RESTRICTEDWORLD TRADE
ORGANIZATIONS/C/W/59
5 November 1998
(98-4346)
Council for Trade in Services
AIR TRANSPORT SERVICES
Background Note by the Secretariat
INTRODUCTION1. This note has been prepared at the request of the Council for Trade in Services and contains
general information on air transport services.  It is intended to facilitate discussion in the Council and
is not to be regarded as exhaustive.
2. Air transport services are covered only in small part by the GATS.  This unique sectoral
exclusion results from a negotiating process in the Uruguay Round the history of which can be found
in the following documents:  MTN.GNS/TRANS/3 of 8 August 1990 and MTN.GNS/TRANS/4 of
27 November 1990 (records of meetings of the Working Group on Transport Services) and
MTN.GNS/W/4 of 27 September 1990 (Draft Sectoral Annex on Air Transport presented by theEuropean Communities).  A summary of these discussions appears in S/CSC/W/11 of 9 October 1997
(paragraphs 3 to 7).  A paper by the Secretariat (MTN.GNS/W/60 of 4 July 1989) brought together
some detailed economic and regulatory information.
3. The present coverage of air transport by the GATS results from paragraphs 2 and 3 of the
Annex on Air Transport Services.
"2. The Agreement, including its dispute settlement procedures shall not apply to
measures affecting:
(a) traffic rights, however granted;  or
(b) services directly related to the exercise of traffic rights,
except as provided in paragraph 3 of this Annex.
3. The Agreement shall apply to measures affecting:
(a) aircraft repair and maintenance services;
(b) the selling and marketing of air transport services(c) computer reservation system (CRS) services."
4. "Traffic rights" are defined in paragraph 6 (d) of the Annex.  The expression "services
directly related to the exercise of traffic rights" is not defined, but the fact that paragraph 3 is
presented as an exception to the exclusion in paragraph 2 implies that the three covered services are
regarded as "directly related".  Each of these covered services is defined, in paragraph 6 (a), (b)and (c) respectively.S/C/W/59
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5. In the air transport sector, and therefore in this paper, questions of definition and
classification are particularly interesting and important, for two reasons.  First, in this sector alone we
have a "positive list" of services covered by the Agreement – those services directly related to the
exercise of traffic rights listed in paragraph 3 of the Annex – and it is therefore important to be sure
that the definitions of these three services are operationally watertight.  Moreover, the absence of a
definition of services which are not "directly related to the exercise of traffic rights" and which arecovered by the GATS, creates uncertainty about the coverage of the Agreement and the scope of the
Annex;  this is discussed in Section I (C) below.  Secondly, the Council is required by paragraph 5 of
the Annex to "review periodically, and at least every five years, developments in the air transport
sector and the operation of this Annex with a view to considering the possible further application of
the agreement in this sector".  The first such review should begin not later than 2000.  It is important
to have a common understanding of what is already covered by the Agreement, and the review
provides a motive and an opportunity to ensure this.  Classification and definition questions arediscussed in section I-C.
6. It should be noted that although air transport is exempt to a large extent from GATS Rules, it
is nevertheless covered by some of the obligations in the GATT.  Article III of the GATT provides
that the national treatment obligation applies to the in ternal transport of goods, and it is clear from the
preparatory work on the drafting of the GATT that the word "transport" in this context covers allmodes of transport.  Article V of GATT likewise establishes detailed and strong disciplines as regards
the transit of goods – though Article V.7 specifies that the Article does not apply to the operation of
aircraft in transit, but rather to the air transit of goods (including baggage).
7. This note is in two parts.  The first part describes the economics and regulatory characteristics
of the three air transport services explicitly covered by the Annex on air transport services, togetherwith the commitments undertaken by Members in respect of  them.  The second part deals with other
air transport services.
PART I:  AIR TRANSPORT SERVICES COVERED BY THE ANNEX
8. This first part will be divided in three sub-parts:  A.  a brief description of the economic, trade
and regulatory regime governing aircraft repair  and maintenance services, computer reservation
system services and selling and marketing of air transport services;  B. an analysis of the
commitments;  and C. a discussion of the exact covera ge of the Agreement, in the light of the lack of
a definition of services not directly linked to the exercise of traffic rights.
A. 
ECONOMIC , TRADE AND REGULATORY REGIMES GOVERNING AIRCRAFT REPAIR AND
MAINTENANCE SERVICES , COMPUTER RESERVATION SYSTEM SERVICES AND SELLING AND
MARKETING OF AIR TRANSPORT SERVICES
2. Aircraft repair and maintenance services
9. Aircraft repair and maintenance activities are defined in paragraph 6 (a) of the Annex as
meaning "such activities when undertaken on an aircraft or a part thereof  while it is withdrawn from
service and do not include so-called line maintenance".  This definition would seem broadly to
correspond with what the industry calls "maintenance, repair and overhaul" (MRO).S/C/W/59
Page 3
10. The MRO market is valued (see sources below1) at between US$ 23 and 28.5 billion in 1996.
Forecasts suggest a market of US$33 billion in 2005;  the figure was only US$16 billion in 1987.
Nonetheless, notwithstanding this growth in absolute  value and in current dollars, the relative weight
of maintenance in the operational costs of airlin e companies is stable and may even be declining
slightly2 (1986 - 8.2 per cent;  1991 - 10.5 per cent;  1992 - 9.9 per cent;  1993 - 8.8 per cent;  1995 -
8.5 per cent).  This stability can be explained partly by the increase in traffic and the faster growth ofother operational costs, and partly by improved productivity, achieved both within airline companies
and through outsourcing of maintenance.  Indeed, maintenance was traditionally undertaken by
companies for their own account, often without the creati on of subsidiaries or even internal billing.  In
the past 25 years, under the influence of deregulation, the proportion of maintenance activities
undertaken externally has risen from 10 to 30 per cent.  In some countries this development is still
more marked;  in the United States "externalised" maintenance grew from 30 per cent in 1990 to
46 per cent in 1996.
