Open Skies Agreements - Essay Example

Open Skies. One of the incidences of the massive deregulation of domestic aviation, in the past few decades which has led to the liberalisation of international air fares and charges, and multiple designation of international airline operators has been the inception of Open Skies Agreements.Because of these agreements many Airline have merged and formed commercial alliances thus opening up previously closed markets to foreign carriers and suppliers. "Open skies" air services agreements are a recent development but as the question states are not applicable internationally but as bilateral agreements. They are aimed at increasing the downstream economic benefits that air services can provide by using them to their full potential.The agreements are characterised by rights to carry passengers to one country, and then fly on to another country.Today more than seventy "open skies" agreements are operative world wide ,however only a few of them apply to non US or EU countries. The modern aviation sector has grown considerably in the past few decades and its emerging commercial perspective has led most people to question whether there should be more intergovernmental efforts and co-operation to respond to the new business environment. Air transport services have experienced the most dynamic recent growth of all sectors in the vitally important transport industry. With regards to the Open Skies Policy it has to be noted that Air transport is crucial to international trade.Eversice the year 1944(under the auspices of the Chicago Conference of 1944) it has been under a complex regulatory system . Overall there are little if any international agreements in this regard and so far the position has been that there have been a lot of bilateral agreements between countries dominating the aviation industry ever since. The success of these open skies agreements depends to a large extent upon the political relationships between countries.Few countries would want to see a rival country save fuel and expenses and attract more tourists and consumers at the cost of its own AirSpace.Therefore even though over the past few decades the some relaxation has taken place in a few countries, Commercial flights are still subject to heavy regulations on their air routes and subject to almost three thousand forms of Bilateral Agreements. This is particularly true with regards to the Pacific regions that poses a great challenges in providing basic transport services in terms of routes and fares.The use of such agreements would indeed eradicate the varying levels of infrastructure development, the high costs and other related problems in this sector.This is because all commercial carriers are facing diseconomies of scale due to not being able to use their air planes to their full potential and are facing increasingly difficult conditions with competition putting pressure on fares, especially in traditional tourism markets. The cost of fuel and maintenance, and professional staff means that Air services to destinations outside the Pacific and other favourite tourist destinations will be have a volume tourist traffic which will demands long-haul direct routes and larger planes.Economically therefore ,the lack of an open skies agreement could cause a world wide crisis in the arena of the commercial airlines and eventually lead to high costs even for the short-haul services to island neighbours and airlines can be reluctant to make intermediate stopovers. The matter therefore is not economical or legal.The issue is purely political.Consider the tug of war that took place between EU and USA authorities over the recent Open Skies Agreement.The Agreement aims to liberalise transatlantic airspace yet European transport Ministers were reluctant to agree to it at first as they felt it gave the US an unfair advantage over European interests and its major airline and cargo.This was expressed in a statement by the EU commission which remarked that many Member States felt "that EU airlines should have more opportunities to access the American domestic market". Many critics lashed out over the delay in this agreement as they believed that a large opportunity was being missed with regard to open access to markets for the benefit of consumers, carriers, workers and airports on both sides of the Atlantic. If negotiated earlier this agreement would agreement would have established 'open skies' between the US and 25 European nations.The advantages of this would have been inevitable in the sense of further competition and offering travellers and shippers more transatlantic choices at a lower cost. The reluctance for the popularity of the Open Skies Agreement can be seen in the light of the taxation problems which have come in front of the EU Court of Justice in the Open Skies line of cases where the story was similar that after the Second World War before the present member states (prior to becoming EU states) entered into some Open Skies agreements to facilitate e alliances between American and European carriers but they had to conform to a number of criteria set out by the American Government. What the EU found most perturbing were the nationality clauses within these agreements as they pertained to allowing each Contracting Party to revoke, suspend, limit or impose conditions on the traffic rights of airline operators acting in their territory where substantial ownership and effective control of that airline was not vested in the Contracting State or its nationals.The EU alleged that this nationality clause violated EU law(Art 43 EC).The nationality clause is alleged to infringe freedom of establishment.The Member States have been protesting that if the ECJ is allowed to interfere in the open skies agreements this would be paramount to increasing US burdens ( involving authorisations issued by the US concerning the US' use of its own airspace and this is jurisdictionally unacceptable).Now coming to the taxation issue the contention also has been that this is will cause an extension of the tax advantages enjoyed by companies having their seat in the Member State to permanent establishments. The ECJ has insisted therefore that it be allowed to adjudicate on the matters of tackling tax treaties between Member States and non-Member States containing potentially discriminatory clauses. Even if the discriminatory behaviour results from a non-Member State's act or omission. Coming again to the good ,the bad and ugly of Open Skies it is worth nothing that liberalisation is good but the political perspectives and international law perspectives would indicate otherwise.Many critics have termed it as a tool of r U.S. diplomatic bullying and intransigence.The basic premise of the agreement is that this"Open Skies" treaty would repeal the authority of national governments to regulate which EU or USA airlines are allowed to fly between the EU and the USA, and which cities in the USA they serve.The agreement has been criticised further as it incorporates obligations under law enforcement treaties [Article 8, Section 1], but omits any mention of those treaties limiting the powers of law enforcement or protecting the rights of travellers. It is very unlikely that future agreements on Open Skies are going to be any popular if they follow the methodology of the EU-US agreement which ignores the operations of the International Covenant on Civil and Political Rights and the law relating to Data Protection, civil liberties, or human rights authorities. There are no standards with the so called heavy "Security measures" and no remedies for their review. There is no provision for human rights, or checks against policy laundering. This will lead to the effect of removing air travel from the protection of the most fundamental international principles of human rights. In conclusion it will take a long to free the notion of the Open Skies from the remnants of Cold War suspicion and move towards international cooperation between the countries.As long as the nations are truly poised towards international co-operation and global economic success,the selfish political ends of the nations will keep interfering with the greater good of having truly "Open Skies".If handled properly this Treaty holds great potential for military and political confidence building in unstable regions of the world apart from its obvious commercial and economical advantages. References 1. OECD (1997), The Future of International Air Transport Policy: Responding to Global Change, Paris: Organization for Economic Co-operation and Development. 2. OECD (1999), Regulatory Reform in International Air Cargo, DST/DOT(1999)1, Paris: Organization for Economic Co-operation and Development. 3. Frederik Sorensen (2001), "Market Access Liberalisation of Air Transport", Paper presented at an ICAO Air Transport Committee Dialogue on Trade in Aviation Services, Montreal: International Civil Aviation Organization, (12 June). 4. Williams, Frances (2000), "WTO seeks to spread its wings over air services", in Financial Times, (29 September). 5. World Trade Organization (2000), Communication from New Zealand: Developments in the Air Transport Services Sector, S/C/W/165, Geneva: WTO, (15 September). Read More