Structure & Development of the Air

Transport Industry TAL035-1

By Raquel Dias

Contents
Introduction ........................................................................................................................................ 2
Overview of the Paris and Chicago Conventions ................................................................................ 2
The five freedoms ............................................................................................................................... 2
The arrival of deregulation in USA and EU and its impact on airline industry.................................... 3
Horizontal ASAs ................................................................................................................................... 4
References .......................................................................................................................................... 4

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Introduction
This work is to explain how countries and the creation of agreements paved the road to the growth
in commercial aviation and the safety of air travel. The demand for air travel and exploration of the
world grew in the mid-1900s and a safer, efficient way was to be found through for example the
Freedoms of the Air. Countries reduced restrictions with these agreements and followed regulation
standards which in all made aviation safe and what we see today.

Overview of the Paris and Chicago Conventions

After World War 1, there was a significant increase in the number of aircraft and International
regulation was brought about through the first attempt of The Paris convention of 1919. This laid
down the air law for nations to follow worldwide (or those who signed them). There are four
principles in the Paris convention as well as 43 articles split into nine chapters. [Paris and Chicago].
The key outcomes of this brought about airspace rules and restrictions as well as the idea of foreign
aicraft being able to fly over another territory, thereby giving freedom of passage to aircraft.

The Chicago convention was signed in 1944 and came into effect in 1947. The convention created
the International Civil Aviation Organisation which created the safety standards for air travel and
regulations. More so, nine freedoms were created to protect the international air travel and its
carrying passengers. It also refrains nations from resorting to the use of weapons against civil aircraft
in flight. Finally, today the use of the 5th Freedom is most used, that allows an international air
carrier to a fifth freedom flight is one where an airline from one country flies between two other
countries, with the right to transport passengers between them [Paris and Chicago]. These kinds of
flights are not allowed in all cases, but rather have to be part of an air services agreement between
countries.

The five freedoms

[Freedoms]

First Freedom of the Air – allows the air carrier registered of the nation to overly a sovereign nation.
Therefore, neighbouring countries give permission to fly over their airspace. Without this freedom,
the safety of air travel ceases to exisit as you would then be entering restricted airspace.

(figure 1)

Second freedom of the Air – As commercial aviation grew, the aircraft could not travel further
enough on single flights, therefore had to stop some place for fuel. For example flying to the USA
required airlines to land in Ireland for fuel before continuing their transatlantic flight. the right or
privilege, in respect of scheduled international air services, granted by one State to another State or
States to land in its territory for non-traffic purposes.

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 (Figure 2)

Third Freedom of The Air - the right to disembark in a third State passengers who have embarked in
the State of nationality of the aircraft.

Example: British Airways disembarks passengers from London (UK) in New Delhi (IN).

(Figure 3)

Fourth Freedom of The Air - the right to embark passengers in a third state to the state of nationality
of the aircraft.

Example: British Airways (UK) boards passengers in New Delhi for London (UK).

(figure 4)

Fifth Freedom of The Air – The right granted by one State to another to land and embark, in the
territory of the first State, traffic coming from or going to a third State. Though the airline must
terminate or originate from the airline’s home country.

(Figure 5)

The arrival of deregulation in USA and EU and its impact on airline industry
1978 is when in USA the deregulation of airlines occurred. Before this, airlines had been led by their
American government causing higher fares and restricted movements. Once the deregulation
occurred in USA, new airlines emerged immediately, and competition grew. Lower fares, new
networks and high rate of expansion [USA deregulation]. Airlines used a hub model to fly from major
airports to other cities, but that itself started to cause dominance of airlines in particular areas,
therefore increasing prices. Domestic airlines used this model to create international routes, they
quickly became flagship carriers instead of remaining domestic. During the 1980s recession airlines
then struggled, however the emergence of Southwest Airlines’ “low cost, no frills” business quickly

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took off and became the model to use, this consequently gave way to a new generation of low cost
travel vs legacy airlines.

In the EU once deregulation occurred, though international travel was strong, this too opened up a
hub base model of operation. It allowed bilateral open skies agreements with USA which created
greater networks and intercontinental multi-hubs by having alliance airlines with USA airlines [EU
deregulation]. The key difference between EU and USA was EU focused on national and international
routes from their home bases without new hubs, and in USA their focus remained on hubs for the
domestic transport market, hence the traffic demand was fed in by the alliance partnership.

Horizontal ASAs

In November 2002, EU courts concluded that it was against law for an EU member national airline
(owned by the national state) to fly to third countries and no other airline could do so, was found to
be breaching the EU law. Therefore, every EU Member is required to grant equal market access for
routes to destinations outside the EU to any EU carrier with an office/registry in its territory [ASAs].
The creation of horizontal ASAs between EU Member States and third countries now respected the
EU laws and its requirements. As a result of this work, the emergence of easyJet and Wizzair around
Europe was seen as they could now operate on the 7th freedom “illustrates a carrier’s right to offer
commercial air services between two foreign countries, independently of any route from or to the
home country” {Freedoms].

References

[Paris and Chicago] - Versailles / Congrs de la Paix ,The Postal History of ICAO. Available at:
https://applications.icao.int/postalhistory/1919_the_paris_convention.htm (Accessed: March
12, 2023).

[Freedoms]: Chicago Convention | SKYbrary Aviation Safety. 2023. Chicago Convention | SKYbrary
Aviation Safety. [ONLINE] Available at: https://www.skybrary.aero/articles/chicago-
convention#:~:text=The%20Convention%20establishes%20rules%20of,effect%20on%204%20
April%201947.. [Accessed 13 March 2023].

[USA deregulation]: When everything changed, Homepage. Available at:

https://airandspace.si.edu/stories/editorial/airline-deregulation-when-everything-changed
(Accessed: March 13, 2023).

[EU deregulation]: www.itf-oecd.org. 2023. EU Air Transport Liberalisation Process, Impacts and
Future Considerations. [ONLINE] Available at: https://www.itf-
oecd.org/sites/default/files/docs/dp201504.pdf. [Accessed 13 March 2023].

[ASAs]: Mobility and Transport. 2023. Horizontal Agreements. [ONLINE] Available

at: https://transport.ec.europa.eu/transport-modes/air/international-aviation/external-
aviation-policy/horizontal-
agreements_en#:~:text=A%20horizontal%20agreement%20is%20an,in%20line%20with%20EU
%20law.. [Accessed 14 March 2023].

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