11. The MRO market is sub-divided into several segments.  Line maintenance (22 per cent of
turn-over, not covered by GATS), upkeep of components (21 per cent), upkeep of engines (30 per
cent) and heavy maintenance of airframes (27 per cent).  Several types of operators share this market;
the airline companies for their own account ("airl ine captives"), airline companies working on behalf
of other airline companies ("airline third party"), the original manufacturers of equipment providing
after sales service ("Original Equipment Manufacturer, OEM") and the independent operators.  There
are no statistics as to the share of the overall market held by these operators, but there are some
indications for the engine-maintenance sector, which represents US$ 6 - 9 billion of turnover.  Here
shares are as follows:  for own account 54 per cent;  for other airline companies 13 per cent;
equipment manufacturers 18 per cent; independent operators 14 per cent;  unknown  13 per cent.  TheMRO market is undergoing major concentration, especially the engine sector, as a result of
technological progress and the high cost of entry.
12. Joint ventures are also increasing, either between airline companies or between the airline
companies and equipment manufacturers or independ ent maintenance companies.  The share of the
original equipment manufacturers is growing rapidly as a result of external growth strategies(takeover of independents) of diversification strategies (Pratt and Whitney repair General Electric
engines and vice versa).  The airline companies which nevertheless remain the main actors in this
market in practice follow three types of strategy:
- that of having no maintenance service and to outsource entirely (this is
notably the case for new companies such as Virgin and for leasing companies,but it is also largely true of British Airways, for example);
- that of developing maintenance activities so as to become a supplier to others
through "total technical support agreements" which is the strategy followed by
Luftansa Technik, Swissair, Singapore Airlines and to a lesser extent Air
France;
- that of deciding case by case whether to outsource particular operations so as
to optimise the workload and productivity of internal maintenance services,which is the strategy followed by Continental and United Airlines, for
example.
                                                     
1 See "Civil Aviation Statistics of the World, 1996", ICAO, and the magazines:  Airlines Business
International, April 1997, Interavia, December 1996 and December 1997 and Aviation Week and SpaceTechnology, April 1997.
2 Source:  Civil Aviation Statistics of the World, 1995, OACI, Table N° 1-25.S/C/W/59
Page 4
13. At the outset these outsourcing strategies produced important savings.  It is estimated for
example that maintenance costs over 15 years represent two thirds of the sale price of an aircraft, and
that to raise the rate of use by one hour per day, by reducing maintenance time, can generate an
increase in turnover of between US$ 10 and 12 million per aircraft over a period of one year.
(Estimate based on Airbus 300-600). In 1996 the U.S. Federal Aviation Administration decided to
impose higher standards, notably on personnel qualif ications and control of sub-contractors.  These
proposals are under discussion but industry sources have claimed that they could raise maintenance
costs by 15-20 per cent.
14. The main reason for public intervention was concern for quality and flight safety.  The
applicable regulations take several forms.  First there are security regulations defined multilaterally by
the International Civil Aviation Organization (ICAO) .  Secondly, national civil aviation authorities
occasionally enact additional standards and ensure that service providers respect these standards, both
on national territory and abroad, through certification programmes.  Finally, in order to avoid conflictsof jurisdiction which might result from this certification of foreign suppliers, a series of bilateral
agreements on air safety is being developed, alongside the start of harmonization and mutual
recognition of certifications.  An example of this is the cooperation between the US Federal Aviation
Administration and the Joint Aviation Authorities of EU Member States.  The certification of foreign
suppliers is sometimes subject to stricter rules than that of nationals (for example certification by theFAA has unlimited validity for American suppliers but must be renewed every one or two years for
foreign suppliers).  However, they do not have extra-territorial effect in the strict sense since their
consequences operate only on the territory of the certifying State (total or partial restrictions on
overflights and servicing in the absence of certification).
15. Among the modes of delivery, Modes 2 and 3 seem by far the most important in this sector.
The presence or absence of restrictions on consumption abroad of air maintenance services is critical.
Thus the liberalization in 1988 of FAA rules, which until then permitted foreign repairs of American
aircraft only in emergencies, has led to an increase of 150 per cent in the number of foreign repair
stations, according to U.S. trade unions.
3
16. In the same way Mode 3 conditions the establishment of foreign maintenance facilities in
third markets.  Table 1 in the Annex compares the number of WTO Members having MFN
obligations on air maintenance (all save one) the size of their commercial fleet in 1995 and 1998 and
the number of maintenance and repair facilities on their territory in those same years.  Countries with
market access and/or national treatment commitments on maintenance services are highlighted.  The
table reveals a general increase in the number of new facilities established.  This is more likely toresult from market growth than from the effects of the GATS, but it may be noted that six of the
13 cases of newly created facilities have been in countries with GATS commitments in this sector.
