Worldwide Air Transport Conference (ATConf/6)

International Civil Aviation Organization Preparations for the ICAO Sixth Worldwide Air Transport Conference (ATConf/6) Mrs. Narjess Teyssier Mrs. Magda Boulos ICAO Buenos Aires, July 6, 2012

Contents Session 1: Overview of industry and regulatory developments Session 2: Outcome of ATConf/5 Session 3: Preparations and arrangements for ATConf/6 Session 4: Examination of key issues to be addressed by ATConf/6 Session 5: Next Steps International Civil Aviation Organization Session 1 Overview of industry and regulatory developments

Value chain of air transport STATES (Regulatory framework) ANSPs MROs Ground Handling Airports Airlines Aircraft manufacturers Lessors Travel agents & GDS Fuel suppliers Seeks services from International Civil Aviation Organization Civil Aviation: the global picture 2.7 Billion passengers 50 million tonnes of cargo

Regional traffic overview for 2011 North America Traffic: +2.4% Capacity: +2.3% Load Factor: +0.0 Pt Latin America Traffic: +10% Capacity: +8.5 % Load Factor: +1.0 Pt World Traffic: +6.5 % Capacity: +6.7 % Load Factor: -0.1 Pt Europe Traffic: +9.3% Capacity: +9.7% Load Factor: -0.3 Pt Middle East Traffic: +8.6% Capacity: +8.8% Load Factor: -0.1 Pt Africa Traffic: +1.2% Capacity: +2.3% Load Factor: - 1 Pt Asia Pacific Traffic: +7.3% Capacity: +7.4% Load Factor: +0.0Pt Source: ICAO Market Shares* Achieved in 2011 International traffic represents 62% of the total passenger traffic International passenger traffic** Domestic passenger traffic** * Market share of the scheduled traffic of the airlines domiciled in the region **Expressed in Revenue Passenger Kilometer

Last decade traffic growth Passenger traffic market share By airline type Passenger traffic market share By airline type IATA members 79% Non IATA airlines 21% IATA members 93% 4500 4000 Non IATA airlines 7% 2000-2010 +4.4 % p.a. 3500 Passenger traffic Billion RPKs 3000 2500 2000 1500 1000 500 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: ICAO, IATA Low Cost Carriers development Number of LCCs : 45 Deregulation : 1987-1997 Number of LCCs : 15 Deregulation : 1978 Network carriers 75% LCCs 25% Network carriers 85% LCCs 15% Network carriers 73% LCCs 27% Number of LCCs : 12 Network carriers 95% LCCs 5% Number of LCCs : 38 Deregulation : accelerating Deregulation : in progress Number of LCCs (Africa and Middle East) : 10 Network carriers 79% LCCs 21% Deregulation : uneven The LCCs business model is being transferred to the long haul segment Source: ICAO

Toward more consolidation: Alliances, Airlines mergers and acquisitions Most well known Non Aligned airlines 1997: Star Alliance Regional Distribution North America: 51% Europe: 40% Asia/Pacific: 9%

1999: Oneworld Regional Distribution North America: 49% Europe: 26% Asia/Pacific: 25% 2000: Skyteam Regional Distribution North America: 55% Europe: 30% Asia/Pacific: 11% Latin America: 4%

2012: Alliances regional distribution Star Alliance: 28% One world: 29% Skyteam: 28% Star Alliance: 8% One world: 2% Skyteam: 2% Star Alliance: 28% One world: 34% Skyteam: 32% One world: 1% Skyteam: 4% Star Alliance: 5% Skyteam: 1% Star Alliance: 31% One world: 33% Skyteam: 31% 3 Major alliances grouping : more than 60% of the worldwide scheduled traffic Air travel: a cyclical industry World annual traffic trillion PKPs 5 4.5 4 3.5 3 2.5 Gulf Crisis Asian Crisis SARS WTC Attack Iraq War Financial Crisis 2 1.5 1 0.5 Oil Crisis Oil Crisis 0 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Source: ICAO, * Estimation for 2009

Air transport vs Economic growth 1979: Index Base 100 Source: ICAO, IHS/ Global Insight World Real GDP Passenger traffic Cargo traffic 600 550 500 450 400 350 300 250 200 150 100 The link between the promoting factors 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Improving Technology Liberalized Services Falling Costs Falling Fares Economic Growth Growing Traffic

Air transport services conducted under liberalized agreements or arrangements Frequencies As a % of international scheduled services Country pairs 60% Number of frequencies Number of country-pair routes 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% Source : ICAO 0% 1995 1999 2004 2009 0% Long-term Passenger traffic forecast results Source: ICAO AAGR for 20 years forecasts 5.2 % p.a. History 1990-2010: 4.4 %p.a. 4.5%p.a 3.6% p.a. 2030-2040: 4.3 %p.a. High GDP scenario = +0.3% for developed countries & +0.6 for the developing countries Low GDP scenario= -0.5 for developed regions & -0.1 for the developing regions.

