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Doc 9626

Approved by the Secretary Generaland published under his authority

Second Edition -2004

International Civil Aviation Organization

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The main purpose of this Manual on the Regulation of nter-national Air Transport s to meet an ever-increasingneed fora comprehensiveand objective source of information aboutthe many facets of this dynamic activity. This need was fore-seen by the ICAO Assembly which, by Resolution A24-11,directed the preparation and publication of this manual.

of definitions and explanations n a logical order of presen-tation derived from the topic itself.

Regulation is the giving of authoritative direction tobring about and maintain a desired degree of orde1: Allregulation involves regulatory process, various patterns ofactivity by people interacting to establish and maintain somedesired result for the subject or entities being regulated.Similarly, all regulation involves regulatory structure, i.e.the organizations or other entities involved and the legalframework (such as licences, regulations and agreements).Finally, all regulation involves regulatory content, theparticular subjects being regulated (such as market access,pricing and capacity).

The need for and expected usefulnessof this manual isnot confined to any particular State or category of States,whether small or large,whether least developed,developing,or having developed economies. Rather, t was prepared tomeet he needs of all ICAO Contracting States.

The air transport authorities of these States may wellbecome the most frequent users of this manual. Yet manyothers in these States may also find it very useful. Inter-national air transport evokes considerable nterest of manypeople: those associated with airlines; airports andcommunities seeking new air services;usersof air transport;air carrier labour; aircraft manufacturers; certain inter-national organizations; people involved with aviationfinancing, tourism development and trade; people inacademia and the communications media; and, at times,members of the general public as well. This manual isintended to also meet the needs of and be useful to thesebroader constituencieswithin ICAO Contracting States and,in so doing, to increase ts value to air transport authoritieswho interact with such constituencies.

The process and structure of international air transportregulation have three distinct venues -national, bilateraland multilateral; therefore, each venue has been assignedaseparatepart in this manual, .e. Parts 1, 2, and 3, respect-ively. Regulatory content opics, which Statesdeal with in allthree venues, are in Part 4. General terminology, i.e. thatwhich is common or supplemental o all parts of this manual,forms Part 5. Appendicescontain certain eferencematerials.

This manual s designed o be "user friendly" and to servethree distinct functions. First, it can be used as a dictionaryof international air transport terms: each erm listed in theIndex has a definition or an explanation on the page indi-cated.On that page, he term is highlighted in bold italic andits definition or explanation s presented n italics.s international air transport developed and became more

complex over the past half century,so too has ts regulation.Also, much new terminology evolved, often without widelyaccepted definitions (or with conflicting ones) and some-times with more than one term applied to the same subject.Thus the approach aken in the preparation of this manualhas been to provide clear and adequate explanations andguidance in a well ordered context. Each relatively shortchapter s, in effect, a narrative composed argely of a series

Second, t can be used as an encyclopedia. Each broadregulatory topic has its own chapter or section of a chapterin the manual, written to compress essential acts into oneor a few pages.The Table of Contents assists he reader todetermine he location of material on broader opics (e.g. thebilateral regulatory process, raffic rights, etc., eachofwhichmay involve many related definitions and explanations).

(iii)

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(iv) Manual on the Regulation of International Air TransportThird, this manual as a whole canbe useful as a textbook

for academic or other educational and training purposes.changes n the last ten years. This second edition has beenupdated and expanded o take account of the developmentsin international air transport and its regulation since 1996when the manual was first published.he scope of the manual is limited to the economic

aspects of international air transport regulation asdistinguished from the technical aspects thereof such asthose involving navigation, safety and security. Neverthe-less, hese other areasof regulation are not totally separablefrom economic regulation and can affect such matters asairline licensing, airport accessand the structure of agreedroutes. Although air transport regulators sometimes alsoregulate commercial non-transport operations,suchas aerialcrop dusting and surveying, as well as non-commercialflying, such as overflight and landing by private, militaryand State aircraft, both topics are outside the scope of thismanual. The term "aviation" is often used ncorrectly in lieuof the term "air transport". While air transport is morespecific, referring to those aspects elated to the carriage byair (usually commercial air transport), aviation is genericand includes far more topics such as military, state andprivate flying, aircraft manufacturing, air navigation, non-commercial transport and specialty air services.