3. Computer Reservation Services
17. Computer Reservation Services (CRS) are defined in paragraph 6(c) of the Annex as "services
provided by computerized systems that contain information about carriers' schedules, availability,
fares and fare rules, for which reservations can be made or tickets may be issued".  The definition
does not specify by or to whom the service is delivered.  The classic pattern of CRS activities can beillustrated as follows:
                                                     
3 Testimony of the Executive Director of the Commercial Transports Department of AFL-CIO before
the National Civil Aviation Review Commission, 8 October 1997, available on the websitehttp://www.faa.gov/ncarc/safetestimony/statement.htm.S/C/W/59
Page 5
Figure 1
18. In this classic pattern (which only dates from 1976) the CRS is not put directly at the service
of the individual client, who is obliged to go through a travel agency.  Theoretically the travel agency
can use several CRS suppliers.  In practice such investments would be costly (since terminals and
programme use have to be rented) and futile, (since all CRS suppliers have all flights in their
inventory there is no point in using several) so in practice the travel agent uses a single CRS supplierwho will grant him free or discounted use of the equipment after a certain volume of reservations.
The CRS supplier is paid US$ 2 per ticket by the airline company.
19. This classic pattern of trade was no doubt in the minds of those who negotiated the Air
Transport Annex.  However, the definition in paragraph 6 (c) would also appear to cover CRS
services provided to the public directly, which have multiplied with the expansion of the internet.These services offered directly to the customer are of two types:  (i) those provided directly by
traditional CRS suppliers such as SABRE's Travelocit y (Figure 2 (a));  (ii) services provided through
Electronic Reservation Services Providers (ERSP) a legal and commercial category recently identified
by IATA with a view to their incorporation in its collective Billing Settlement Plan (Figure 2 (b)).
Figure 2 (a)Client
(private or
business)Travel
agencyCRS
supplier
Airline
companyPrice o f
ticket
Commission
Retrocession 2$ perticket
Path of the order
Remuneration of operatorsPrice of ticket
Client
(private or
business)Website of CRS
(e.g.
Travelocity,
amadeus.com)Airline
companyPCS/C/W/59
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Figure 2 (b)
20. The ERSP website does not hold complete information on flights and these providers must
therefore themselves have recourse to a classic CRS provider.
21. Nonetheless from the client's viewpoint the ERSP  supplies the full range of services covered
by the Annex;  timetables, seat availability, tariffs and tariff regulations, bookings etc.  The definitiondoes not imply that the information supplied must be exhaustive.
22. The question can be posed whether the definition of CRS would cover the following:
- websites of airline companies which permit reservations on several companies
belonging to the same alliance (Figure 3 (a));
- systems by which airline companies permit direct access by travel agencies to
their own seat inventory or even to that of other companies, thus bypassing
the CRS:  such systems have been developed in particular by Continental
airlines (Figure 3 (b)).
It would seem that these are covered:  they are "services provided by computerized systems" and the
definition does not say that the services have to be provided by specialized CRS providers.
Figure 3 (a)
Figure 3 (b)PCClient
(privateor
business)ERSP 
(e.g.
Priceline.com)CRS (e.g.
Worldspan)Airline
company
Client (private orbusiness)PCWebsite of the airline
company (e.g.:Lufthansa for billet Star
Alliance)
CRSTravel
agencyAirline
company
(e.g.:
Continental )Client (private
or business)S/C/W/59
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Figure 3 (c)
23. The number of possible combinations between the various operators involved has thus
multiplied.  Though it would appear that the Annex definition is broad enough to cover all of these,
there may be some legal uncertainties arising from the facts that:
- certain services are covered elsewhere (travel agency services);
- CRS suppliers provide many services not related to aviation (car rentals, train,
ferry, hotel reservations etc.).  Such services are of course covered by the
GATS in any case, but would presumably not be covered by a commitment on
CRS services in the air transport sector;
- the dividing line between CRS and selling and marketing is not altogether
clear.  In some schedules they are committed together as "selling and
maketing including CRS" whereas selling and marketing which is defined as
being carried out by the airlines themselves, is in principle a narrower
category than CRS which are provided to travel agencies as well as airlines(see paragraph 47 below).
24. The following description of the economic, trade and regulatory regime will be limited to the
"classic" pattern of CRS shown in Figure 1 above.  This market is notable for its very high level of
concentration;  it is shared by only a dozen operators, of whom only 5 operate on a global scale
(SABRE, Galileo, Amadeus, Worldspan, GETS).  The concentration process is not complete sinceGalileo is currently absorbing GETS and discussions are taking place between Worldspan and
Amadeus, while Galileo is allied with Apollo and SABRE with Abacus.  There are few overall data
on the sector apart from an estimated turnover of US$ 4 billion, which is split fifty-fifty between
North America and the rest of the world.  This figure also includes non-aviation business (train and
hotel reservations etc.,).  Growth forecasts up to 2015 suggest growth of 3.6 per cent annually for theNorth American market, which is already relatively mature, and for the rest of the world 5.5 per cent.
4
The following table, compiled by the Secretariat on the basis of information drawn from the websitesof the main CRS suppliers and from other information supplied by ICAO, shows the size of the major
CRS suppliers and the shareholdings in them of the airline companies.