2030 Main Domestic markets 1452 287 81 286 1257 86 35 362 441 Source: ICAO Major International markets in 2030 Source: ICAO

Unpredictable circumstances The European volcanic ash cloud Snow storms in Europe Japanese earthquake and tsunami Europe s sovereign debt crisis Political unrest in the Middle East Continuous higher oil prices Increasing tax burdens placed on aviation killing the goose that lays the golden eggs. International Civil Aviation Organization Session 2 Outcome of ATConf/5

Air transport conferences Outcome / Results Principal Results of ATConf/5 Challenges & Opportunities for Liberalization theme Conclusions, recommendations and a Global Declaration Practical guidance ICAO s leadership role and reorientation on liberalization

Role of ICAO Facilitate, promote and assist States in the liberalization process ICAO Regional Seminar, Buenos Aires, July 6 2012 Facilitating Liberalization Studies (e.g. Safety implications, ESTDR) Databases on economic regulation www.icao.int site index Case studies on liberalization experience State Policies on ownership and control

Facilitating Liberalization Template Air Services Agreement TASA TASA TASA World Air Services Agreements (WASA) Web Database Original text of over 2500 bilateral agreements 90 distinct provisions covered Summary of the routes exchanged A built in search engine

States involved in open skies agreements States which signed open skies agreements with both the US and third countries States which signed open skies agreements with the US only States which signed open skies agreements with the third countries only States involved in OSAs

Regional distribution Regional liberalization status Full liberalization arrangements (ASEAN, CARICOM, EU, LACAC. Trans-Tasman cooperation) Gradual liberalization arrangements (AFCAC, Damascus Agreement signatory states, South Pacific Islands)

Multilateral initiatives IATA s Agenda for Freedom Draft Multilateral Convention World Trade Organization ICAO Initiatives 36

ICAN events held in different regions What is ICAN A unique, innovative facility/service A place to meet for multiple ASA talks A forum to get info, discuss issues A platform for bilateral, multilateral talks

ICAN benefits Number of participating States Number of meetings Number of Bilateral Agreements Cost savings to States 2008 2009 2010 2011 27 52 38 64 100 200 200 340 20 60 60 120 n/a n/a US$ 10 million n/a ICAO Regional Seminar, Buenos Aires, July 6 2012 ICAO Regional Seminar, Buenos Aires, July 6, 2012

International Civil Aviation Organization Session 3 Preparation and arrangements for ATConf/6 Objectives of ATConf/6 IMPROVEMENT OF THE REGULATORY ENVIRONMENT Develop guidelines for a new harmonized regulatory framework in areas such as market access, consumer protection and taxation; Focus on the best means to implement it with the aim to build a more sustainable international air transport system.

Conference Agenda Item 1: GLOBAL OVERVIEW OF TRENDS AND DEVELOPMENTS 1.1 Review regulatory changes & industry developments 1.2 Briefing on other areas of ICAO s work that may have economic implications (e.g. safety, security, environment) Setting the scene Agenda (cont d) Item 2: EXAMINATION OF KEY ISSUES AND RELATED REGULATORY FRAMEWORK 2.1 Market access Traffic rights (beyond 3/4 Freedoms) more flexibility for all cargo services liberalization of auxiliary services (e.g. ground handling) regional or plurilateral approaches, prospects for multilateralism airline capacity and airport access issues (slot allocation and night flight restrictions)

Agenda (cont d) 2.2 Air carrier ownership and control relax rules for airline designation and authorization moving beyond national ownership and control requirement foreign investment in national airlines regulatory arrangements to facilitate airline access to international capital markets Agenda (cont d) 2.3 Consumer protection air passenger rights related regulatory approaches and industry practices (e.g. conditions of carriage, industry commitments, airline insolvency airline pricing transparency development of ICAO guidance material Compatibility/harmonization of regulatory approaches

