Existing frameworks for how trade is facilitated between countries in this sector

The arrangements described in this section are examples of existing arrangements between countries. They should not be taken to represent the options being considered by the Government for the future economic relationship between the UK and the EU. The Government has been clear that it is seeking pragmatic and innovative solutions to issues related to the future deep and special partnership that we want with the EU.

The Prime Minister has set out that the UK is seeking an ambitious arrangement with the EU which builds on our unique position of regulatory alignment. We should seek a set of arrangements which is in the best interests of citizens and businesses – both in the UK and across the EU.

International air services are not covered by WTO rules but governed by ASAs between individual countries (or regional blocs) which determine levels of marketaccess.56 ASAs are part of the international framework of air transport that has developed from the 1944 Chicago Convention. ASAs will set out the access between two states, and might also stipulate the number of carriers, provisions for freight traffic and a range of other aviation related business.

The UK has bilateral ASAs with 111 countries (including, for instance, Brazil, Russia, India and China). Our access to EU Member States, and some third countries, such the US and Canada, is currently derived from our membership of the EU. In total, this accounts for access to 44 markets which include some of our major trading partners and together they account for around 85 per cent of international passenger movements to and from UK airports

Since the privatisation of the commercial aviation industry in the UK, and following the removal of commercial restrictions within the EU internal aviation market during the 1990s, the UK has actively sought to liberalise and deregulate its ASAs, aiming,on a reciprocal basis, to allow carriers to operate competitively, on a level playing field, and within an appropriate regulatory framework.

The 1944 Chicago Convention also established the International Civil Aviation Organisation (ICAO), a UN special agency that develops international aviation guidelines and standards. ICAO has 191 state members. The UK is a permanent representative on ICAO’s Council – ICAO’s main executive body – independent of its membership of the EU. The EU is an ad-hoc observer in many ICAO bodies and at ICAO Council the EU is represented based on an ad-hoc invitation.58 ICAO has no ability to set regulation or enforce its rules, compliance is drawn from members’ domestic legislation. The UK and the EU have developed their aviation regulatoryframework on the basis of ICAO’s global standards.

Summarised below are examples of frameworks which facilitate aviation between the EU and non-EU countries.

European Common Aviation Area Agreement

The UK is currently part of the European Common Aviation Area (ECAA) by virtue of its membership of the EU.59 The ECAA agreement sets out the framework for an integrated aviation market, and aims to extend the EU’s internal aviation market to several non-EU countries.60 The level of market access granted is linked to the degree to which countries adopt the aviation acquis. For example, Norway is part of the ECAA through its membership of the European Economic Area (EEA). It has adopted the full aviation acquis, and has full and open access to the European single aviation market. The Former Yugoslav Republic of Macedonia has not completely aligned its aviation regulations and has more limited market access.

The EU-Switzerland Air Transport Agreement is a bespoke bilateral agreement which predates the ECAA. It is one of seven bilateral agreements between the EU and Switzerland which stand or fall as a package. Switzerland agreed in 2002 to adopt and implement the aviation acquis in full. Switzerland has been granted liberalised access to the internal market, though its traffic rights do not extend to the ability to fly between two destinations within a Member State.

EU Multilateral Agreements With Third Countries

US Open Skies Agreement

The EU has concluded liberal agreements with third countries. The EU-US Air Transport Agreement is an example of this. It offers liberal market access for the EU and US, with air carriers being able to fly an unlimited number of frequencies on any route between the US and EU Member States. Prior to this agreement, transatlantic routes were restricted in the points that could be served, the carriers that could operate them and at what frequency. The agreement encourages principles of competition and regulatory cooperation.

Neighbouring Countries Multilaterals (Inc. Israel, Morocco, Moldova, And Jordan)

Several countries neighbouring the EU have concluded agreements with the EU. The terms of these agreements differ from the other but none of these countries have been granted the right to operate flights within the EU. They are distinct from the US agreement in that they extend to regulatory alignment, meaning that the respective third countries have agreed to adopt and implement some, most of or all of the EU acquis as it applies to aviation. There is a close correlation in these relationships between the level of liberalisation in the agreement and the extent to which the third country agrees to implement the acquis.

EU Canada Air Transport Agreement

EU and Canada Transport Agreement was signed in 200961. The agreement aims to promote competition within the aviation marketplace with minimum government interference and regulation. The EU-Canada agreement gants EU and Canadian carriers the right to fly between any point in Canada and any point in the EU, as well as points beyond, on services originating in the EU or Canada.

The agreement emphasises the need for parties to work collaboratively. This is particularly emphasised on areas such as security and safety. Parties areencouraged to exercise mutual recognition of security arrangements and reciprocal acceptance of safety certificates and licences. Where there are reasonable grounds, and/or a contracting party departs from the agreement, parties can act to suspend, limit or revoke the arrangements.