                                                     
4 Source:  Website:  http://www.galileo.com/investor/index.htm.Client (private or business) Website of the travel agencyPCS/C/W/59
Page 8
Table1:  Information on major CRS suppliers
SABRE GALILEO AMADEUS WORLDSPAN GETS ABACUS
Foundation date 1946-1959 1972 1987 1968 (delta)
1971(TWA)1990 as one1949(SITA)
1976(GETS)1988
Revenues 1997:1,78bn$
1998:1,615bn$1997:1,22bn$
1996:1,109bn$1997: 1,2bn$ not available not available not available
Stockholders Public:  18 % (since
1996)
American Airlines :
82%Public:  35%
(since 1997),
Aer Lingus, Air
Canada, Alitalia,Austrian, BritishAirways, KLM,Olympic, Swissair,
TAP,
United-Airlines, USAirwaysLufthansa:  29.2%
Air France:  29.2%
Iberia:  29.2%
Continental:  12.4%public flotationimminentDelta
Northwest
TWACooperative of 49
airlines mostly
from developing
countriesAll Nippon
Airways, Cathay
Pacific, China
Airlines, EVAAirways, Garuda,Hong Kong DragonAir, Malaysian
Airlines,
PhilippinesAirlines, RoyalBrunei, Silkair,Singapore Airlines,Worldspan
Employees58,500 2,800 3,500 including
national marketing
companies1,350 without themn.a n.a Headquarters:
350
National marketingcompanies:  400
Number of travelagencies connected40,000 38,000 43,000 17,880 3,000 7,300
6
(10,000 in total
through the alliancewith Sabre)
Number of terminals 170,000 153,000 190000
(127000:  travel
agents
63000 airlines salesoffices)n.a 3,500 18,700
(24,000 through the
alliance with Sabre)
                                                     
5 Except for Amadeus and Abacus , sources do not indicate if these figures include or not the employees of the national marketin g companies
6 Nota bene :  Other national/regional CRS Vendors:  Axess (Japan) 7 009 travel agencies connected;  Infini (Japan) 6 348;  Topas (Korea) 2  718, FANTASIA
(Australia) and GEMINI (Canada).S/C/W/59
Page 9SABRE GALILEO AMADEUS WORLDSPAN GETS ABACUS
Number of countries
covered108 97 120 (thro ugh 55
national marketingcompanies)45 n.a 16 national
marketingcompanies all inAsia
Number of reservationsmade/year + % of theglobal market (12-
month period ending
30 Sept. 97
7328.8 million(32.8% )307.7 million
(30.7%)245,1 million
(24.2%)121 million
(12.1%)50 m n.a
Other elements -3 million  individual
consumers on-line(Travelocity)-Global distributionalliances in 11
countries, Central
America (TACAGroup), FANTASIANetwork (Australia,New Zealand) andGulf Air"
-35% share in
ABACUSInternational (seeABACUS)- Absorbing the
GETS system over athree year period.-Linked to Apollosystem via national
marketing company
in USA- Absorbed System
One in 1995- In discussion withWorldspan- Joint venture with
Arabic Computer
Systems (SaudiArabia) for nationalmarketing companyfor Middle East- Joint venture
(KAL, 68%,
AMADEUS 32%) tooperate TOPAS CRSin Korea- In discussion with
Amadeus- Ongoing merger
with Galileo- Limited to Asia
pacific- Joint venture(65% ABACUS,35% SABRE) in
ABACUS
international.ABACUSsubscribers usecustomized SABREsystem
- Joint Venture
(60% ANA,40%ABACUS) inINFINI JapaneseCRS
                                                     
7 Source:  Travel Distribution Report, 15 January 1998)S/C/W/59
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25. The first real-time informatics system was the Semi Automated Business Research
Environment (SABRE of American Airlines in 1959) the first installation in a travel agency took
place in 1976, and 1985 saw the first system allowing individual customers to make reservations
through their personal computers.  From the end of the 1980s, the CRS companies developed the use
of data to optimize connections between flights, e ither within a single company or among an alliance
of companies, and to optimize receipts by pricing seats in relation to effective demand ("YieldManagement").  The CRS companies have developed complex computer programmes for this
purpose, which they can use either directly if they are owned by an airline company (which is still true
as to 82 per cent for SABRE, for example) or by  reselling information supplied by the airline
companies.  In the same way CRS suppliers have developed computer programmes designed to
research and optimize business travel on behalf of companies ("SABRE Travel Solutions" or
"Amadeus Corporate World").
26. The development of the regulatory regime has been determined to a large extent by the
property rights of the airline companies.  The CRS companies were founded by airline companies
which, though they  were obliged to include the flights of competitors in their databases in order to
offer the complete range of flights available, quite logically used their subsidiaries to promote in the
first instance their own flights.  To do this the "screens" showing flights between two given cities
(City Pairs) were set up so that the flights of th e parent company showed up first, before those of
competitors.  As public authorities became aware of this problem and began to take measures to
suppress it, other more subtle programmes were designed.  This explains the appearance in the early
1980s of "Codes of Good Conduct" under which a CRS supplier was authorized to operate only if it
undertook an obligation to give non-discriminatory treatment to all airlines such as EU regulation
n° 2299/89
8 and n° 3089/939 or the corresponding US legislation.10  These regulations, which imply
reciprocity-based treatment, have been the subject of MFN exemptions. Nonetheless, as appears from
the following table compiled by ICAO, this reciprocity regime has not prevented the establishment of
the major suppliers, which tends to confirm the ge neral view in the economic literature and in the
profession to the effect that these problems of "collusion" have largely evaporated for the "classical"
CRS suppliers.  They recur however on the websites operated by the airline companies.
Table 2: WTO Members with MFN exemptions on CRS services
(Members with commitments are shown in bold type)
1995 1998
MembersNumber of Vendors Number of Vendors Evolution
State
Austria 4 4
Belgium 5 4 -1
Bulgaria 3 1
Denmark 4 4
Finland 4 4
France 5 4 -1
Korea 2 4 +2
Kuwait 0 2 +2
Germany 5 4 -1
Greece 4 4
Iceland 2 2
Ireland 3 4 +1
Italy 5 4 -1
Liechtenstein 0 0
                                                     