Agenda (cont d) 2.4 Fair competition avoidance of unfair competitive practices impact of industry consolidation and concentration effect of economic regulatory frameworks on the airline industry compatibility or harmonization in application of competition laws/rules Agenda (cont d) 2.5 Safeguards sustainable and effective participation of all States, particularly developing countries assurance of services avoidance of unilateral action impinging on air transport

Agenda (cont d) 2.6 Taxation & other levies on international air transport taxes/charges/fees imposed on civil aviation impact of non aviation related levies on the development of air transport implications for ICAO s existing policies on taxation and charges Agenda (cont d) 2.7 Economics of airports and air navigation services Report on financial situation of airports and air navigation services providers Review implementation of recommendations resulting from the 2008 CEANS Consider related issues (e.g. funding of regulatory oversight functions and infrastructure & financing the air transport system)

Agenda (cont d) 2.8 Implementation of ICAO policies and guidance relevance and effectiveness of existing ICAO policies and guidance on the economic regulation of international air transport application or implementation by States of ICAO Policies measures to improve the situation Preparations started ICAO Air Transport Synposium (IATS): 18 22 April 2012 Secretariat prepared working papers on each agenda item Assistance and review by ATRP(4 to 8 June 2012) ATRP/11 report finalized Invitation to States & Organizations to attend ATConf/6 (reply by 30 September 2012) A series of regional seminars to assist States

Documentation Secretariat will prepare the conference basic working paper on each agenda item Papers on ICAO ATConf/6 website (30 November 2012) States submission of working papers ATConf6@icao.int No later than 1 February 2013 (for translation purposes) Documentation for the meeting will be placed on the ICAO website at www.icao.int/atconf6 Administrative arrangements Agenda: inclusion of appropriate technical experts in national delegations Credentials are required for the meeting; visa may also be required Online registration and additional information on the ICAO website at www.icao.int/atconf6 Working language: simultaneous interpretation in Arabic, Chinese, English, French, Russian and Spanish

Preparatory seminars Regional seminars: Arab States: Rabat, 1 July 2012 Latin American States: Buenos Aires, 6 July 2012 African States: Dakar, 6 & 7 September 2012 North Central & Caribbean States: Martinique, 3 October 2012 Asia Pacific States: India, TBC European States: Paris, 13 & 14 November Pre Conference Symposium One day symposium: Montréal, 17 March 2013 Better prepare participants Join forces with the major stakeholders organizations such as IATA, ACI, CANSO, UNWTO. Six sessions: topical issues very high level speakers Electronic bulletin on symposium agenda

Outcome of IATS 388 participants/66 ICAO member States/11 organizations/4 aircraft manufacturers 9 sessions, including expert panels: industry trends in airline mergers, alliances and consolidation; financing of AT; forecasting for a cyclical industry; economic benefits of AT; new airline business models; economic sustainability; strategies and tools for AT sustainability Strategies and Tools for Sustainable Air Transport impediments to AT sustainability (what s wrong?) strategies for AT sustainability (what should we do?) tools for AT sustainability (how?) www.icao.int/meetings/iats ICAO Regional Seminar, Buenos ( Documentation ) Aires, July 6, 2012 Main impediment: fragmentation industry fragmentation is geographic, regulatory, economic areas of concern: economic/financial situation of air transport disparities in Value Chain low profitability of carriers/airports challenges to finance infrastructure proliferation of taxes and levies challenges to position AT in economic cycles + fuel price volatility existing regulatory/policy frameworks: different approaches on fair competition, consumer protection, market based measures for environmental protection

Strategies and tools STRATEGIES industry regulators/policy makers all stakeholders TOOLS economic development of AT infrastructure MBMs Chicago Convention Annex 20 International Civil Aviation Organization Session 4 Examination of key issues to be addressed by ATConf/6

Liberalization of market access: key issues Expanded market access is fundamental to the development of air transport Open skies agreements have become widespread, regional liberalization has increased Concerns with the notion of level playing field Industry faces structural changes and competition Multilateral initiatives (IATA, WTO,..) Cargo: restrictions inherent in the traditional bilateral system no longer meet the needs of the air cargo industry Liberalization of market access: ICAO activity ICAO policy and guidance on market access (Ass. Resolutions, model clauses, TASAs) ATConf/5 States to pursue liberalization at own pace and choice bilaterally, regionally, multilaterally A37 20 recognized benefits of ICAN

