Aviation Regulation – History and Practice
This part covers the end of World War II and the events leading up to the Chicago Convention of 1944, the Convention itself, the establishment of ICAO, the Freedoms of the Air and bilateral Air Service Agreements, the formation of IATA, the Bermuda Agreement of 1946 and the concept of the “Chosen Instrument”.
WORLD WAR II AND THE ROAD TO CHICAGO
Like World War I, aviation technology made tremendous gains during World War II and these gains were enjoyed primarily by the United States, particularly in the area of high-capacity and long range air transport. Why this happened was a result of an agreement between U.S. President Franklin D. Roosevelt and British Prime Minister Winston Churchill: the U.S. would focus on the manufacture of high capacity and long range transport aircraft and bombers and the Allies would focus on the manufacture of fighters and light bombers. As the war began to wind down, the potential of United States superiority in the manufacture of transport aircraft became inevitable.
By 1944 defeat of Germany was all but certain. And by then, aviation technology had developed to the point that no city in the world was more than forty hours away from any other city by air. However, the round-the-world routes operated by military air transport would snap apart with the advent of peace and would be closed to commercial planes unless the broadest traffic rights were obtained before the end of the war. Airlines would be limited to flying within their own borders (and to/from colonies) and in the case of the United States, under Pan American’s pre-war trans-oceanic authority unless the U.S. engaged in nation-by-nation politicking as Juan Trippe had done in South America. In addition, U.S. airlines desiring to fly beyond the coasts of Western Europe would require permission from the host governments of the gateway countries. The flag airlines of the Western European countries did not have such a problem. They simply operated routes through their colonies to Asia and Africa. The British carrier, BOAC, was already operating to areas within the commonwealth where war had receded.
For the United States, a policy needed to be developed as to post-war international aviation and it came in the form of government-to-government negotiations for landing rights. This, in effect, ended Juan Trippe’s term as a “shadow” foreign minister for U.S. aviation. As put forth by President Roosevelt, “Juan Trippe can’t have it all”, and indeed, as a reward for their support during the war effort, domestic airlines such as TWA, American Overseas Airlines (formerly American Export Airlines until American Airlines’ merger with owner American Export Lines) and Northwest were granted authority to operate international routes by the CAB.
However, what was clear as the end of the war approached, was that the United States would have undisputed superiority in air transport to the extent that it was the only country with the capability to operate a worldwide air transportation system. Two other factors contributed: The U.S. had long production lines capable of turning out four engine, long range aircraft and the U.S. was also capable of making immediate commercial business, whereas the Allies, specifically Great Britain, were still geared to military production and unable to make a swift change and, along with France, were technologically injured. In addition, the defeated Axis powers were denied the capability to manufacture and produce aircraft. The result was obvious: The U.S. had a virtual monopoly on the manufacture of transport aircraft.
This virtual monopoly, of course, did not sit well with the major powers, in particular Great Britain, and it became clear that an international conference was necessary to resolve the issues of international aviation and more importantly, the issues between the U.S. and Great Britain.
As it was also clear that both the Paris and Havana Conventions were now obsolete, there emerged a need for an international organization to maintain standards of safety, communications, signals and weather reporting and also prevent destructive competition breaking out of tariffs. As a result, with the urging of Great Britain, the United States took the initiative and sent out invitations to the Allied Nations and the neutral countries of Europe and Asia to meet in Chicago on 1 November 1944. Fifty-four countries accepted and sent delegations to the Conference on International Civil Aviation, to be known as the Chicago Convention of 1944.
CHICAGO AND BEYOND
The Chicago Convention of 1944
On 1 November 1944, delegates from fifty-four countries met at the Stevens Hotel in Chicago to commence what was to become the most significant conference on aviation regulation in history. The goal was to promote international traffic and develop an entry procedure that would allow healthy growth in the industry. In addition, issues such as routes, frequencies, pricing and fares, aircraft registration, navigational aids and safety standards were to be discussed.
At a Convention such as this, those with the greatest bargaining power could afford to make broad and sweeping proposals, usually tailored to their interests. The United States had this bargaining power and the feeling was it was going to be used to secure a near monopoly in long-haul air transport. What the U.S. was advocating was access to international routes, minimal control of rates, frequencies and capacity and an international organization with limited political and economic authority. In essence, an “open skies” regime was being promoted.
While freedom of competition is a noble position to take, it seemed absurd that such a position would be espoused by a competitor who has a commanding lead in an industry that was characterized by considerable restriction to entry. The U.S. position was similar to the proverbial elephant who, while dancing through the chicken yard, cried, “Everyone for Himself!”