8 OJ n° L/220, 29 July 1989, page 1.
9 OJ n° L/278, 11 November 1993, page 1 (under revision).
10 57 FR 43834, 22 September 1992.S/C/W/59
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1995 1998
MembersNumber of Vendors Number of Vendors Evolution
Luxembourg 5 4 -1
Netherlands 4 4
Norway 4 4
Poland 5 3 -2
Portugal 4 4
Romania 1 3 +2
Singapore 5 4 -1
Slovenia 1 1
Spain 4 4
Sweden 4 4
Switzerland 4 4
Thailand 2 4 +2
United Kingdom 6 4 -2
United States 5 4 -1
27. Some bilateral aviation agreements, such as that between the US and Canada of 1995, contain
provisions designed to achieve the same purpos e.  ICAO has also produced two Codes, in 1991
and 199611, containing similar obligations as to "neutrality" and undertakings on non-discriminatory
access to the market which are in many ways comparable to those in the GATS.  Thirty states adopted
the 1991 Code.  The 1996 Code replaces the 1991 Code in its entirety.  So far, nine States, of which
eight are WTO Members (Fiji, France, Kingdom of the Netherlands-Aruba, Kuwait, Portugal,
Romania, Thailand and the United States) have adopted this Code or indicated that their legislation is
applied consistently with its principles.
28. Changes in the capital structure of CRS companies confirm this trend towards neutrality:  the
parent airline companies are now seeking to reco ver their heavy investments in informatics and to
realize the potential capital appreciation – hence the trend towards public flotations (18 per cent of
SABRE in 1996, 35 per cent of Galileo in 1997 and Amadeus in 1998 - though the latter has just
announced the temporary abandonment of its flotation because of the depression of the market).
29. In terms of the GATS modes of supply, trade is essentially carried on under mode 3.  The
typical way of organizing a CRS supplier is to establish in each country a "National Marketing
Company" (NMC) with which the local airline company or important local travel agencies are often
associated.  This local company then markets the se rvice to local travel agencies and provides after-
sales service for the programmes installed by the centralized technical service of the CRS.  However,
it sometimes happens that a national market is covered by a National Marketing Company in a
neighbouring country.  In this way Amadeus covers 120 countries with only 55 NMCs.  In these casesCRS services are supplied under modes 1 and 2.  Mode 4 is also relevant to some extent in the context
of the installation of the complex informatics system, which requires highly qualified personnel.
30. Annex Table 2, compiled by ICAO, illustrates the presence of major CRS suppliers in the
territory of WTO Members which have MFN obligations on these services.  (For the situation of
Members which have taken MFN exemptions on CRS services see Table 2 above).  There seems to be
no correlation between the development of the number of suppliers and the existence of
commitments:  of the Members which have MFN obligations 30 (seven having commitments) show a
fall in the number of suppliers, 27 (four with commitments) show an increase and 45 (six with
commitments) show no change.  There also appears to be no correlation for those Members who have
                                                     
11 ICAO Council Resolution of 17 December 1991 and ICAO Council Resolution of 25 June 1996,
(text available at the Secretariat).S/C/W/59
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MFN exemptions on CRS services:  nine Members (six with commitments) show a fall, five (three
with commitments) show an increase and 13 (eleven with commitments) show no change.  This does
not imply that commitments make no difference:  other factors help to explain both reductions in the
number of suppliers (concentration among operators) and their increase (growth in the market).  It
will be necessary to await completion of the concentration process before the long-term effects of
commitments on the investment strategies of CRS suppliers can be assessed.
4. Selling and marketing of air transport services
31. Paragraph 6 (b) of the Annex defines selling and marketing of air transport services as
"opportunities for the air carrier concerned  to sell and market freely its air transport services
including all aspects of marketing such as market research, advertising and distribution.  These
activities do not include the pricing of air transport services nor the applicable conditions".
32. This definition is clearly restricted to selling and marketing activities undertaken by the
airline company itself, and does not cover these activities when carried out by CRS and ERSPsuppliers and travel agents. Technological changes have complicated the situation somewhat.  New
forms of distribution are emerging in which the airline company, instead of using a specialized
intermediary such as a travel agent, uses a partner which controls a telecoms or banking infrastructure.
Thus, American Airlines and Continental, in combination with American Express, have introduced
"smart cards" combining membership and credit functions and permitting the electronic delivery oftickets, seat reservations, boarding cards, mail tags and so on.  At present these services are available
only at interactive terminals in airports, but such terminals will soon be widely distributed.  This "E-
ticketing" is likely to grow in particular on heavily used domestic routes (shuttle services) because it
reduces waiting time and personnel costs.  The terminals can also be managed by the airline company
alone;  partnership with a bank is not essential.  Another example of this type of partnership is thatbetween the Bank of Hawaii and Hawaiian Airlines for the sale of tickets through automatic telling
machines.
33. The Annex definition says nothing about those to whom sales are made.  Potentially,
therefore, it covers not only direct sales to private or business clients but also block sales of seats to
travel agencies and tour operators (notably in the charter market).  However, it would seemunreasonable to go so far as to include in the definition retail sales of seats by airlines to travel agents,
since here the essential business is that of the trav el agent, for whom the airline company is merely a
supplier. Members may wish to consider whether there are points in this area which require
clarification.
34. The coverage of the term "air transport services" as used in the definition may also merit
discussion.  It certainly includes the sale of passenger tickets and also the sale of air freight by means
of bills of lading, since no distinction is made between passengers and freight.  But whether it should
be understood to cover ticket sales for such services as business aviation and carrying skiers to
mountain tops is not so clear.
35. From the economic point of view the direct sale of tickets on regular flights by airline
companies accounts for between 20 and 30 per cent of all tickets sold, with significant differences
between different companies.  A first approximation to the size of the market would be the value ofoperational expenses for "ticketing, sales and promotion", as reported by the airline companies.