Liberalization of market access: ATRP/11 Conclusions More States embraced liberalization since ATConf/5 Reluctance to open up and go beyond bilaterals Need to modernize the global regulatory framework role for ICAO ICAN, a valuable platform ICAO guidance valid and its application to be promoted Recommendations ICAO to promote its policy and guidance material on air transport regulation and liberalization, and to develop additional guidance ; Survey States interest towards a plurilateral or multilateral agreement Additional guidance (case studies, liberalization indicators,..) Slot allocation : key issues shortages in slots are affecting a growing number of airports ICAO guidance: consultation and dispute resolution mechanisms under air service agreements Specific restrictions are locally determined, but they have a significant global impact

Night flight restrictions: key issues Night flight restrictions imposition of curfews at individual airports, largely in response to concerns expressed by local communities particular impact on all cargo carriers, especially on express delivery operations Slot allocation: ATRP/11 Conclusions & Recommendations Conclusions States to give due consideration to airport and ATM capacity constraints States to give due consideration to concerns of other States ICAO guidance on consultation remains valid ICAO to continue to monitor Recommendation ICAO to inform ATConf/6 on present and future airport and ATM capacity constraints

Night flight restrictions: ATRP/11 Conclusions Conclusions States to give due consideration to concerns of other States ICAO Balanced Approach principle remains valid ICAO to monitor situation and States practices Air carrier ownership and control: key issues Overriding majority of air service agreements include a nationality clause Criterion not contained in Chicago Convention Art. 5 IASTA (and ASAs): State can withdraw certificate if carrier not substantially owned and effectively controlled

Air carrier ownership and control: key issues Why these restrictions? national security concerns resistance by labour free rider concerns (unreciprocated rights) nationality of third country investors protect service to remote areas Impact on competition it s in all ASAs.. any changes require amendments Air carrier ownership and control: key issues Liberalization and privatization in the airline industry: transnational consolidations/mergers and trans national investments At odds with ownership and control restrictions

Air carrier ownership and control: key issues Impact of restrictions limit access to capital limit economies of scale barriers to entry and exit Air carrier ownership and control ICAO activity Alliances & mergers involving foreign investment and equity exchange Flexible requirements community carrier Agenda for Freedom initiative: signing Statement of Policy Principles US initiative for a legal binding instrument A37: US proposed ICAO consider development of a multilateral convention to facilitate airline access to international capital

Air carrier ownership and control ICAO activity ICAO has considerable policy guidance (Doc 9587) Alternative criteria, model clauses, Assembly resolutions (ATConf/5 conclusions and recommendations ) Guidance material on States policies and practices ICAO policies valid but not widely used Air carrier ownership and control ICAO activity ICAO to develop more flexible multilateral/ plurilateral agreement based on: choose your partner Legal commitment to waive nationality clause Accept third country O &C for certain countries airlines and nationals only Not impinge on national legislation and policy Wider acceptance

Air carrier ownership and control: ATRP/11 Conclusions More States are willing to liberalize ownership & control Considerable progress at the regional level States hesitant to make global policy & allow unlimited foreign ownership ICAO to develop a multilateral/plurilateral arrangement to meet needs Air carrier ownership and control: ATRP/11 Recommendations ICAO to promote its policy guidance and encourage its use ICAO to consider the development of a multilateral or plurilateral agreement

Fair competition: key issues Preamble Chicago Convention: air transport services to be established on basis of equality of opportunity Article 44(e): prevent economic waste caused by unreasonable competition Traditional approach in ASAs (favour airline cooperation) at odds with competition regulations (prohibit price fixing, collusion) Fair competition: key issues Competition not only between air carriers, but also between airline alliances With consolidation has come a heightened risk of anti competitive behaviour Development of provisions on fair competition at the regional level

Fair competition ICAO activity ATConf/5 model clause in ASAs ( Safeguards against anti competitive practices) fares and rates insufficient to cover costs excessive capacity or frequency of service practices sustained rather than temporary serious negative economic effect to another airline intent of crippling, excluding or driving another airline from the market; and abuse of dominant position Fair competition: ATRP/11 Conclusions New opportunities and challenges created by an increasingly competitive environment States to seek convergence in the application of competition rules Recommendations ICAO to update its guidance and foster cooperation among competition authorities ICAO to study competition policies and the principles on fair competition

