Abstract
Air transport is a different animal from other aspects of trade, in that it is circumscribed by the need for airlines to obtain permission of the grantor State to obtain market access. In this context, how does one approach market access in the coming decades. At the most fundamental level, the advantages of free trade as would apply to air transport would be that it would encourage States to trade freely with their trading partners which would in turn help in the growth of the global economy; it would give the consumer a better choice of products and competition generated by free trade would bring down the price of the product. Arguments against free trade in air transport would be that globalization and liberalization will take jobs away from a State; the limit of imports would keep money in the State; free trade could be a threat to national security and a State could develop dependence on the expertise of other more advanced States. Free trade increases national wealth and promotes foreign investment, both of which are absent in the present structure of market access in many States.
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Notes
- 1.
Abeyratne (2002a), pp. 53–80.
- 2.
See Abeyratne (1999a), Chapter 7, Outsourcing and the Virtual Airline, pp. 115–126.
- 3.
- 4.
- 5.
Abeyratne (2003), pp. 3–37.
- 6.
Abeyratne (2002d), pp. 83–115.
- 7.
- 8.
Infra, Chap. 10, note 8 at 56.
- 9.
The EC Treaty, also called the Treaty of Rome, was concluded in 1957 to forge an even closer union among the people of Europe. See Goh (1997), p. 15.
- 10.
Case 167/73 Commission v. French Republic [1974] ECR359 at 370.
- 11.
See Adkins (1994), p. 81.
- 12.
Case T-51/89, Tetra Pak Rausing SA. v. Commission [1990] II E.C.R. 309, [1991] 4 C.M.L.R. 334 para 31.
- 13.
Case 85/76 Hoffman-La Roche & Co. A.G. v. Commission [1979] E.C.R. 461.
- 14.
Policy and Guidance Material on the Economic Regulation of International Air Transport, Doc 9587, Second Edition, 1999, Appendix 2 at A2-2. See also Manual on the Regulation of International Air Transport, Doc 9626 First Edition 1996, Appendix 5, Guidance Material for Users of Air Transport, at A5-1.
- 15.
These conditions are the result of an agreement reached on 11 February 1946 by the United States and the United Kingdom in Bermuda. For a clear analysis of the Bermuda Agreement see de Murias (1989), pp. 52–72.
- 16.
See generally, Abeyratne (1993), p. 3.
- 17.
Wassenbergh (1996), p. 80.
- 18.
The right to uplift or discharge passengers, mail and cargo in a country other than the grantor State.
- 19.
See Study on Preferential Measures for Developing Countries, ICAO Doc AT-WP/1789, 22/8/96 at A-7–A-9. For a more recent revision of guidelines, see, Policy and Guidance Material on the Economic Regulation of International Air Transport, ICAO Doc, 9587, Second Edition, 1999, Appendix 3 at A3-1–A3-3.
- 20.
For a detailed discussion of regulations on aircraft noise and engine emissions, see Abeyratne (1996) at chapter 3, pp. 271–313.
- 21.
BISD/IV, T.I.A.S No 1700, 55 U.N.T.S. 188. The GATT 1947 agreement is also contained in Results of the Uruguay Round of Multilateral Trade Negotiations: The Legal Texts, Geneva, GATT Secretariat, 1994.
- 22.
Article 4 of the WTO Agreement.
- 23.
Benitah (2001), p. 1.
- 24.
Rafiqul Islam (1999), p. 216.
- 25.
Article XVI of GATT 1947.
- 26.
In the Tokyo Round Subsidies Code, there was no formal definition of an export subsidy, although there were several examples cited.
- 27.
German Exchange Rate Scheme for Deutsche Airbus, Report of the Panel, March 4 1992. See 1992 WL 792947, SCM/142.
- 28.
Abeyratne (2004), pp. 585–601.
- 29.
Both the EU and the United Kingdom uses the AKSO NV case as a benchmark where a Dutch chemical company, with a 65 % market share of its flour bleach product was found to be abusing its dominant position. The European Court of Justice found that price below average variable cost by means of which dominant competitor seeks to eliminate its competition is regarded as an abusive practice. See AKZO Chemie BV v. EC (1991) ECR 1-3359 at paras. 71–72.
- 30.
GesetzgegenWettbewerbsbeschränkungen (GWB) Section 20(4).
- 31.
U.S. District Court, District of Kansas, 27 April 2001, 28 Avi 15, 204.
- 32.
The WTO comprises a Ministerial Conference composed of representatives of all Member countries and meets at least once every 2 years. The Ministerial Conference carries out the functions of the WTO and takes necessary action to this effect. There is also within the WTO structure, a General Council composed of representatives of all Member countries and this Council meets as deemed appropriate. As necessary, the General Council conducts the functions of the Ministerial Conference when the latter does not meet. It also carries out its functions as assigned by the Agreement. Furthermore, the General Council also discharges the responsibilities of the Dispute Settlement Body.
