15^th TRANSPORTATION WORKING GROUP
Santiago de Chile, April 19 - 23,1999

 TPT/WG/15/CT/SC/4.1

 Third Meeting of Steering Committee on
More Competitive Transportation Industry (including Infrastructure)

 Report on Air Services

AUSTRALIA

Interim REPORT BY Australia

The Productivity Commission, a research and policy advising agency within the portfolio of the Treasurer, has completed an exhaustive review of Australia’s international air services policy. The Government is currently considering the recommendations arising from the review. Australia will submit a detailed report to the Steering Committee on progress in achieving the recommendations of the ASG once the results of the review are known.

In the meantime, Australia offers the following interim report. Some of the following may be subject to change following completion of the Government’s consideration of the Productivity Commission Report.

Option 1. Air carrier ownership and control.

Recommendation: Give consideration to relaxing the ownership and control requirements when considering designation made by partners under bilateral air services arrangements on a case-by-case basis. Medium priority.

Most of Australia’s air services agreements contain the requirement that airlines be substantially owned and effectively controlled by nationals of the party designating an airline. In a number of instances the ownership requirements have been excluded.

Australia’s legislation limits foreign ownership of Australian international airlines to 49% and control criteria require that the chairperson and at least two thirds of the board members are Australian citizens, and that the airline’s head office and operational base are in Australia.

Option 2. Tariffs

Recommendation: Support the removal or progressive easing of tariff regulations through the bilateral air services arrangements where this promotes competitive pricing to the benefit of consumers. Medium priority.

Australia has adopted a tariff article in its standard draft air services agreement which does not require tariffs to be filed for approval. The article provides for intervention only in accordance with competition policy principles.

The new tariff article has been tabled with Korea and will be agreed progressively with APEC members. The revised Papua New Guinea air services agreement is silent on tariffs.

Option 3. Doing business matters

Recommendation: Work towards removing impediments to doing business matters whether under bilateral agreements or in domestic laws and by-laws. High priority.

Australia’s domestic laws do not allow discriminatory practices. Where restrictions to doing business matters exist in other countries, Australia has sought agreement to have these addressed.

Option 4. Air freight

Recommendation: Progressively remove restrictions in the operations of air freight services while ensuring fair and equitable opportunity for the economies involved. High/medium priority.

Australia seeks open freight arrangements in its air services agreements. Where this is not possible, separate freight entitlements are pursued.

Australia has open freight capacity in 6 of its air services agreements with APEC economies, of which 3 have no restrictions on the routes that can be operated.

Option 5. Multiple airline designation

Recommendation: Include, as appropriate, multiple airline designation in bilateral air services agreements. High priority

Australia has multiple designation in all its air services agreements with APEC economies.

Option 6. Charter services

Recommendation: Allow and facilitate the operation of both passenger and freight ad hoc charter services which supplement scheduled services. Medium priority.

Australia has adopted a liberal approach to passenger charters, particularly those which target secondary gateways and encourages charter operators to compete with scheduled freight capacity, especially to meet seasonal increases in freight demand.

Option 7. Airlines’ cooperative arrangements

Recommendation: Facilitate cooperative arrangements such as code-sharing including third country code-share and code-share over domestic sectors, joint operations and block space arrangements, where it can be shown to be of benefit to consumers and airlines(s) and where there are no anti-competitive effects, and where fair and equitable opportunities for the economies involved can be ensured. High priority.

Australia actively pursues cooperative arrangements in its air services agreements. These arrangements are subject to Australia’s competition laws.

Australia has code share arrangements which permit third country code share with 8 APEC economies, code share on domestic sectors also with 8 economies, code share arrangements restricted to 3^rd/4^th carriers with 7 economies and 3 agreements which do not refer to code share.

Option 8. Market access

Recommendation: Take an approach to progressively achieve more liberalised market access under their bilateral air services arrangements, while ensuring fair and equitable opportunity for the economies involved. Medium priority.

Australia seeks to negotiate capacity well ahead of demand with its bilateral partners and has two agreements where capacity is unrestrained. While current policy settings preclude "open skies" Australia is progressively seeking to liberalise its air services arrangements.

This page was last updated on 12 March, 2008