Fair competition what s next? foster cooperation, dialogue and exchange of information between and among competition authorities collecting information regarding competition policies and practices developed or applied by other organizations core principles on fair competition Safeguards: key issues With liberalization, States have considered safeguards necessary, due to the disparity in the stages of development, competitive strength of air their carriers and geographical conditions. Safeguards established to ensure: Sustained and effective participation Assurance of service Essential air service Avoidance of unilateral action

Safeguards: ATRP/11 Conclusions In a liberalizing environment, safeguards continue to be needed by some States Need to give special consideration to interests and needs of developing countries ICAO guidance remains relevant and valid ICAO should continue to monitor developments, keep guidance up to date and responsive to address emerging global issues Safeguards ICAO activity ATConf/5 conclusions on safeguards to ensure fair competition Guidance in Doc 9626 for inclusion in ASAs: fair and equal opportunity and fair competition Material incorporated into Doc 9587

Taxation of and other levies on international air transport Not on ATConf/5 agenda Not specifically addressed in Convention, but two relevant provisions: Article 24 exemptions on fuel and aircraft equipment Article 15 principles of treatment and nondiscrimination Policies defined in A37 20 on taxes (App. E & Doc 8632 & Supplement) and on charges (App. F & Doc 9082) Taxation of and other levies on international air transport Clear distinction : Charges recover costs of facilities and services for aviation. Taxes raise government revenues and not transferred to the benefit of aviation ICAO policy (Doc 8632) addresses: Exemptions to fuel and aircraft equipment (95% ASAs) Exemptions on income (Double Taxation treaties) Taxes on sale and use of air transport (not covered in ASAs)

Taxation of and other levies on international air transport: key issues Some States, regional organizations & industry associations oppose taxes Negative impact of continued proliferation of taxes and other levies on air transport Lack of transparency & discriminatory practices Taxes levied on air transport not other modes Tourism taxes on the upwards VAT and other sales taxes imposed on air transport Taxation of and other levies on international air transport: key issues ICAO policies on charges discussed at CEANS TASA: Taxation Article based on Doc 8632 (in part), for optional use by States ICAO policies on taxation remain valid only to be amended with MBMs (??) ICAO policies and Doc 8632 NOT respected Issue remains with implementation by States

Taxation of and other levies on international air transport: ATRP/11 Conclusions Proliferation of various types of taxes and levies and discriminatory practices against air transport Recommendations States to follow ICAO policies on taxation Insertion of an optional clause in the TASA, with regard to taxes on the sale or use of international air transport International Civil Aviation Organization Coffee break

Consumer protection: key issues intense airline competition leads to unbundling of services perceived service deterioration transparency issues regulatory activity (incl. EU and US) travel disruptions (volcanic ash, winter) UNWTO activity Consumer protection ICAO activity ATConf/5: minimize differences in content and application of regulations A37/20 consumer interests should be given due regard in the development of policy ICAO guidance in Doc 9626 (4.9) http://www.icao.int/sustainability/pages/eap _ep_consumerinterests.aspx

ICAO s Guidance & Policies relating to passenger protection Pre contractual and contractual relationships from the perspective of the air transport system, other operators could potentially be subject to liability CEANS Recommendations: Responsibility of States: minimize anticompetitive risk, ensure non discrimination and transparency, ensure investments, protect users/end users Doc 9082: ICAO s Policies on Charges for airports and ANS. Paragraph 19 mentions the need to protect the interests of passengers and other end users. Additional guidance material in such areas as conditions of carriage, fare guarantee, baggage, tariff disclosure, denied boarding and code sharing in Doc 9587 ICAO Policy Guidance on the Economic Regulation of International Air Transport Policies are not mandatory but States have a moral obligation to adhere to them: Conferences, Council, Assembly 93 Consumer protection ICAO activity Table A SUMMARY OF VOLUNTARY COMMITMENTS AND REGULATORY MEASURES Item Voluntary Commitments by airlines Legislation/ Regulation* International Liability Conventions ATA Airline Customer Service Commitment European Airline Passenger Service Commitment IATA Global Customer Service United States Framework & RP 1724 European Union (EU) & ECAC Before the travel Offer the lowest fare available Yes Yes Yes - - - Inform of possible availability of lower fares at web site - Yes Yes*1 *3 *13 - Honor the agreed fare after payment - Yes Yes*2 *23 - - Allow reservations to be held or cancelled Yes Yes Yes *23 - - Provide prompt ticket refunds Yes Yes Yes - - - Waive ticket restrictions (non-refundable, sequential use of flight coupons) in special circumstances - - Yes*2 *4 - - Ensure good practice of airline ticket selling web sites - - - - *13 - Ensure fair advertisements - - - *5 *14 - Advise passengers regarding an airline's commercial and operational conditions Publish contingency plans, customer service plans and contracts of carriage (carrier website) Yes Yes Yes *6 *15 *21 *23

