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Open skies is an international policy concept that calls for the liberalization of the rules and regulations of the international aviation industry—especially commercial aviation—in order to create a free-market environment for the airline industry. Its primary objectives are:
- to liberalize the rules for international aviation markets and minimize government intervention as it applies to passenger, all-cargo, and combination air transportation as well as scheduled and charter services; and
- to adjust the regime under which military and other state-based flights may be permitted.
Since World War II, most states have invested national pride in the creation and defence of airlines (sometimes called flag carriers or legacy airlines). Air transportation differs from many other forms of commerce, not only because it has a major international component, but also because many of these airlines were wholly or partly government-owned. Thus, as international competition grew, various degrees of protectionism were imposed.
Bilateral air transport agreement
A bilateral air transport agreement is a contract to liberalize aviation services, usually commercial civil aviation, between two contracting states. A bilateral air services agreement allows the airlines of both states to launch commercial flights that covers the transport of passengers and cargoes of both countries. A bilateral agreement may sometimes include the transport of military personnel of the contracting states.
In a bilateral agreement, the contracting states may allow the airlines of the contracting parties to bring passengers and cargoes to a third country or pick up passengers and cargoes from the host country to the home country of the airline or to a third country in which the contracting states has existing open skies agreement.
Multilateral air transport agreement
A multilateral air services agreement is the same as bilateral agreement, the only difference being that it involves more than two contracting states.
First step towards a civil transport regime
The Convention on International Civil Aviation (1944), signed at Chicago (also called the Chicago Convention), was intended to prepare a framework within which civil air transport could develop (not military or other state activities whether in a piloted or drone craft). It introduced nine freedoms of the air for those states that have adopted the Convention and enter into bilateral treaties that may grant any of the following rights or privileges for scheduled international air services:
- To fly across the territory of either state without landing.
- To land in either state for non-traffic purposes, e.g., refueling without boarding or disembarking passengers.
- To land in the territory of the first state and disembark passengers coming from the home state of the airline.
- To land in the territory of the first state and board passengers travelling to the home state of the airline.
- To land in the territory of the first state and board passengers travelling on to a third state where the passengers disembark, e.g., a scheduled flight from the United States to France could pick up traffic in the UK and take all to France (sometimes termed beyond rights).
- To transport passengers moving between two other states via the home state of the airline, e.g. a scheduled flight on an American airline from the United Kingdom lands in the U.S. and then goes on to Canada on the same aircraft.
- To transport passengers between the territory of the granting State and any third State state without going through the home state of the airline, e.g. a scheduled flight on an American airline from the UK to Canada that does not connect to or extend any service to/from the U.S..
- To transport cabotage traffic between two points in the territory of the granting State on a service which originates or terminates in the home state of the foreign carrier or (in connection with the so-called Seventh Freedom) outside the territory of the granting State (also known as consecutive cabotage), e.g. an American airline flies from the U.S., lands passengers in London and then boards passengers to fly to Manchester.
- To transport cabotage traffic of the granting State on a service performed entirely within the territory of the granting State (also known as stand alone cabotage), e.g. a British airline operates a service between Perth and Sydney in Australia).
Because only the first five "freedoms" have been officially recognised by international treaties, the ICAO considers the remaining "freedoms" "so-called".
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 other's 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 (the Fly America Act).
- (tackling of) the tax-free position of EU-U.S. aviation.
- 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 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 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.
The ASEAN Open Sky Agreement is the Southeast Asia's major aviation policy. It is geared towards the development of a unified and single aviation market among ASEAN members in Southeast Asia projected to begin 1 January 2016, though all agreements have not been signed.
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.
While American Airlines, Delta Air Lines and United Airlines complained that Emirates airline, Etihad Airways and Qatar Airways violates open-skies agreements, Alaska Airlines, Atlas Air, FedEx Express, Hawaiian Airlines and JetBlue Airways have stood in opposition (it’s unknown who Southwest Airlines stands with but are very likely to side against the gulf carriers), insisting the agreements have broader benefits, promoting trade, travel and economic expansion, with Atlas Air even supporting Norwegian Air International application to enhance consumer choice.
