Harmonising Regulatory and Antitrust Regimes for International Air Transport Harmonising Regulatory and Antitrust Regimes for International Air Transport addressesthetimelyandproblematicissueoflackofuniformityinlegalstandards for international civil aviation. The book focuses on discrepancies within the regulatory and antitrust framework, comprehensively reveals the major legal limitations and conflicts, and presents possible solutions thereto. It discusses potential strategies for multilateralisation and defragmentation of air law, and for international harmonisation of airline economic regulation with fair competi- tion standards. This discussion extends to competition between air transport law and other legal regimes as well as to specific regulatory problems related to air transport.Theuniquefeatureofthebookisthatitreconcilesdistinctperspectives on these issues presented by renowned aviation and aerospace experts who represent the world’s key air transport markets and air law academic centres. By providing unbiased solutions that could serve as a base for future interna- tionalarrangements,thisbookwillbeinvaluableforaviationprofessionals,aswell asstudentsandscholarswithaninterestinairlaw,economicregulation,antitrust studies, international relations, transportation policy and airline management. Jan Walulik has a PhD in law; Head, Civil Aviation Laboratory, Centre for AntitrustandRegulatoryStudies,FacultyofManagement,UniversityofWarsaw; corporate attorney (Warsaw bar). Routledge Research in Competition Law Available titles in this series include: The Internationalisation of Competition Rules Brendan J. Sweeney Antitrust Federalism in the EU and the US Firat Cengiz Competition and Regulation in the Airline Industry Puppets in Chaos Steven Truxal Forthcoming titles in this series include: Merger Control in Post-Communist Countries EC Merger Regulation in Small Market Economies Jurgita Malinauskaite Merger Control in Europe The Gap In The ECMR And National Merger Legislations Ioannis Kokkoris Harmonising Regulatory and Antitrust Regimes for International Air Transport Jan Walulik Collective Redress and EU Competition Law Eda Şahin Competition Policy and Network Industries Structural Separation in the Telecommunications Sector Pierluigi Congedo Harmonising Regulatory and Antitrust Regimes for International Air Transport Edited by Jan Walulik Firstpublished2019 byRoutledge 2ParkSquare,MiltonPark,Abingdon,OxonOX144RN andbyRoutledge 52VanderbiltAvenue,NewYork,NY10017 RoutledgeisanimprintoftheTaylor&FrancisGroup,aninformabusiness ©2019selectionandeditorialmatter,JanWalulik;individualchapters,the contributors TherightofJanWaluliktobeidentifiedastheauthoroftheeditorial material,andoftheauthorsfortheirindividualchapters,hasbeen assertedinaccordancewithsections77and78oftheCopyright, DesignsandPatentsAct1988. Allrightsreserved.Nopartofthisbookmaybereprintedor reproducedorutilisedinanyformorbyanyelectronic,mechanical,or othermeans,nowknownorhereafterinvented,including photocopyingandrecording,orinanyinformationstorageorretrieval system,withoutpermissioninwritingfromthepublishers. Trademarknotice:Productorcorporatenamesmaybetrademarksor registeredtrademarks,andareusedonlyforidentificationand explanationwithoutintenttoinfringe. BritishLibraryCataloguing-in-PublicationData AcataloguerecordforthisbookisavailablefromtheBritishLibrary LibraryofCongressCataloging-in-PublicationData Names:Walulik,Jan,editor. Title:Harmonisingregulatoryandantitrustregimesforinternational airtransport/JanWalulik. Description:Abingdon,Oxon;NewYork,NY:Routledge,2019.