Consumer protection: ATRP/11 Conclusions Consumer protection has gained importance but regulatory approaches vary and passenger dissatisfaction persists ICAO guidance remains relevant Recommendations ICAO to survey the effectiveness of various regulatory approaches, and consider developing a set of principles ICAO will continue to cooperate with UNWTO on matters of mutual interest and keep States informed of the work carried out by UNWTO in the area of protection of tourists and tourism service providers affecting air transport. Consumer protection what s next? on going monitoring on the fundamental principles: price transparency (what should/not be included in offers to the traveling public; how to advertise); basic services; assistance to passenger in cases of delay, cancellation, extraordinary circumstances; harmonization/compatibility of notions such as force majeure/extraordinary circumstances; insolvency of carrier. study on effectiveness of regulations fundamental principles on protection of passengers code of conduct cooperation with UNWTO

Economics of airports and air navigation services: key issues Growth of air transport closely linked to infrastructure development & management Financial situation of airports and ANSPs Funding of regulatory oversight functions Economics of airports and air navigation services: ICAO activity ICAO Council to keep economic situation of airports/ansps under review ICAO collects traffic/financial data ICAO survey to States on adoption of CEANS recommendations Funding of oversight functions ICAO Policies on Charges (Doc 9082): oversight costs can be included in cost basis oversight responsibilities separated from services

ICAO Policies and Guidance on charges Joint Fourth AEP ANSEP meeting, Montreal, 7 11 Feb 2011 Revision of ICAO s Policies on Charges for Airports and Air Navigation Services (Doc 9082) 9 th edition available. Updating of the economics manuals (Doc 9562 Airports, and Doc 9161 Air Navigation Services) Completed in spring 2012. 99 Economics of airports and air navigation services: what s next? Report on the financial situation of airports and air navigation services Secretariat currently collecting data, report by mid December 2012 Report on the implementation of CEANS 2008 recommendations Implementation of ICAO s policies on charges, report by mid December 2012 Guidance on funding of oversight functions a) Funding of oversight functions b) Funding of safety oversight at the regional (RSOOs)level c) Funding of airport and air navigation infrastructure

Implementation of ICAO Policies and Guidance ICAO produced comprehensive policies and guidance material on air transport regulation and liberalization. Good feedback of validity Instances where policies are not implemented properly by States Policies are not mandatory or legislative as with SARPs States have morale obligation to comply with Key Issue : lack of awareness Implementation of ICAO Policies and Guidance: ATRP/11 Conclusions ICAO s leadership role re affirmed in economic regulation and the development of guidance to assist States. States to recognize importance & relevance of policies and adhere to their commitments. ICAO to cooperate with industry to ensure awareness, knowledge and use of the policies.

Implementation of ICAO Policies and Guidance: ATRP/11 Recommendations ICAO to encourage States to incorporate ICAO policies, principles and guidance in national legislations, rules, regulations and ASAs. ICAO to conduct a survey on the relevance and use of policies, including Doc 9626 and 9587. ICAO to provide States with information on coverage and content of a new Annex to consider the proposal. Proposed Annex on the Economic Development of Air Transport ICAO Air Transport Symposium (IATS, 18 20 April 2012) Development of an Annex to the Chicago Convention to address the sustainability of air transport ATRP/11 further examination required in considering an Annex related to the economic development of air transport. Secretariat to provide further information on this Annex, including the proposed scope and coverage

A New Annex? requires bold and strong tools Comprehensive: all AT economics (MBMs, airport/ansps,etc.), incl. airlines, States, Value Chain.. No silos. Consistent: logical structure (general principles, standards per industry) Dynamic: responsive to circumstances Annex 20 must be systemic Identify imbalances Affecting economic sustainability Possible effects on safety e.g. shortage of financing/funding = airport/airspace congestion = shortage of qualified personnel

