REPORT BY NEW ZEALAND TO THE

STEERING COMMITTEE ON MORE COMPETITIVE TRANSPORTATION INDUSTRY (INCLUDING INFRASTRUCTURE) ON

IMPLEMENTATION OF AIR SERVICES GROUP RECOMMENDATIONS

The Steering Committee on More Competitive Transportation Industry (Including Infrastructure), at its meeting during the 13th Transportation Working Group Meeting, endorsed the Comprehensive Report on the Options submitted by the APEC Air Services Group on More Competitive Air Services With Fair and Equitable Opportunity. The Steering Committee recommended that Economies could provide progress reports to the Steering Committee, on a voluntary basis, on their implementation of the recommendations.

New Zealand presented progress reports to the 14^th and 15^th Transportation Working Group Meetings in Seoul and Santiago respectively.

As noted in its report to the 15^th meeting, New Zealand held successful air services negotiations with Mexico and Thailand in February 1999. Information on the outcome of these two negotiations is included in this report.

Air services negotiations with Indonesia have taken place since the 15^th meeting and the outcome is also included in this report. Negotiations are also scheduled to take place in November with Peru.

Implementation of the Options

New Zealand’s International Air Transport Policy provides for immediate implementation of the Air Services Group’s recommendations, as follows:

Option 1: Air Carrier Ownership and Control

New Zealand’s standard approach is to seek to remove from bilateral agreements, and exclude from new agreements, the provision referring to the ability for one Party to withhold etc, operating authorisation from an airline designated by the other Party where substantial ownership of that airline is not in the hands of nationals of the Party designating the airline. New Zealand seeks to have included, in place of the substantial ownership provisions, a provision that an airline be incorporated and have its principal place of business in the territory of the Party designating the airline, while retaining the provision that effective control be vested in the Party designating the airlines, nationals of the Party, or both.

Such provisions have been included in arrangements signed with Singapore, Malaysia, Brunei, Chile, and Mexico.

Option 2: Tariffs

New Zealand’s standard approach is to seek to remove all tariff filing requirements from air services agreements.

The requirement that tariffs be approved has been removed in arrangements signed with Australia, the United States, Singapore, Malaysia, Brunei and Chile.

Option 3: Doing Business Matters

New Zealand maintains a non-discriminatory, open market approach to these matters.

Option 4: Air Freight

New Zealand seeks, on a reciprocal basis, to remove from existing agreements and exclude from new agreements, all route, capacity and traffic rights restrictions on international air services, providing unrestricted opportunities for dedicated air-freight services, and for combination services.

Option 5: Multiple Airline Designation

New Zealand has adopted a multiple designation policy since the 1960s. Multiple designation is provided for in all but two of the bilateral air services arrangements negotiated by New Zealand with APEC economies.

Option 6: Charter Services

New Zealand has a liberal approach to the operation of non-scheduled/charter passenger and freight air services. In some instances, this is explicitly provided for in bilateral air services agreements entered into by New Zealand whereby the unrestricted route, capacity and traffic rights arrangements applied to scheduled operations also apply to non-scheduled operations.

In other cases, as is common practice world-wide, non-scheduled international air services are dealt with on a unilateral, case-by-case basis, requiring the approval of all relevant authorities. Applications which meet safety and security requirements, and do not circumvent bilateral air services arrangements are approved.

Option 7: Airlines’ Co-operative Arrangements

New Zealand’s standard approach is to create maximum opportunities for airlines to serve markets by whatever means those airlines deem to be commercially sensible, including third-country code-sharing arrangements. Pursuing open market arrangements wherever possible increases the prospect of competitive service being provided by additional airlines. Concerns regarding the impact on competition of airlines’ co-operative arrangements are addressed through the competition regulatory framework.

Option 8: Market Access

New Zealand seeks, on a reciprocal basis, to remove from existing agreements and exclude from new agreements, all route, capacity and traffic rights restrictions on international air services, including in respect of seventh and eighth freedom (cabotage) opportunities.

New Zealand’s Individual Action Plan

New Zealand’s 1999 Individual Action Plan includes a summary of the situation in respect of progress in negotiating these elements into bilateral arrangements with APEC economies. The relevant extract from New Zealand's 1999 Individual Action Plan is attached for the information of APEC economies (as noted above, air services negotiations are scheduled to take place shortly with Peru).

Outcome of Air Services Negotiations with Mexico (22-23 February 1999)

Air services negotiations with Mexico on 22-23 February 1999 resulted in signature of a draft air services agreement which provides for:

• An open route schedule;
• Open third and fourth freedom capacity between the two countries;
• In-transit and own-stopover rights, but no fifth freedom rights;
• A liberal investment regime.
• A tariffs regime which provides for the filing of tariffs to be dispensed with by either party at their option; and
• Code-sharing opportunties, including third-country code-sharing.

Signature of the Air Services Agreement was witnessed by the Prime Minister of New Zealand, the Rt Hon Jenny Shipley and President Ernesto Zedillo Ponce de Leon of Mexico, during Mrs Shipley’s official visit to Mexico on 13-15 May 1999.

These arrangements are sufficient to allow a code-share service, which is likely to be the most likely way in which commercially viable services would be offered in the short to medium term.

Outcome of Air Services Negotiations with Thailand (10-11 February 1999)

Air services negotiations with Thailand on 10-11 February 1999 resulted in the signature of a Memorandum of Understanding, which confirmed the previously reached liberal understanding on third-country code-sharing opportunities and allows for the designated airlines of each country to:

• Serve any point beyond the other country (the Route Schedule to the current Air Services Agreement already provides for open intermediate and destination points);
• Provide unlimited third and fourth freedom capacity;
• Carry fifth freedom traffic on up to 21 services per week.

The two delegations also agreed in principle to the draft text of a new liberal Air Services Agreement between New Zealand and Thailand as the basis for further consideration.

Thai Airways International have taken advantage of the new capacity arrangements by increasing its services between Bangkok and Auckland via Sydney.

Outcome of Air Services Negotiation with Indonesia (3-4 August 1999)

Air services negotiations with Indonesia on 3-4 August 1999 resulted in liberalisation of the New Zealand – Indonesia air services arrangements, expressed in a Memorandum of Understanding that includes:

• Confirmation of code-sharing, including third-country code-sharing, but with an Australian carrier only;
• The addition of a second intermediate point in Australia (to be nominated), with full traffic rights, for Indonesia;
• The introduction of an intermediate point in Australia (to be nominated), with full traffic rights, for New Zealand;
• Access via Denpasar or Jakarta, with full traffic rights, to a point in Asia for the designated airlines of New Zealand; and
• A seats-based capacity formulation that permits the designated airlines of each side to operate up to 900 seats per week in each direction.

The Memorandum of Understanding has been approved by both governments.

Ministry of Transport
Wellington
26 October 1999

Extract from New Zealand's 1999 Individual Action Plan

R = Reduced Restrictions

New Zealand has also concluded less liberal air services agreements with a number of APEC economies (Canada; China; Chinese Taipei; Hong Kong, China; Indonesia; Korea; Japan; Mexico; Papua New Guinea; Russia; and Thailand).

New Zealand is willing to negotiate new air services agreements with APEC members Peru, the Philippines, and Viet Nam and will continue to pursue reciprocal liberalisation of its bilateral air service agreements and specifically, increases in capacity entitlements and route options. New Zealand is willing to consider, in bilateral air services negotiations, proposals for the removal of all barriers to trade in air services on a reciprocal basis. New Zealand is also willing to consider liberalisation as outlined above with groups of like-minded economies.

This page was last updated on 1 Feb, 2008