- 33.
Marrakesh Declaration of 15 April 1994, para. 2. The Marrakesh Agreement came into being with the Marrakesh Declaration and is an integral part therefore of the Marrakesh Declaration. See The Results of the Uruguay Round of Multilateral Trade Negotiations, The Legal Texts. GATT Secretariat: Geneva 1994, for the text of the Declaration.
- 34.
Marrakesh Declaration, id. Article III.2. The Ministerial Conference is composed of representatives of all Members, which meets at least once every 2 years. The Conference carries out the functions of the WTO and takes action necessary to this effect. The Ministerial Conference also has the authority to take decisions on all matters under any multilateral trade agreements if so requested by a Member, in accordance with the specific requirements for decision-making in the Marrakesh Agreement and in the relevant multilateral trade agreement. See Article IV. 1. Id.
- 35.
Id. Article III.3.
- 36.
Annex 2, Article 23(a).
- 37.
Annex 2, Article 23(b).
- 38.
Annex 2, Article 2.1.
- 39.
Annex 2, Article 2.2.
- 40.
Annex 2, Article 3.2.
- 41.
Annex 2, Article 3.3.
- 42.
Annex 2, Article 3.4.
- 43.
Annex 2, Article 3.10.
- 44.
Annex 2, Article 5.1.
- 45.
Annex 2, Article 6.1.
- 46.
Annex 2, Article 8.1.
- 47.
Annex 2, Article 8.2.
- 48.
Organisation for Economic Co-operation and Development (OECD), established in 1961, promotes policies that are calculated to improve the economic and social well-being of people around the world. The OECD provides a forum in which governments can work together to share experiences and seek solutions to common problems. The Organization works with governments to understand what drives economic, social and environmental change.
- 49.
AIRLINE COMPETITION—Background Paper by the Secretariat, Directorate for Financial and Enterprise Affairs Competition Committee, 18–19 June 2014, DAF/COMP(2014)14.
- 50.
ICAO Press Release, 16 December 2013. The OECD Report also notes that the number of travellers has increased because, among many other things, prices have decreased significantly in response to increasing competition in the air transport market. For example, in 1974 the cheapest round-trip New York-Los Angeles flight (in inflation-adjusted dollars) that regulators would allow: $1442. Today one can fly that same route for $268.
- 51.
Global Air Transport Outlook to 2030, Circ.333, AT/190:2012 at 59.
- 52.
AIRLINE COMPETITION, Supra note 49 (this chapter), Background Note at 3. The Report goes on to say that worldwide, aviation and related tourism generate over 56 million jobs, of which 8.36 million are directly linked to the aviation sector. Around 35 % of international tourists travel by air.
- 53.
Global Market Forecast: Flying on Demand 2014–2033 at 16.
- 54.
Id. 17.
- 55.
Flying Smart, Thinking Big, Airbus Industrie’s Global Market Forecast, 2009–2028 at 16.
- 56.
See ICAO Circular 333, Global air Transport outlook to 2030 and Trends to 2040 at 44.
- 57.
- 58.
- 59.
See No evidence Gulf carriers get ‘artificial support’, says Willie Walsh http://www.arabianbusiness.com/no-evidence-gulf-carriers-get-artificial-support-says-willie-walsh-564516.html#.VBUzWsWSxMg Also, Interview: Maurice Flanagan, Emirates Airline, by Shane McGinley, July 27 2010. See http://www.arabiansupplychain.com/article-4587-interview-maurice-flanagan-emirates-airline/2/.
- 60.
Explaining Dubai’s Aviation Model, Oxford Economics, June 2011. See http://www.oxfordeconomics.com/my-oxford/projects/128910.
- 61.
Id. 5.
- 62.
The following choices are available to a passenger travelling from New York to Mumbai. American Airlines/British Airways with a connection in London; Emirates with a connection in Dubai; United/Lufthansa/Swiss Air with a connection in Frankfurt, Munich, or Zurich; Air India with a connection in Delhi; Turkish Airlines with a connection in Istanbul; Qatar Airways with a connection in Doha; or Delta/Air France/KLM with a connection in Paris or Amsterdam. See Empirical Investigation and Analysis of Economic Issues Raised in Restoring Open Skies: The Need to Address Subsidized Competition from State Owned Airlines in Qatar and the U.A.E., Edgeworth Economics, May 21, 2015 at 5.
- 63.
The International Air Transport Association is a trade association of the world’s airlines. These 250 airlines, primarily major carriers, carry approximately 84 % of total available air traffic.
- 64.
- 65.
Ibid.
- 66.
A key factor behind 5-Star Airline Rating is the airline’s ability to deliver a truly consistent and high quality of product and service. A great product is not by itself the key to a 5-Star Airline rating, and Skytrax Star Rating also places great emphasis on the quality of front-line service an airline provides. A 5-Star Airline rating recognises airlines whose front-line staff (across airport and onboard experience) deliver a true and consistent 5-Star standard of service delivery. See Emirates http://www.airlinequality.com/StarRanking/4star.htm.