| Series:Routledgeresearchincompetitionlaw Identifiers:LCCN2018037228|ISBN9780815353867(hbk) Subjects:LCSH:Aeronautics,Commercial—Lawandlegislation.| Antitrustlaw. Classification:LCCK4095.H3562019|DDC343.09/7—dc23 LCrecordavailableathttps://lccn.loc.gov/2018037228 ISBN:978-0-815-35386-7(hbk) ISBN:978-1-351-13491-0(ebk) TypesetinGalliard bySwales&WillisLtd,Exeter,Devon,UK Contents Listoftables xi Listofabbreviations xii Listoflegalacts xiv Listofcourtrulings xxii Listofadministrativedecisions xxiv Forewordfromtheeditor xxvi Listofcontributors xxviii PART1 Multilateralisationofinternationalcivilaviation relationsanddefragmentationofinternationalairlaw 1 1 Thesevendecadesofscatteredskies 3 MAREKŻYLICZ 2 Multilateralizationofinternationalcivilaviationrelationsand defragmentationofinternationalairlaw 5 PETERP.C.HAANAPPEL 2.1 Introduction 5 2.2 History 6 2.2.1 1919–1944:theinterbellum 6 2.2.2 1945–1975:theregulatoryperiod 7 2.2.3 1975–today:deregulationandliberalization 9 2.3 Economictheoryandpractice 10 2.4 Airlineprivatizationandmultilateralization 11 2.5 Intergovernmentalmultilateralization 13 2.5.1 TheUnitedStates 13 2.5.2 TheEuropeanUnion 14 2.5.3 Elsewhere 15 2.6 Ownershipandcontrolofairlines 16 vi Contents 2.7 Globalreform 17 2.7.1 TheInternationalCivilAviationOrganization(ICAO) 17 2.7.2 TheWorldTradeOrganization(WTO) 18 2.8 Conclusionsandprospectsformultilateralizationand defragmentation 19 PART2 Balancingairpolicyandfaircompetitionininternational airtransport 21 3 Airlinesasallies:Howtomanagethemarket? 23 PABLOMENDESDELEON 3.1 Thetrendtowardsinternationalalliances 23 3.2 Thefirstsignificantcase:KLM–Northwestairlines 24 3.3 Competitionandtradeinairtransport 25 3.4 Airlinebehaviouraffectingcompetition 26 3.5 Competitionregimesinairtransport 27 3.5.1 TheUSlawandpolicy 27 3.5.2 TheEUregime 28 3.5.3 Othercountries 31 3.6 FrictionsbetweencompetitionlawandbilateralASAs 31 3.7 Implicationsofcross-borderserviceprovision 33 3.7.1 The‘effects’doctrine 33 3.7.2 TheAirCargoFuelChargescases 34 3.7.3 Multilateraleffortsinharmonisingcompetitionlaws 36 3.7.4 Achievementsonconvergenceofcompetitionlawandpolicy 37 3.8 Conclusionsandrecommendations 38 4 Regulatoryschizophrenia:Mergers,alliances,metal-neutral jointventuresandtheemergenceofaglobalaviationcartel 41 PAULS.DEMPSEY 4.1 Introduction 41 4.2 Themetamorphosisofairtransportagreements 43 4.3 Airlinealliances 48 4.3.1 Antitrustandcompetition:asuccinctsummaryof USandEUlaws 48 4.3.2 Restraintoftrade 51 4.3.3 Mergersandconsolidations 53 4.3.4 Airlinealliancesandantitrustimmunity 59 4.4 Analysis 70 Contents vii 5 Airlinealliances:Permittedandprohibitedpracticesin viewoftheEUlaw 74 AGNIESZKAKUNERT-DIALLO 5.1 Introduction 74 5.2 Diversityofairlinealliances 75 5.3 AirlinealliancesinviewoftheEUcompetitionlaw 77 5.4 Airlinealliancesinviewofmarketaccessregulations 80 5.4.1 Combiningservicesandcode-sharing 80 5.4.2 Aircraftleasing 82 5.4.3 Franchisingandcommonbranding 84 5.4.4 Otherinter-airlineagreements 85 5.5 Conclusions 86 6 Competitionininternationalairtransport:Anoverview ofEUpolicydevelopments 88 PAWEŁZAGRAJEK 6.1 Competitioninairtransport 88 6.2 Internationallegalframeworkforcompetitioninairtransport 89 6.3 DevelopmentoftheEUcompetitionpolicyininternationalair transport 93 6.4 PillarsoftheEUcompetitionpolicyininternationalairtransport 96 6.4.1 ImplementationoffaircompetitionprovisionsinASAs 96 6.4.2 Thedefenceinstrument–Regulation868/2004 97 6.4.3 PromotingregulationofcompetitionattheICAO 102 6.5 Conclusions 104 PART3 Competitionbetweenairtransportlawandother regulatoryregimes 105 7 Citius,Altius,Fortius:Regulatingcommercialspaceflight underairlaworspacelaw? 