Open Skies - Civil Transport Open Skies

Civil Transport Open Skies

The last twenty-five years have seen significant changes in airline regulation. The United States began pursuing Open Skies agreements in 1979, and, by 1982 it had signed twenty-three bilateral air service agreements worldwide, mainly with smaller nations. That was followed in the 1990s by agreements with individual European states.

A huge step was taken in 1992 when the Netherlands signed the first open skies agreement with the United States, in spite of objections posited by European Union authorities. The agreement gave both countries unrestricted landing rights on each others' soil. Normally landing rights are granted for a fixed number of flights per week to a fixed destination. Each adjustment takes a lot of negotiating, often between governments rather than between the companies involved. The United States subsequently granted antitrust immunity to the alliance between Northwest Airlines and KLM Royal Dutch Airlines which started in 1989 (when Northwest and KLM agreed to code sharing on a large scale) and which actually is the first large alliance still functioning. Other alliances would struggle for years to overcome transnational barriers or still do so.

In 2001 the United States signed the Multilateral Agreement on the Liberalization of International Air Transportation (MALIAT) with Brunei, Chile, New Zealand, and Singapore. The United States has enjoyed a powerful negotiating position but the European Commission, as a supranational body, negotiated with the United States government on a community Air Service Agreement. These negotiations led to the text of an agreement being initialed on 2 March 2007. Contending issues are:

• cabotage — opening up the hub and spoke networks on both sides of the Atlantic would be contentious;
• the U.S. rules on foreign ownership. These are partly designed to protect their own carriers but also to satisfy the U.S. military which maintains the Civil Reserve Air Fleet by drawing on commercial fleets for airlift during national emergencies. The airlines, as a quid pro quo, benefit through a priority over the carriage of military and government personnel.
• (tackling of) the tax-free position of EU-U.S. aviation.
• the provisions of the Fly America Act.
• there might also be problems in harmonising the framework of antitrust policy (e.g., to protect against predatory behavior).

The EU-U.S. Open Skies Agreement was amongst one of the most significant open skies agreements concluded in recent years, applying to civil aviation traffic between two of the world's three largest markets. The Asian market, considered one of the fastest growing, remains relatively regulated at present, although the phased introduction of the ASEAN open skies agreement covering ten countries in Southeast Asia from 2008 has prompted major Asian markets (including Japan, China and India) to consider similar initiatives.

The ASEAN Multilateral Agreement on Air Services and the ASEAN Multilateral Agreement on the Full Liberalisation of Air Freight Services which were simultaneously approved on May 20, 2009 in Manila, Philippines are multilateral air transport agreements among the ten-member Association of Southeast Asian Nations. These two agreements which took effect January 1, 2010, call for a calibrated and gradual implementation in each contracting state, to allow countries with less developed airline industry to cope up with more developed ones. It is part of the broader ASEAN Air Transport Integration and Liberalization Plan.