This edition includes many new topics (e.g. State aids,competition laws, airline alliances, franchising, aircraftleasing, passenger rights, and privatization of airports),which are ernerging issues drawing increasing regulatoryattention. A number of new air transport terms anddefinitions have been added, ncluding many that were non-existent when the first edition was published (e.g. mega-alliance, e-cornmence, B2B, etc.). Additionally, newwebsites and e-mail addresses primarily of air transport-related international organizations and entities) have beenadded,enabling computer-equipped eaders o vastly expandtheir knowledge base.

The updating of established topics, as well as theaddition of new infonnation, adds significantly to themanual's value as a user-friendly tool for those who areinterested in knowing more about he regulatory aspectsofinternational air transport.

This manual both complementsand supplements CAODoc 9587 -Policy and GuidanceMaterial on the EconomicRegulation of International Air Transport, which is acompendiumof all the formal policies and guidance adoptedby ICAO in this field (suchas Assembly resolutions, Councildecisions, and conclusions and recommendations of airtransport conferences).

WHAT IS NEW INTHE SECOND EDITION

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

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TABLE OF CONTENTSPage

Part 1 -NATIONAL REGULATION 2.2 Structure f BilateralRegulation.2.2-].0 Introduction o NationalRegulation.2.2-2.1 Process f NationalRegulation.

-Basic DocumentTypes ..:.-Typical Provisions of Bilateral Air

Transport (Services) Agreements.Types of Bilateral Agreements on Subjects

Closely Related to Air Transport. 2.2-41.1-21.1-3

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

-Comity and Reciprocity.

2.3 Key Issues of Bilateral Regulatory ProcessandStructure

,2 Structure of National Regulation. 1.2-11.2-11.2-2The OrganizationalComponentThe Legal Component. 2.3-3

2.3-41.3 Key Issues of National Regulatory ProcessandStructure 1.3-1 2.3-52.3-6

-Balancing Benefits in a LiberalizingEnvironmentShortcomings of Bilateral Regulatory

Structure.Bilateral Relations Involving Groupsof States.Application of Competition Laws to

AirTransportEffects of State Aids and Subsidies. .The Relationship Between Air TransportRegulators and Interested Parties.he Optimum LQcation of the

International Air Transport RegulatoryFunction.

2.4 Types of International Air ServicesNegotiations 2.4-1

3-2Part 3 -MULTILATERAL REGULATION

Part 2 -BILATERAL REGULATION 3.0 Introduction o Multilateral Regulation. 3.0-12.0 Introduction o BilateralRegulation. -A Brief History of the Multilateral

Regulation of InternationalAirTransportEvolution of the Bilateral RegulationofInternationalAir Services. 3.0-22.0-]

Process f Multilateral Regulation. 3.1-]2.1-1.1 Process f BilateralRegulation.3.1-1

2.1-] 3.1-33.1-3

-Fonnal Multilateral Meetings.Process within Fonnal International

OrganizationsThe Multilateral Treaty Process. ...

2.1-4 3.2 Structureof Multilateral Regulation.2.1-5

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

Meetings and Documents.Consultations and Negotiations: Strategic

and Tactical Considerations.Conclusion, Implementation, Management,

Dispute Resolution, Amendment and(Exceptionally) Termination ofan Agreement

-Basic Elements of the OrganizationalComponentBasic Terminology of the Legal

Component.1-7 3.2-2

(v)

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(vi) Manual on the Regulation of International Air TransporlPage

3.2-3 3.8-13.8-13.8-23.8-33.2-43.2-53.2-5

-Main Components of the lATAOrganizational Stnicture.The lATA Traffic Conference Structure.

~ Tariff Coordination Process.Trade Association Activities.