Other countries advanced proposals calling for more control, while the British were calling for an international air authority that would control frequencies, capacities, rates and routes agreed upon bilaterally or multilaterally between nations. The authority would take action with a view to maintaining a broad equilibrium between the world’s air transport capacity and the traffic offering. It would thus eliminate wasteful practices, unfair competition and control subsidies.
The British, while lacking bargaining power in the air transport aspect, did wield considerable power from the political aspect. Through its vast number of overseas colonies and commonwealth connections, Britain had the capability of denying landing rights to, for instance, U.S. carriers. This was a major weakness for the United States: the need to obtain landing rights in foreign countries to load and unload passengers and cargo.
Delegates from other countries also submitted proposals calling for some sort of control, including the possibility of a single international corporation as a World Airline, with every nation participating. These suggestions were all unacceptable to the United States.
What was emerging during the convention was that the nations in attendance were there to strengthen their weaknesses. Indeed, the U.S. was present to secure landing rights in foreign countries and that was the goal in calling for the convention in the first place. The U.S. did not bring up issues such as frequencies, traffic or capacity. As the convention progressed, however, it was clear that the U.S. would have to back down from its laissez-faire position. This occurred when the Canadian delegation proposed the “Four Freedoms of the Air” that would be universally acceptable:
The right to fly and carry traffic over the territory of another partner to the agreement without landing.
The right to land in those countries for technical reasons such as refueling without boarding or deplaning passengers.
The right of an airline from one country to land in a different country and deplane passengers coming from the airline’s own country.
The right of an airline from one country to land in a different country and board passengers traveling to the airline’s own country.
For the United States, these did not meet its requirements for control on international trunk routes. Accordingly, the U.S. added a “Fifth Freedom” to the Canadian proposal.
The right of an airline from one country to land in a second country, to then pick up passengers and fly on to a third country where the passengers then deplane.
This proposal was not received well by the other major nations as it made quite clear the U.S. objectives: to dominate and monopolize much of the world’s traffic. As a result, because the U.S. was unable to get sufficient support from the delegates for the Fifth Freedom rights, at the close of the convention, the economic issues such as fares, frequencies and capacities were left unresolved.
The failure to resolve the economic issues left the question as to where an airline could fly dependent on bilateral negotiations. And in these negotiations, the parties would summon whatever power they had to secure the greatest contribution to their national well-being. The convention amplified the importance of bilateral negotiations. The reality was that no strength in technical matters, no amount of operating know-how or superiority in quality can overcome the inability to reach a market. The British may not have been technically superior to the United States, but they did have control of one end of a large number of international journeys. This was sufficient to negate much of the U.S. superiority, and the failure of the British to sign-off on the Fifth Freedom addition was considered the major reason for the inability of the U.S. to secure those rights.
One notable absentee at Chicago was the Soviet Union. While invited and actually prepared to attend, a last minute decision was made not to attend. Considerable speculation arose as to why. One reason suggested was a low priority given to international civil aviation. Other reasons, however, were more feasible: First, attendance might have forced the Soviets to grant the right of innocent flyover its territorial air space. This would have been difficult to refuse since the Yalta and Potsdam Conferences lay ahead. Another was that the Soviets might have been forced into a premature disclosure of its plans for Eastern Europe.
The convention ended however, with three important accomplishments:
Established the International Civil Aviation Organization (ICAO)
Produced the Freedoms of the Air.
Produced the criteria for Bilateral Agreements (Air Services Agreements – ASAs)
The Convention on International Civil Aviation was signed at Chicago on 7 December 1944.
Every state has complete and exclusive sovereignty over airspace above its territory.
The aircraft of states, other than scheduled international air services, have the right to make flights across state’s territories and to make stops without obtaining prior permission. However, the state may require the aircraft to make a landing.
No scheduled international air service may be operated over or into the territory of a contracting State, except with the special permission or other authorization of that State.
Each state shall keep its own rules of the air as uniform as possible with those established under the convention, the duty to ensure compliance with these rules rests with the contracting state.
Before an international flight, the pilot in command must ensure that the aircraft is airworthy, duly registered and that the relevant certificates are on board the aircraft. The required documents are:
Certificate of Registration
Certificate of Airworthiness
Passenger names, place of boarding and destination
The aircraft of a state flying in or over the territory of another state shall only carry radios licensed and used in accordance with the regulations of the state in which the aircraft is registered. The radios may only be used by members of the flight crew suitably licensed by the state in which the aircraft is registered.
The pilot and crew of every aircraft engaged in international aviation must have certificates of competency and licenses issued or validated by the state in which the aircraft is registered.