Annex 20 must be systemic Identify imbalances: Possible negative effects on safety Possible negative effects on security Possible negative effects on environmental protection Possible negative effects on economics of all or parts of the air transport value chain The Rationale for a new Annex? Economics recognized vital part of the equation (States, industry, IATS, fragmentation) In line with new SO (eco. dev. of AT) Group in one single document: easier for States Chicago Convention: Art. 44, 37, 15, 55

From the Convention Article 44 to foster the planning and development of international air transport needs of the peoples for economical air transport. Article 37 ICAO shall adopt SARPs dealing with safety, regularity and efficiency From the Convention Article 15 Uniform conditions (non discrimination) Charge only for service provision (costrelatedness) Add: transparency and consultation with users (already recognized/applied in many States and ASAs)

More from the Convention Article 55 The Council may: conduct research into all aspects of air transport [ ] of international importance [ ] and facilitate the exchange of information between contracting States [ ]; study any matters affecting the organization and operation of international air transport [ ]. The Annex 19 Precedent Hybrid: between technical standards and policy If this was done for Annex 19 (safety management), why not for economics? Air transport economic issues require Holistic Systemic approach

International Civil Aviation Organization Session 4 NEXT STEPS Discussion and coordination of a regional position ATConf/6 Next steps Council 197 th Session, ATC to: Review ATRP/11 report (Secretariat WP) Be informed of seminars and progress on preparations for the Conference (Secretariat IP) Secretariat to: Prepare and send out a series of surveys to States Prepare basic WPs on each item, assisted by ATRP Promote ATConf/6, assist States to prepare (seminars) Organize and inform on the pre Conference symposium Finalize preparations for conference, exhibitors, etc

Work to be carried out by ICAO Global overview on major regulatory and industry developments Survey on airline economics and viability Survey on Jet fuel? Survey on multilateral agreement on air cargo Work to be carried out by ICAO Market access: case studies on liberalization; liberalization indicators Verification of ICAO guidance on aircraft leasing Survey on multilateral agreement on exchange of commercial rights Survey on multilateral agreement on ownership and control (facilitate access to foreign capital)

Work to be carried out by ICAO Slot allocation: present/future airport/atm capacity constraints Consumer protection: effectiveness of regulations; pros/cons of regulation v. industry commitments Fair competition: competition policies and practices developed/applied by other organizations Work to be carried out by ICAO Implementation of ICAO policies and guidance: relevance and use of ICAO guidance; coverage/content of a new potential Annex Preliminary review of Doc 9626 and Doc 9587

What s needed from States Regional coordination Be involved for a way forward Prepare common position papers on agenda items Advise on attendance and notify names of representatives Meet deadlines for processing documentation Reply to surveys to be carried out by ICAO Challenges and issues Market access Air carrier ownership and control Consumer protection Fair competition and safeguards Taxation of international air transport Main issue: Implementation of ICAO policies and guidance

Approximat ely 2 years ICAO All rights reserved. This document and all information contained herein is the sole property of ICAO. No intellectual property rights are granted by the delivery of this document or the disclosure of its content. This document shall not be reproduced or disclosed to a third party without prior permission of ICAO. This document and its content shall not be used for any purpose other than that for which it is supplied. The statements made herein are based on the mentioned assumptions and are expressed in good faith. Where the supporting grounds for these statements are not shown, ICAO will be pleased to explain the basis thereof. ANC Panel Contracting States Assembly Council Secretariat ANC Meetings Panels & Committee s Proposal for Action AN C Secretaria t AN Study Group International Organizations Divisional Meeting Origin of Proposal Development Phase 0-5 years Direct Submission Validation Technica l Proposal ANC Preliminary Review Contracting States Secretaria t Secretariat Analysis International Organizations Review Phase 3 Month s Audio-visual Aids Unit ICAO, 2004 PANS ANC Final Review ANC Approves Subject to Approval by President of Council on behalf of Council Green Edition State s PANS Blue Edition Applicability Date Secretariat ANNEX ANC Recommen ds Council Adopts Green Edition States Disapprove Adoption/ Publication Phase 2 weeks Notification of Differences ANNEX Blue Edition Supplement Applicability Date 10 Months Approximately Adoption Date (Usually March) 4 Months Effective Date (Amendment becomes effective if not disapproved by majority of States) 4 Months Applicability minimumdate (Usually