In 1994, this was US$ 37.5 billion and in 1995 US$ 40 billion – about twice the size of the market for
maintenance and ten times that for CRS services.  Depending on the year in question, ticketing, sales
and promotion account for between 15.5 and 16.5 per cent of operational expenses.  However this
figure includes commission paid to travel agents , which would not be covered by our definition.S/C/W/59
Page 13
36. The cost of issuing air tickets varies considerably according to the means of distribution used.
It is US$ 8 per ticket via a standard travel agency using CRS, US$ 6 when the agency reserves the
ticket directly from the airline company and US$ 1 when the individual client makes his own
reservation on-line.12  Airline companies are seeking to reduce distribution costs and for this purpose
have placed ceilings on commissions paid to travel agencies, and have introduced direct sales via
informatics systems as described above.  All of the companies are developing internet reservationfacilities.  Such sales are growing rapidly, particularly in the U.S. market.  Though the number of
sales offices operated by the airlines themselves is only 20-25 per cent of the number of travel
agencies, their share of computer terminals is closer to fifty per cent.
B. A
NALYSIS OF COMMITMENTS
1. Preliminary remarks:  Relations between the Annex, the CPC and sui generis
definitions
37. This analysis covers the commitments undertaken by Members on the three services listed
above under the rubric 11.C "Air Transport Services ", in which some have made reference to the
relevant CPC categories and others have used sui generis  classification.  Since there is no obligatory
classification Members are free, as in other sectors, to use the CPC, sui generis  definitions or
combinations of the two.  Except in the case of maintenance, there is no direct equivalence, in the
concordance tables, between the CPC and the headings in paragraph 3 of the Annex.  The implicationof this, given that this is the only sector whose cove rage is explicitly defined in the Agreement, is that
use of CPC numbers may imply commitments on services not covered by the Agreement.
38. For repair and maintenance services there is a partial equivalence between the W/120 heading
and CPC 8868** which clearly covers the repair of aircraft as of all other equipment. There is no
specific mention of maintenance in the CPC item but W/120 establishes a correspondence between11.c.d "maintenance and repair of aircraft" and CPC 8868**.  It may therefore be presumed that
CPC 8868** includes maintenance services in the sense of the Annex (meaning maintenance of
aircraft taken out of service rather than routine servicing of "on-line" aircraft).
39. The term "computer reservation systems" does not appear in the CPC.  As suggested in the
Secretariat document on Computer and Related Services (S/C/W/45), the link between these services– particularly database services, CPC 844 and CPC 7523 "Data and message transmission services" –
and computer reservation system services may require consideration.  Related questions arise in the
distribution sector (S/C/W/37, paragraph 6) in the cas e of services which can be stocked, which is true
of airline tickets up to the date of their expiry.  The Secretariat Note on Tourism Services (S/C/W/51,
paragraphs 22 and 23) underlines the importance of Computer Reservation Systems and Global
Distribution Systems for travel agencies and tourism services in general.  Table 2 of the same
document draws attention to the to the problem of the classification of CRS and GDS services, which
goes well beyond the air transport sector, since CRS services also cover rail, road and maritime
transport as well as hotel reservations and car rentals.   In summary, it is not possible to say where
CRS services fit into the CPC.
40. The same problem of concordance with CPC occurs in relation to the selling and marketing of
air transport services, which is clearly linked to transport but also relates to data base andtelecommunication services, since even for reservations which they make themselves, aircraft
companies need to use computer networks, market research, distribution and advertising – or more
precisely a combination of these services, which are all cited , except computer network services , in
the Annex definition.
                                                     
12 Source:  Air Transport Association of America, 11 February 1997.S/C/W/59
Page 14
2. Aircraft repair and maintenance
41. Forty-five Members (counting individually th e Member States of the EC/12) have made
commitments on aircraft repair and maintenance.  This figure (34 per cent of all Members) is
unusually high for a transport activity.  Two of the 45 have used their own sui generis  definitions of
the scope of this activity.  These definitions are shown in the footnote to Table 3 in the Annex.
Fourteen Members have refered to the CPC and eight have made explicit reference to the definitionsin the air transport Annex:  the remainder have used the precise terms of paragraph 3 of the Annex
without referring to it.
42. As far as national treatment is concerned, commitments seem relatively liberal.  In Mode 1,
15 Members have committed this sector without limitations.  Of  the 19 Members which have made
no commitment under this mode, 17 considered that the cross border supply of these services was not
technically feasible.  Members may consider it worthwhile to discuss this point, in the hope of
arriving at a common view.  One possibility would be to distinguish activities which can be suppliedat long distance, such as electronic transmission of data needed for maintenance, diagnosis of
problems, etc., from those, such as replacement of  a part or repainting, which require the physical
proximity of the service supplier and the aircraft.  The same question arises in relation to other modes
of transport.
43. Commitments under Mode 2 (consumption abroad) appear very liberal, since 42 Members
have offered it with no limitations and only three have made no commitment for this mode.  (One of
these three Members also maintains an MFN ex emption under which preferential treatment is
accorded to certain suppliers of maintenance services outside its territory.) Under Mode 3,
34 Members have offered the sector without limitations and eight have done so with limitations (on
investment screening, obligation to establish a registered office, licencing or authorizationrequirements, residence requirements and foreign equity limitations).  In Mode 4, 43 of the 44
schedules follow the classic formula – no commitment except as indicated in the horizontal section.
The remaining Member has made no commitment, horizontal or otherwise, under this mode.
44. National treatment limitations either reflect those in the market access column or are more
liberal, but for two exceptions (one reference to the horizontal section under Mode 3 and one casewhere there is no national treatment commitment although a commitment is made in market access).
