16^TH TRANSPORTATION WORKING GROUP
Hong Kong, 8-12 November 1999

REPORT ON AIR SERVICES

AUSTRALIA

STEERING COMMITTEE ON MORE COMPETITIVE TRANSPORTATION INDUSTRY (INCLUDING INFRASTRUCTURE) ON IMPLEMENTATION OF AIR SERVICES GROUP RECOMMENDATIONS

REPORT BY AUSTRALIA

 1. REVIEW OF AVIATION POLICY

The Australian Government has now completed an extensive review of its international air services policy. The review found that the policy had met its short to medium term goals. The rapid growth in inbound tourism and export opportunities for Australian industry was made possible by the negotiation of passenger and freight capacity well ahead of demand and of significantly expanded network options for both Australian and foreign carriers.

Both Australia and the international airlines that serve our markets are becoming increasingly integrated into the global market. Passengers and shippers are demanding better quality services to more destinations at a lower cost. Airlines around the world are responding with demands for freedom and flexibility in offering new services and innovative products that increasingly challenge the old bilateral rules, which allowed each state to restrict competition in their home markets.

On 3 June 1999 Australia announced its new international aviation policy. Australia will continue to liberalise its air services bilaterally, but will also pursue greater opportunities on a plurilateral and multilateral basis.

Australia new international aviation policy underpins continuing liberalisation of air services arrangements with our APEC partners. We are happy to discuss implementing any of the eight options bilaterally, plurilaterally or multilaterally. The policy recognises, however, that while many Governments accept the need for aviation reform, they may have legitimate concerns about the timing and direction of liberalising market access for international airlines within and beyond the bilateral system.

2. REVIEW OUTCOMES APPLIED TO THE EIGHT OPTIONS

Australia’s new policy direction will facilitate implementation of the eight options identified by the Air services Group on More Competitive Air Services with Fair and Equitable Opportunity. We intend to implement the new policy measures in the following ways:

Market access:

As the opportunity arises, Australia will implement bilateral ‘open skies’ arrangements with like minded countries where this is in the national interest. Where ‘open skies’ is not an option, Australia will pursue the most liberal outcome possible. ‘Open skies’ will remove restrictions on capacity and routes, including route and traffic rights at intermediate and beyond points.

Where ‘open skies’ cannot be negotiated or is not in the national interest, Australia’s standing policy will be to offer to all bilateral partners a regional airports access package that includes unrestricted direct route access, and unlimited capacity, code share and own stopover rights for all designated international airports other than Sydney, Melbourne, Brisbane and Perth.

Airlines’ cooperative arrangements:

Australia will remove restrictions on code sharing under its bilateral arrangements and will offer, within negotiated capacity, unrestricted rights for foreign airlines to code share on Australian domestic airlines and carry their own stopover traffic to all points in Australia.

Air freight:

Since 1996, Australia has negotiated liberal dedicated freight capacity in its bilateral air services arrangements to allow operators to make commercial decisions about providing dedicated freighters unencumbered by passenger considerations.

Australia will continue to pursue the most liberal arrangements possible for dedicated freight services.

Multiple airline designation:

Australia has sought multiple designation since the late 1980s. Australia’s policy on liberalised market access includes multiple airline designation as a means of increasing the range of choice for consumers of air services.

Tariffs:

Australia’s practice is not to interfere with tariffs in the market place, allowing airlines to make commercial decisions based on their assessment of market demand. Australia will remove tariff regulation from its air services agreements as the opportunity arises bilaterally. Australia is also amending its domestic legislation to remove the requirement for airline’s tariffs to be approved. Airline tariffs in the Australian market place will then be subject only to the general provisions of Australia’s competition law.

Doing business matters:

Australia negotiates to remove discriminatory practices from "doing business" clauses in its bilateral arrangements and will continue to do so with like minded bilateral partners under the new policy.

Ownership and control:

Australia is changing its international airline ownership laws to allow 49% foreign ownership without discrimination between classes of foreign investors for all Australian airlines other than Qantas.

Australia will also negotiate liberalised ownership and control criteria for airline designation bilaterally with like minded partners.

Foreign investors, including foreign airlines, are now permitted to acquire up to 100% of the equity in Australian domestic airlines subject to a national interest test.

Charters:

Since June 1996 Australia has taken a liberal approach to charters, encouraging their development to accommodate seasonal peaks in demand and as direct competition for scheduled services. This approach will continue under the new policy.

This page was last updated on 1 Feb, 2008