traffic -RouteRights -Market -Operational

Rights Access Rights.as

Affected

by

the

3.4-3 3.4-4
3.5 Worldwide Intergovernmental Organizations
Specialized Organs of theAgencies United Nations. of the

4.1-2 4.1-5 4.1-8

4.1-12

So-called

"Sixth

Freedom".

4.2 Air Carrier Capacity 3.5-] 3.5-2 3.5-2

-Types -Definition -Why States and of Regulate Characteristics Tariff. Tariffs. of Tariffs.

4.2-] 4.2-3

-Capacity -Capacity

Regulationby Governments as Viewed by Air Carriers.

Other United

Worldwide Nations

Intergovernmental

4.3 Air Carrier TarilTs

4.3-1
4.3-1 4.3-1

Organizations

3.6 Regional Intergovernmental Civil AviationOrganizations.

-Latin -Europe -Africa America and the Caribbean.

3.6-1
-Methods for Tariff Regulating Issues Tariffs. ...

4:3-2
-Key

-MiddleEast

3.6-1 3.6-1 3.6-2 3.6-2

4.3-6 4.3-8

4.4 AirCarrierOwnership
-Foreign -SomeExceptions -Use -The of Discretionary the Investment Criteria Criteria. in Air Carriers

4.4-1
4.4-1 4.4-1 4.4-2 4.4-3 4.4-3

3.7 Regional and Trans-regional Intergovernmental Organizations and

TradeAreas
-KeyIssues

Regional

Intergovernmental Groups. Groups

Organizations Fonnal Trans-regional Imonnal Trans-regional

4.5 AirCargo

4.5-1
4.5-1 4.5-1 4.6-1

3.7-6 3.7-6 3.8-1

-Distinct Features Air Cargo of -Regulation of Air Cargo.

3.8 InternationalAir 1ransport Association (lATA)

4.6 Non-scheduled Services. Air

3.7-1 3.7-1 4.2-1 3.5-1 3.3-1 3.9-1

Table of Contents

(vii)

-Characteristics -Kinds Air

of Non-scheduled Non-scheduled

4.10 Airport-relatedMatters.
'+.0-1
-Privatization -Slot -Ground Allocation. Handling. of Airports

4.10-1
4.10-1

Services. of International

-Regulation Services.of Non-scheduled Air

4.6-]

4.10-2 4.10-2
Part 5 -GENERAL TERMINOLOGY

Air Services. 4.7 Airline Commercial Activities.

-Currency Conversion and Remittance Personnel

4.7-]

5.0 Introductionto General Terminology

4.7-2 5.1 AirCarriers 5.2 Aircraft

-Employment of Earnings -Sale

of Non-national

and Marketing

of International and

-Airline AirTransport Product Distribution -Aircraft Electronic Leasing Commerce.

4.7-2 4.7-3 4.7-5

5.3 AirServices 5.4 Airports

4.8 Airline Cooperative Activities.

-Airline -Airline -Airline Alliances. .. Codesharing Franchising. 4.8-1 4.8-2 4.8-4

Fonnats lATA

Currency Tariff Conversion for Filings.

System.

4.9 AirlinePassengers
-Airline's -PassengerRights Condition of Contract/Carriage

4.9-1
4.9-1 4.9-4 4.9-5

2. 3.

AI-I A2-1A3-1

Prorating. Guidance

Material

for

Users

of

4.
AirTransport

A4-]

-Improperly -Unruly

or

Disruptive Documented

Passengers. Passengers.

...

4.9-6

INDEX

NDICES