45. Apart from the case mentioned above, only two Members have taken MFN exemptions:  these
Members also have no commitments for this sector.  One of these exemptions is formulated in very
general terms, referring to all of the services co vered by the Annex and to all regulatory regimes,
whether bilateral, multilateral, unilateral, de jure  or de facto .  The other exemption covers a typical
reciprocity regime.
3. Selling and marketing of air transport services
46. Thirty-four Members, again counting 12 EU Member States individually, have made
commitments in this sector.  Here too the commitments reflect a rather liberal regime overall (see
Table 4 in the Annex).
47. Two Members have defined this activity in a sui generis  manner and one, which has not made
commitments, has used a sui generis  definition for its MFN exemption.  These definitions appear in
the footnotes to Tables 4 and 7 in the Annex.  Three Members have referred to the CPC – either to
CPC 7469 (other services related to air transport) or to CPC 74710-74720 (travel agency and tourist
organization services/tourist guide services).  Three Members have included in the definition the
selling and marketing of computer reservation systems.  Six have made an explicit reference to the
definition in the Annex.  Finally, two Members have limited the scope of their commitments, one byexcluding the selling and marketing of air transport services for a series of raw and processedS/C/W/59
Page 15
agricultural products, the other by limiting its commitments to advertising and the creation of regional
offices.
48. In Mode 1, 26 Members have committed this sector without limitations, one subject to an
obligation to open sales offices on the territory of the country concerned.  Eight have made no
commitments (two on the ground of technical non-feasibility).  In Mode 2, commitments are more
liberal.  All 33 Members which have committed this activity have done so without limitations;  onlythree have made no commitments.  In Mode 3, 28 Members have made commitments without
limitations, one with limitations and seven have made no commitments.  In Mode 4, 31 Members
refer to their horizontal commitments, one makes a commitment without limitation and two make no
commitments.
49. As regards national treatment, the commitments either match in essence the entries in the
national treatment column or are more liberal.  In 18 cases (counting EU Member States individually),
limitations relate to use of computer reservation systems and to MFN exemptions intended to cover
reciprocity requirements in that matter.  These limitations concern Modes 1 and 3 and are all drafted
in the same terms:  "for distribution through CRS of air transport services provided by CRS parent
carrier:  unbound".   In three cases, national treatment limitations differ from those in the market
access column (one reference to the horizontal section, one case in which national treatment is
unbound and one providing for exemption from VAT on a reciprocal basis).
50. MFN exemptions for this activity are of two kinds.  The most common (24 cases counting EU
Member States individually) covers both selling and marketing and CRS services:  these are designed
to obtain equivalent treatment on the basis of reciprocity.  They cover all countries where there is a
CRS supplier or an aviation company using CRS, are of indefinite duration and are justified by
reference to the inadequacy of multilaterally agreed rules for CRS services.  Twelve cases concernEuropean  Members and in these reference is sometimes made to Community regulation. Their
transatlantic counterpart is largely similar but defines selling and marketing more broadly, and
establishes a link with the Chicago Convention an d with bilateral agreements.  The other kind of
exemption (three cases) covers selling and marketing only.  One is formulated in very general terms,
while the others relate to provisions under bilateral agreements which may involve reciprocalrestrictions, or preferential treatment, for selling and marketing activities.
4. Computer Reservation Systems Services
51. Thirty-nine Members (counting 12 EU Members individually) undertook commitments on
CRS services.  This figure (29.5 per cent of WTO Members) is relatively high for a transport activity.
Table 5 in the Annex shows that here too commitments are relatively liberal.
52. One Member has defined this activity in a sui generis  manner (see footnote to Table 5 in the
Annex).  The same Member, and one other, ha ve referred to CPC 7523** ("Data and message
transmission services"), another Member has referred to CPC 7469 ("Other services related to air
transport").  As stated above, eight Members have included CRS under marketing services.   Eight
have referred explicitly to the Annex definition while a reminder have simply used the title "computer
reservation system services".
53. As regards market access, 35 Members have made commitments without limitation under
Mode 1, while one has done so with limitations (access authorised only through the public switched
network ).  Three have made no cross-border commitments.  In Mode 2, 38  Members have made
unlimited commitments, and one has left this mode unbound.  In Mode 3, 33 Members have made
unlimited commitments, one has a limitation on investment screening and five make no commitments.
In Mode 4, 37 Members make reference to their horizontal commitments, one has no limitation onthis Mode and one leaves it unbound.S/C/W/59
Page 16
54. National treatment commitments essentially reflect those under market access, though some
are more liberal.  In seven cases, limitations relate to the use of CRS and to the MFN exemptions
covering reciprocity legislation in this connection.  In one other case, reference is made to the
horizontal section;  this does not appear in the market access column.
55. MFN exemptions on CRS services are of three kinds.  One of these covers all sectors
including CRS and all types of air transport regimes.  The second consists of exemptions coveringboth CRS and selling and marketing, (in one case CRS alone) and is intended to secure reciprocal
treatment (see paragraph 26 above).  Thirdly there are two exemptions designed to accord preferential
treatment to a particular CRS system or to air carriers using it.  One of these permits only companies
in partnership with a major CRS supplier to establish their own system.  The other permits access to
national tourist agencies via the dedicated SITA network only to CRS providers designated by the
carriers of the country benefitting from the exemption.  The texts of these exemptions can be found in
the footnotes, Table 7 in the Annex.