- 67.
Kupchan (2012), p. 198.
- 68.
Ellenberg (2014).
- 69.
- 70.
- 71.
http://siteresources.worldbank.org/INTPROSPECTS/Resources/334934-1322593305595/8287139-1326374900917/GEP_January_2012a_FullReport_FINAL.pdf. The Report also stated that the global economy is now expected to expand 2.5 and 3.1 % in 2012 and 2013 (3.4 and 4.0 % when calculated using purchasing power parity weights), versus the 3.6 % projected in June for both years. High-income country growth is now expected to come in at 1.4 % in 2012 (−0.3 % for Euro Area countries, and 2.1 % for the remainder) and 2.0 % in 2013, versus June forecasts of 2.7 and 2.6 % for 2012 and 2013 respectively. Developing country growth has been revised down to 5.4 and 6.0 % versus 6.2 and 6.3 % in the June projections. Reflecting the growth slowdown, world trade, which expanded by an estimated 6.6 % in 2011, will grow only 4.7 % in 2012, before strengthening to 6.8 % in 2013.
- 72.
Constantinescu et al. (2014). See http://www.imf.org/external/pubs/ft/fandd/2014/12/constant.htm. The IMF states that Trade grew by no more than 3 % in 2012 and 2013, compared with the pre-crisis average of 7.1 % (1987–2007). For the first time in over four decades, trade has grown more slower than the global economy. One commentator says: “In part, the weakness in world trade has clearly been due to the cyclical slowdowns in the Eurozone in 2012, and in the BRICs in 2013. Because trade between the member states inside the Eurozone is counted as part of world trade, the euro crisis has had a particularly large effect. But this effect should have been reversing by the middle of 2013, so it is disturbing to see that the decelerating trend in trade flows has continued”. See Davies (2013).
- 73.
Weldon (2015). See http://www.bbc.com/news/explainers-31661078.
- 74.
Boz (2014).
- 75.
Zakaria (2011), p. 21. The author goes on to say: “The so called emerging markets have accounted for over half of this global growth, and they now account for over 47 % of the world economy measured at purchasing power parity (of over 33 % at market exchange rates).” Ibid.
- 76.
Sharma (2012), p. 242.
- 77.
The Group of Twenty Finance Ministers and Central Bank Governors (also known as the G-20, G20, and Group of Twenty) is a group of finance ministers and central bank governors from 20 major economies: 19 countries plus the European Union, which is represented by the President of the European Council and by the European Central Bank Their heads of government or heads of state have also periodically conferred at summits since their initial meeting in 2008. Collectively, the G-20 economies account for more than 80 % of the gross world product (GWP), 80 % of world trade (including EU intra-trade), and two-thirds of the world population. They furthermore account for 84.1 % and 82.2 % of the world’s economic growth by nominal GDP and GDP (PPP) respectively from the years 2010 to 2016, according to the International Monetary Fund.
- 78.
Ghemawat (2011), p. 12.
- 79.
Slaughter (2004), p. 18.
- 80.
Spence (2011), p. 36.
- 81.
Schwab (2015).
- 82.
Chicago Convention, supra, Chap. 1, note 5, Article 44 d).
- 83.
The Schumpeter effect is associated with the notion of creative destruction put forward in the 1930s by the celebrated economist Joseph Schumpeter, which introduced the process by which new innovations replace older technologies. Start-up airlines have to be mindful of being overrun by more established airlines, making creative destruction a common phenomenon in air transport.
- 84.
Aghion et al. (2014). See scholar.harvard.edu/files/aghion/files/causal_effects_of_competition.pdf.
- 85.
Low cost carriers emerged primarily because of the globalization of the air transport industry and market deregulation in most parts of Asia and Europe, which encouraged new enterprises to approach the air transport market with vigour and energy. See Lawton (2002), p. 1.
- 86.
Defining Performance In Disruptive Innovation, 15 June 2009. See Forbes Magazine at http://www.forbes.com/2009/06/15/southwest-apex-learning-personal-finance-clayton-christensen-innovation-airlines.html.
- 87.
Disruption: Flying the Not-So-Friendly Skies, Working Knowledge for Business Leaders, Harvard Business School. See http://hbswk.hbs.edu/archive/3736.html.
- 88.
Anthony (2008), see https://hbr.org/2008/04/why-its-so-hard-to-disrupt-the/.
- 89.
Mezue et al. (2015), pp. 71–72. The authors state that Panasonic, Sharp and Sony in consumer electronics; Nissan and Toyota in cars; and Canon, Kyocera, and Ricoh in office equipment, all are examples of disruptive innovation.
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Abeyratne, R. (2016). Competition and Innovation in Air Transport. In: Competition and Investment in Air Transport. Springer, Cham. https://doi.org/10.1007/978-3-319-24372-6_5
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