COMMENTARYT
he world of air transport has experienced two major dis-
putes that have led to fi erce discussions bordering on openhostility, serious threats and tensions that have not been easy
to overcome. First the European Commission (EC) tried to
impose its view of how aviation should tackle the increase of
CO 2 emissions on the rest of the industry and was stopped
only at the last minute when it became clear a trade war would
be unavoidable. Then European and U.S. airlines launched a
massive anti-Gulf carrier campaign. They claim that Emirates,
Qatar Airways and Etihad Airways are all heavily government-
subsidized and should therefore lose open-market access to
the U.S. and Europe.
Beyond Bilaterals
ETS, ‘fair competition’ disputes show that air
transport lacks an ef ective settlement process
These most signifi cant aeropolitical
disruptions of the past few years show
both have a common cause. There
is no dependable dispute settlement
mechanism in place for governments
and the industry. The one overarch-
ing takeaway from what the industry
has been witnessing for years is that
there needs to be a point of contact
with global responsibility to deal
with such issues. Both the emissions
trading system (ETS) and the subsidy
case provided good illustrations of the
International Civil Aviation Organiza-
tion’s (ICAO) shortcomings.
The organization needs to be em-
Airline Intel
By Jens FlottauManaging Editor for Civil
Aviation Jens Flottau blogs at:
AviationWeek.com/thingswithwings
Jens.fl [email protected]22 AVIATION WEEK & SPACE TECHNOLOGY/MARCH 30-APRIL 12, 2015 AviationWeek.com/awst
JOEPRIESAVIATION.NETpowered to take on a role similar to
what the World Trade Organization
(WTO) does in other industries —in-
cluding aircraft manufacturing—but
geared toward the specifi c needs of air
transport.
The U.S. subsidy claims also show
the inadequacy of the current bilat-
eral system that governs capacity
between major markets. Even the
U.S. open-skies policy is still based
on bilateral agreements that contain
language such as this: “Each party
shall allow a fair and equal oppor-
tunity for the designated airlines of
both parties to compete in providingthe international air transportation
governed by this agreement.”
The quote is from the open-skies
agreement between the U.S. and
Qatar. But what does “fair and equal
opportunity” actually mean: “equal
market access,” “no state support,”
“no Chapter 11,” “identical taxation”
or something else? Who knows for
sure?
The point is that as long as the
process is governed by bilaterals,
each party will come up with its own
interpretation of the contract. There
is no independent authority to issue
a binding ruling. Bilateral settle-
ments are also inadequate because
whatever is agreed upon will not
necessarily apply to non-signatories.
Many air service agreements don’t
even include clauses on fair competi-
tion; that is true for the France-Unit-
ed Arab Emirates and Germany-UAE
deals. And where those clauses are
in place, they are often ef ectively
dormant for political or strategic
reasons, such as in the U.K.-UAE
and U.K.-Qatar agreements (Qatar
Airways owns part of U.K.-based
International Airlines Group).
That partisan action goes nowhere
is also the lesson learned from the ETS
debacle; the EC did not even try to rely
on bilateral clauses, but essentially
argued that whatever it decided for
intra-European fl ying also would apply
extraterritorially.
The one positive aspect of the ETS
dispute is that now an international
process for developing a multilateral
solution is in place. ICAO is now trying
to defi ne a global ETS that takes into
account what the European Union
had in mind, but it also deals with
concerns voiced in other regions that
see emissions trading as a threat to
their growth plans. But as much as
European regulators had to learn the
hard way that they cannot decide such
an important issue for everyone else ,
any one trying to force aeropolitical
changes within bilateral relationships
likely will have the same experience.
ICAO is not the perfect organiza-
tion to handle these issues, because its
pace is incredibly slow. But as the only
intergovernmental agency dealing with
air transport specifi cally, there is prob-
ably no other place to go. c