107 FRANSG.VONDERDUNK 7.1 Privatecommercialhumanspaceflight–thecontext 107 7.2 Thebasictenetsofairlaw 108 7.3 Thebasictenetsofspacelaw 110 7.4 Privatemannedspaceflightprojectsandthelegalconundrum 113 7.5 TheUSapproach–stressingthe‘space’in‘spaceflight’ 115 7.6 TheEuropeanapproach–stressingthe‘flight’in‘spaceflight’ 118 7.7 Findingthebestmix 122 viii Contents 8 Betweenglobalclimategovernanceandunilateralaction: TheestablishmentoftheCarbonOffsettingandReduction SchemeforInternationalAviation(CORSIA) 125 ELENACARPANELLI 8.1 Introduction 125 8.2 Ataleoftwostories:theICAO–EU‘dialogue’onthereduction ofaviationemissions 126 8.3 AfterCORSIA:unilateralismreloadedortheendofthegame? 132 8.3.1 EffectivenessofCORSIA 132 8.3.2 Intersectionbetween‘legalorders’andtheriskofaresurgence ofunilateraldrifts 133 8.3.3 Interplaywithotherinternationalnorms 137 8.4 CORSIAandmarketdistortions 139 8.5 Conclusions 140 9 Airlinenon-commercialadvantagesandfaircompetition: Theissueoflabourconditions 142 ANDREATRIMARCHI 9.1 Introduction 142 9.2 Faircompetitioninaviation 143 9.2.1 Apatchworkofregulatoryregimes 143 9.2.2 Theroleofbilateralism 144 9.3 Thenotionof‘non-commercialadvantages’ 145 9.3.1 TradelawandWTO 146 9.3.2 EURegulation868/2004 147 9.4 Labourstandardsasnon-commercialadvantages 148 9.5 Theregulationoflabourintheaviationindustry 150 9.5.1 Thechoiceofinternationalforum 150 9.5.2 Thechoiceoflegalinstrument 151 9.6 Concludingremarks 152 PART4 Regulation,deregulationornon-regulationofaerospace activities 155 10 Cheapliberalisation:Cuttingregulatorycornersinair transportorcuttingone’sownthroat? 157 JANWALULIK 10.1 Introduction 157 10.2 Airpolicyandregulation 157 Contents ix 10.3 Liberalisationtrendsanddrivers 158 10.4 Safetyoversightchallenges 164 10.5 Risksandsafeguards 169 10.6 Regulatoryalternatives 171 10.7 Summary 175 11 Airlinenationality:AreconstructionoftheEUownership andcontrolrules 177 ELMARM.GIEMULLA 11.1 Introduction 177 11.2 Ownershipandcontrolaslegalrequirements 177 11.3 Reviewofairlineownershipandcontrol 179 11.4 Interpretativeguidelines 180 11.4.1 Thenotionof‘nationality’ 181 11.4.2 EUregulationsoncontrol 182 11.4.3 FormercasesintheEU 182 11.4.4 Nationalguidelinesonownershipandcontrol 184 11.4.5 EUguidelinesonownershipandcontrol 185 11.5 Ownershipandcontrolassessmentprocess 186 11.5.1 Germantwostepapproachforlicensing 186 11.5.2 Ongoingcompliance 187 11.6 Conclusions 188 12 Sub-orbitaltraffic:Anewregulatoryornon-regulatory discipline 189 MAŁGORZATAPOLKOWSKA 12.1 Introduction 189 12.2 Regulatorychallengesinouterspacecommercialization 190 12.2.1 Statusofsub-orbitalflights 190 12.2.2 Transitissues 191 12.2.3 Registrationofobjectsandoperations 192 12.2.4 Safetyandsecurity 193 12.2.5 Passengerstatus 194 12.2.6 Civilliabilityandinsurance 194 12.2.7 Ownershipinspace 196 12.2.8 Criminaljurisdiction 197 12.3 Resultsofthedebateonspacetransportregulation 197 12.4 Summary 200