The Chicago Conference Documents. .The Warsaw System and the MontrealConventionofI999ther Air Law Instruments.egional Multilateral Agreements. ...

3.3 Key ssues f Multilateral RegulatoryProcess nd Structure. 3.9 Non-governmentalrganizations. 3.9-13.9-2~ Air Carrier Organizations..- Other Aviation Organizations. ...-Other Organizations Interested in

AirTransport3.3-2 3.9-33.3-3 Part 4 -REGULATORY CONTENT

Why the Multilateral Approach?ossible Processes in the Quest for a

NewMultilateralismhe Likely Generic Structural Elements

of a New Multilateral Air TransportAgreement.he General Agreement on Trade in

Services (GATS) and its Air TransportAnnex. 4.0 Introduction to Regulatory Content 4.0-13.3-44.1 Basic Market Access. 4.1-13.4 InternationalCivil AviationOrganization ICAO) 3.4-1 4.1-24.1-54.1-8.4-13.4-33.4-4

-RouteRightsOperational Rights.Traffic RightsMarket Access as Affected by the

So-called "Sixth Freedom".

-Policy Development Bodies.Air Transport BureauICAO Policy, Guidance and Infomlation.

4.1-123.5 Worldwide Intergovernmental

Organizations 4.2 Air Carrier Capacity 4.2-]-Capacity Regulationby Governments-Capacity as Viewed by Air Carriers. 4.2-3.5-]3.5-2 4.3-1

Organs of the United Nations.pecialized Agencies of the

United Nationsther Worldwide Intergovernmental

Organizations

4.3 Air Carrier TarilTs3.5-2

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

-Methods for Regulating Tariffs. ...-Key Tariff Issues

4.3-14.3-14:3-24.3-64.3-83.6 Regional ntergovernmental ivilAviationOrganizations. 3.6-1

3.6-13.6-13.6-23.6-24.4-1

-AfricaEuropeLatin America and the Caribbean.

-MiddleEast4.4 AirCarrierOwnership

4.4-14.4-14.4-24.4-34.4-3

3.7 Regional and Trans-regionalIntergovernmental Organizations andTradeAreas

-The Discretionary Criteria.Use of the CriteriaSomeExceptionsForeign Investment in Air Carriers

-KeyIssues

4.5 AirCargo3.7-63.7-64.5-1Regional IntergovernmentalOrganizationsonnal Trans-regional Groups.

Imonnal Trans-regional Groups -Distinct Features f Air Cargo-Regulation of Air Cargo. 4.5-14.5-13.8 InternationalAir 1ransportAssociation lATA) 3.8-1 4.6 Non-scheduledir Services. 4.6-1

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4.10 Airport-relatedMatters. 4.10-1'+.0-1

4.10-14.10-24.10-2

4.6-]

-Characteristics of Non-scheduledAir Services.Kinds of International Non-scheduledAir Services.Regulation of Non-scheduledAir Services.

-Ground Handling.Slot Allocation.Privatization of Airports

Part 5 -GENERAL TERMINOLOGY.7 Airline Commercial ctivities. 4.7-]5.0 Introduction o GeneralTerminology

4.7-2 5.1 AirCarriers4.7-2 5.2 Aircraft

-Currency Conversion and Remittanceof EarningsEmployment of Non-national Personnel

-Sale and Marketing of InternationalAirTransportAirline Product Distribution andElectronic Commerce.Aircraft Leasing 4.7-34.7-5 5.3 AirServices

5.4 Airports4.8 Airline Cooperative ctivities.-Airline Alliances. ..-Airline Codesharing-Airline Franchising.

4.8-14.8-24.8-4 AI-IA2-1A3-1.3.4.4.9 AirlinePassengers 4.9-1Fonnats for Tariff Filings.ATA Currency Conversion System.

Prorating.uidance Material for Users of

AirTransport A4-].9-14.9-44.9-54.9-6-PassengerRightsAirline's Condition of Contract/Carriage

-Unruly or Disruptive Passengers.Improperly Documented Passengers. ... INDEX