RECOMMENDATION 1: AIR CARRIER OWNERSHIP AND CONTROL

Co-ordinating economies: New Zealand and Singapore

Synopsis of Submissions

Fourteen economies responded to the questionnaire on air carrier ownership and control.

For the majority of respondents, designation criteria remain based on substantial ownership and effective control. Evident, however, from ten of the responses, is a preparedness to consider or adopt alternative designation criteria (either for the bilateral partner's airlines or the airlines of both sides), viz.:

• P place of incorporation, principal place of business and effective control;
• P principal place of business, permanent place of residence and maintains strong links to the designating Party (recommendation of the ICAO Air Transport Regulation Panel in June 1997).

One economy explained that its policy of substantial ownership and effective control may be waived in cases where economically undeveloped countries have difficulty in establishing an airline.

Some economies identified the maximum level of foreign ownership allowed in their international carriers. Two levels identified were 35% and 49%. One economy advised that it had "increased the limit of foreign investment in scheduled/unscheduled air transport from 20 to less than 50 per cent".

One economy suggested the "substantial ownership and effective control" formulation was the best means of ensuring the appropriate authorisation and supervision of safety and security standards of designated airlines by competent authorities.

A new and shared understanding on airline ownership and control would be consistent with the commitment to free trade in goods and services agreed by APEC Leaders in the Bogor Declaration of Common Resolve. Economies will have to consider this and one option could be the acceptance of joint ownership of airlines operating solely on routes between APEC members. Such an airline could have its place of incorporation and principal place of business in one APEC economy, and be effectively controlled there, but be owned jointly by nationals, including airlines, of that economy and one or more other APEC economies.

^[1] Joint ownership of an airline might be proposed in order to meet necessary start up and operating capital, to access wider management and operational expertise, to achieve cost savings through joint purchasing, or to provide traffic feed within a grouping of airlines.