Key open skies provisions
Most of the existing civil agreements include:
- Free market competition,
- No restrictions on international route rights; number of designated airlines; capacity; frequencies; and types of aircraft.
- Pricing determined by market forces:
- A fare can be disallowed only if both governments concur — "double-disapproval pricing" — and only for certain, specified reasons intended to ensure competition.
- Fair and equal opportunity to compete:
- For example:
- All carriers—designated and non-designated—of both countries may establish sales offices in the other country, and convert earnings and remit them in hard currency promptly and without restrictions. Designated carriers are free to provide their own ground-handling services—i.e., "self-handling"—or choose among competing providers. Airlines and cargo consolidators may arrange ground transport of air cargo and are guaranteed access to customs services.
- User charges are non-discriminatory and based on costs; computer reservation system displays are transparent and non-discriminatory.
- For example:
- Cooperative marketing arrangements
- Designated airlines may enter into code-sharing or leasing arrangements with airlines of either country, or with those of third countries, subject to usual regulations. An optional provision authorizes code-sharing between airlines and surface transportation companies.
- Provisions for dispute settlement and consultation
- Model text includes procedures for resolving differences that arise under the agreement.
- Liberal charter arrangements
- Carriers may choose to operate under the charter regulations of either country.
- Safety and security
- Each government agrees to observe high standards of aviation safety and security, and to render assistance to the other in certain circumstances.
- Optional seventh freedom all-cargo rights
- Provide authority for an airline of one country to operate all-cargo services between the other country and a third country, via flights that are not linked to its homeland.
The Treaty on Open Skies, signed in Helsinki in 1992 is a multinational sacrifice of air sovereignty to enhance military transparency and build confidence by permitting observation flights over almost the full territory of each signatory state:
- except for areas of hazardous airspace and a ten kilometer zone along the state borders of non-state parties; and
- subject to a maximum flight distance.
- Each aircraft is fitted with a sensor suite including optical panoramic and framing cameras, video cameras with real-time display, thermal infrared imaging sensors, and imaging radar (SAR). To ensure that each suite conforms to the Treaty specifications, there is an initial seven-day certification of each Open Skies aircraft by a short demonstration flight, and by analysis of the imagery recorded during that flight.
- Each state to be overflown has the choice of either certifying the aircraft of the observing state or of providing an aircraft with full sensor equipment of its own for the observing state (the so-called taxi option);
- the flights are undertaken by joint teams; and
- the image data can be shared among all signatories to support the monitoring of compliance with existing or future arms control treaties.
There is also a bilateral Open Skies Agreement between Hungary and Romania. In a tacit but persistent way, the United States has been promoting the idea of bilateral or trilateral open skies arrangements between states in South America. Similarly, there are many bilateral treaties and Memoranda of Understanding that permit military aircraft mutually to train in or transit through their airspace. For example, Singapore has such arrangements with the United States, France, and Australia.
- Winnie Yeoh; David Tan; Oh Chin Eng; Chong Kah Yuan; The Star/ANN (19 March 2015). "Asean on track for Open Skies policy". The Jakarta Post.
- Jul 6, 2007 (2007-07-06). "Asia Times Online Southeast Asia news Prying open ASEAN's skies". Atimes.com. Retrieved 2013-02-02.
- Japan pushes for Asian 'open skies' The Australian
- "PM urges Asean to move faster on open skies pact". Asiaone.com. 2007-11-01. Retrieved 2013-02-02.
- Brian Sumer (19 Sep 2017). "JetBlue CEO Blasts Big U.S. Airlines for Wielding 'Anti-Consumer Power'". Skift.
- Jon Hemmerdinger (15 Aug 2017). "Interview: Bill Flynn, chief executive, Atlas Air". Flightglobal.
- US Department of State on Open Skies for civil aviation
- Multilateral Agreement on the Liberalization of International Air Transportation (MALIAT)
- US Defence threat Reduction Agency on Open Skies for aerial surveillance
- Air Transport Portal of the European Commission for EU-US Open Skies talks