Recognition of Certificates and Licenses. Certificates of Airworthiness, certificates of competency and licenses issued or validated by the state in which the aircraft is registered, shall be recognized as valid by other states. The requirements for issue of those Certificates or Airworthiness, certificates of competency or licenses must be equal to or above the minimum standards established by the Convention.
No aircraft or personnel with endorsed licenses or certificate will engage in international navigation except with the permission of the state or states whose territory is entered. Any license holder who does not satisfy international standard relating to that license or certificate shall have attached to or endorsed on that license information regarding the particulars in which he does not satisfy those standards.
The Convention is now supported by nineteen annexes containing standards and recommended practices (SARPs). The annexes are amended regularly by ICAO and are as follows:
Annex 1 – Personnel Licensing
Annex 2 – Rules of the Air
Annex 3 – Meteorological Service for International Air Navigation
Annex 4 – Aeronautical Charts
Annex 5 – Units of Measurement to be used in Air and Ground Operations
Annex 6 – Operation of Aircraft
Annex 7 – Aircraft Nationality and Registration Marks
Annex 8 – Airworthiness of Aircraft
Annex 9 – Facilitation
Annex 10 – Aeronautical Telecommunications
Annex 11 – Air Traffic Services – Air Traffic Control Service, Flight Information Service and Alerting Service
Annex 12 – Search and Rescue
Annex 13 – Aircraft Accident and Incident Investigation
Annex 14 – Aerodromes
Annex 15 – Aeronautical Information Services
Annex 16 – Environmental Protection
Annex 17 – Security: Safeguarding International Civil Aviation against Acts of Unlawful Interference
Annex 18 – The Safe Transport of Dangerous Goods by Air
Annex 19 – Safety Management (Since 14 November 2013)
Units of Measurement to be used in air and ground operations: feet (for vertical distance/altitude), knots (for speed), and nautical miles (for distance).
The International Civil Aviation Organization (ICAO) was formed to administer the Convention.
Key areas of interest:
Establishment of international technical standards and recommended practices in the conduct of international air operations
Standardization of procedures
Communications and air traffic management
Development in aircraft design
Growth and development of airways and airports
Cooperation between member nations
Sets industry technical and legal standards for member states’ civil aviation authorities
Insure the safe and orderly growth of international civil aviation throughout the world
Encourage the arts of aircraft design and operation for peaceful purpose
Encourage the development of airways, airports and air navigation facilities for international civil aviation
Meet the needs of the peoples of the world for safe, regular, efficient and economical air transport
Prevent economic waste caused by unreasonable competition
Insure that the rights of contracting States are fully respected and that every contracting State has a fair opportunity to operate international airlines
Avoid discrimination between contracting States
Promote safety of flight in international air navigation
Promote generally the development of all aspects of international civil aeronautics
Freedoms of the Air
The right to fly and carry traffic over the territory of another partner to the agreement without landing
The right to land in those countries for technical reasons such as refueling without boarding or deplaning passengers
The right of an airline from one country to land in a different country and deplane passengers coming from the airline’s own country
The right of an airline from one country to land in a different country and board passengers traveling to the airline’s own country
The right of an airline from one country to land in a second country, to then pick up passengers and fly on to a third country where the passengers then deplane
The right to carry traffic from one country through the home country of the airline to a third country
The right to carry traffic from one country to another country without going through the home country of the airline
The right to carry passengers between two or more points in one foreign country with continuing service to or from one’s own country, known as “True Cabotage”
The ninth freedom is a variation from the Eighth Freedom in that it is the right to carry passengers within a foreign country without continuing service to or from one’s own country, known as “Stand-alone Cabotage” and almost no country permits it
The criteria produced by the Chicago Convention included the following key provisions:
Exchange of air rights
Equality of treatment with respect to airport charges, customs duties and inspection fees
Mutual recognition of airworthiness certificates and personnel
Compliance with laws pertaining to entry, clearance, immigration, passports, customs, etc
Regulations concerning ownership and control
The designated carrier/s (“Chosen Instrument”?), the routes served and tariffs
The International Air Transport Association
Shortly after the Chicago Convention, a call was made for a meeting among airline operators with a proposal to form a non-governmental organization of airline operators. During this meeting, articles of association were drafted for consideration at a conference to be held in Havana in April 1945. On 19 April, the articles were approved and enacted, forming the International Air Transport Association (IATA).
Focused on economic rather than technical issues, the purpose of IATA initially was to to promote safe, regular and economical air transport for the benefit of the peoples of the world; to foster air commerce and to study the problems connected therewith; to provide the means of collaboration among the air transport enterprises engaged directly or indirectly in international air transport services; and to cooperate with ICAO”. Today these functions largely remain the same:
Sets economic standards for the orderly flow of air transportation throughout the world
Coordinates fares and rates among member airlines
Provides forum for industry agreements between airlines (interline, alliances)
Conducts training for airline personnel
Provides clearing house for collections on interline international tickets
Holds semiannual “Slot Conference”
Assigns airline designators
The Bermuda Agreement of 1946
The Bermuda Conference was held in 1946 and it was essentially a conference between the two airline powers, Britain and the United States. There was a feeling of urgency at the conference. Besides the aviation issues to be resolved, Britain was in a severe crisis over its balance of payments and was concurrently negotiating a $3.75 billion loan on easy terms. At the same time, the U.S. was engaged in conference with Britain and its commonwealth partners over telecommunications rights with the hope that empire preferences disciminatory to the U.S. would be eliminated. It was, however, the principle aim of the conference to reconcile the widely divergent views held by the two nations on the extent to which international air transport should be controlled.
The Bermuda Air Agreement, known as the Bermuda Agreement of 1946, was accepted by both nations. Its provisions included criteria regarding Fifth Freedom Rights, including consideration of the traffic requirements between the country of origin and the country of destination, the requirements of through airline operation and the traffic requirements of the area through which the airline passes after taking account of local and regional services.
The key provisions included:
Provided for Fifth Freedom rights with reciprocity
Provided for extensive routes between the two countries with the requirement for reciprocity
No arbitrary restrictions on capacity or flight frequencies
Procedures for rate-making and traffic rules assigned to IATA subject to government approval
Disputes referred to the ICAO for advisory opinion
Pan American and BOAC were the designated carriers
Became model for future bilateral agreements
This agreement enabled Pan American pick up passengers at London for passage to points east. As the agreement also applied to commonwealth countries, Pan American benefited from Fifth Freedom rights at points in India and later at Hong Kong. This enabled Pan American to launch its round-the-world services in 1947.
Below are pages from a 1948 Pan American time table showing its round-the-world service and the scene in New York at the departure of its first round-the-world flight.The the area through which the airline passes after taking account of local and regional services.n and the traffic requirements.
The “Chosen Instrument”
The concept of the “Chosen Instrument” suggests that the national carriers designated to operate international routes by their owning nations are instruments of those nations’ foreign policy. Indeed, through the bilateral agreement system promulgated by the Chicago Convention, that could ring true. However, the term preceded Chicago.
During the early years of Pan American’s growth, the U.S. government looked very favorably at the carrier, and viewed it as an “instrument” of foreign policy by using the airline to facilitate economic expansion to Latin America and the Caribbean. The U.S. government, in fact, awarded Pan American every foreign airmail route for which bids were invited. This was helped by provisions of the Foreign Air Mail Act that provided that only airlines capable of operating on a scale and manner that would project the dignity of the United States in Latin America would be granted the right to carry international mail. Secondly, contracts would only be given to companies that had been invited for operations by the host countries. In both cases, Juan Trippe made sure that Pan American had no competition. He aggressively pursued friendly relations with most countries in Latin America and the Caribbean and often personally met with foreign leaders. Trippe was also the kind of entrepreneur who emphasized elegance and grandeur in operating his airline. To enhance the stature of Pan American, Trippe also invited the famous aviator Charles Lindbergh to serve as a technical adviser.
In addition, there was concern over the German presence in South America in the 1930s. The German airline Lufthansa had established subsidiaries in various countries and Sociedad Colombo-Alemana de Transportes Aéreos (SCADTA) was formed by a group of Colombian and German businessmen, posing a threat to the Panama Canal. This meant the presence of German propaganda and espionage. Pan American proceeded to acquire SCADTA and other German subsidiaries to remove the German presence and expand its Latin American route network. In essence, this was carrying out U.S. foreign policy to rid the continent of the German presence.
Up to World War II, because of its leadership and role in international commercial aviation, Pan American was considered the “Chosen Instrument” for the United States.
However, while Trippe was largely successful negotiating on behalf of his airline and his government, his stature as the “ad hoc” transport minister would soon come to an end following his efforts to secure transatlantic authority from the British and the U.S. government’s eventual policy of government-to-government negotiations for foreign landing rights. However, although Pan American no longer had a monopoly on international routes, the airline was still considered the principle international carrier, and indeed, the “Chosen Instrument”.
The “Chosen Instrument” survived up through the Cold War largely because of the restrictive nature of the regulated airline industry and the resultant barriers to entry. With the advent of “Open Skies” and general liberalization of the industry, this concept has faded away. Under the current regime, there is virtually no airline that can really claim to be an instrument of its country’s foreign policy.
END OF PART THREE
The next installment of this story, Part 4, will cover the post-War regulated and protectionist era of the airline industry including the government role in international commercial aviation during the Cold War.