5. Other commitments
56. These commitments are summarized in Table 6 in the Annex.  The sector in which there are
most commitments (by five Members) is CPC 736 "Services auxiliary to air transport" which includes
airport management services, air navigation control services and other related services such as
cleaning, disinfection, fire services, hangars and towing.  The commitments scheduled for this sectorare very liberal, only one Member having scheduled limitations (on foreign equity participation and
the concession regime).  Closely linked with this sector is that defined by one Member in a sui generis
manner as "use of ground maintenance equipment", for which this Member has made commitments
under Modes 3 and 4.
57. Aircraft leasing with crew (CPC 734) has also been the subject of commitments by
4 Members, one of whom has scheduled a limitation having to do with the required form of legal
entity.
58. Finally, two Members have made commitments without limitations under CPC 731 "air
transport passenger services".
6. Other MFN exemptions
59. Seven exemptions taken by five Members fall into two categories – fiscal exemptions and
exemptions related to transport activities.  Four Members have between them taken five exemptions
providing for reciprocal exemption from various ta xes, relating to all countries and of indefinite
duration.  Two Members have taken reciprocity-based exemptions covering the treatment given
specifically to suppliers of air transport services.  The texts of these exemptions can be found in thefootnote to Table 7 in the Annex.
C. 
POSSIBLE FURTHER WORK ON THE CLARIFICAT ION OF THE SCOPE OF THE ANNEX AND ON
CLASSIFICATION ISSUES
60. There are several reasons why Members may think it necessary to undertake further work on
the classification of air transport services, and perhaps on aviation services more generally.  The first
and most important is the lack of a definition in the Annex of "services directly related to the exercise
of traffic rights", from which it follows that we also lack a definition and a clear understanding ofwhat is included in services not directly related to traffic rights.  However, there are commitments in a
number of schedules on aviation services other than repair and maintenance, CRS and selling and
marketing;  in the view of the Members concerned, these are presumably services not directly related
to traffic rights.  Comparisons are made more difficult by the lack of a concordance between the
definitions in the Annex and those in W/120 and the CPC.S/C/W/59
Page 17
61. There are many services ancillary to all form s of transport which can be offered either in
conjunction with air transport services or in multimodal combinations, and it may be desirable to
reach an understanding on the treatment of such services for scheduling purposes.  Attention should
also be paid to a number of services (for example air catering services and refuelling services) which
are rendered to passenger flights but whose relationshi p with the Annex is not clear.  It would also be
valuable to reach a clear understanding on the coverage by the GATS of aviation activities other thanair transport (for example recreational flight, crop- spraying by air, flight surveys, geological or
archeological, aerial photography and publicity, etc.  There are also important auxiliary services
(essentially airport services) which provide service to other forms of aviation than air transport and
which to this extent cannot be regarded as directly related to the exercise of traffic rights.
62. If for these or other reasons, Members decided to pursue classification issues further, there are
a number of activities which would seem to merit study.  These include  services auxiliary to all forms
of transport , such as cargo handling and storage and warehousing services (CPC 741 and 742), freight
transport agency services (CPC 748) and "other supporting and auxiliary transport services (74900).
Should these be considered as directly related to the exercise of traffic rights?
63. If this question were answered positively, it would imply that a distinction should be made
between services provided in connection with all modes of transport, under heading 11-H of W/120
"Services auxiliary to all modes of transport", which would clearly be covered by the GATS, andthese same services when provided specifically in  connection with air transport, when they would
presumably not be covered.  The question is not academic, since many Members have made
commitments under 11-H of W/120.
64. It is also not clear that all services covered by CPC 746 ( "Supporting services for air
transport ") are directly related to the exercise of traffic rights and therefore excluded from the GATS.
These include airport operation services, excluding cargo handling, air traffic control services and
"other supporting services for air transport" such as cleaning and disinfection of aircraft, fire services
and so on.  All of these are needed and provided in connection with all forms of aviation, not merely
the transport of passengers and freight.  Furthermor e, the link between some of these services, like
disinfection, and the exercise of traffic rights seems somewhat remote, even if the disinfection ispracticed in a passenger aircraft.
65. The same question, as to their relationship with the exercise of traffic rights and therefore
their coverage by the GATS, arises in connection with the rental and leasing  o f  a i r c r a f t  w i t h  a n d
without crews (CPC 83104 and 734 re spectively).  A number of commitments (19 and 4 respectively)
have been made on these services.  The definition of traffic rights in paragraph 6 (d) of the Annexincludes the right to operate services "for hire", but it is not clear from the text or from the negotiating
history whether this includes both charter services  (including the block-booking of seats by travel
agents) and leasing of aircraft. The economic importance of this sector is considerable:  in 1996
34 major leasing companies owned 1760 jets worth US$ 41 billion that is 13.5 per cent of the world
fleet.  Aircraft leased by airlines from other airlines and manufacturers accounted for another 4.6 per
cent of the world fleet.
13
66. Franchising  is of growing importance in air transport because it complements the
development of regional companies and of "hub" strategies.  It also reduces the risks of operating in
areas where direct operations might not necessarily be profitable.  A typical example is the franchised
partners of British Airways:  British Mediterranean Airways in the Middle East and Central Asia and
GB Airways in the Iberian Peninsula, Malta and the Middle East.  There are many other examples.
The definition of franchising services in CPC 8929 (which is very imperfect – see paragraph 7 ofS/C/W/37) includes franchising activities in the air transport sector.  Nevertheless, although
franchising is not mentioned in the definition of traffic rights, it could well be thought to be an activity
                                                     
13Source:  ICAO "The World of Civil Aviation 1996-1999".S/C/W/59
Page 18
directly related to the exercise of traffic rights because the essential purpose of franchising activities is
to channel regional traffic towards international and intercontinental flights.
67. Catering services  are economically important, because hundreds of thousands of meals are
served every day on board aircraft.  The size of the market is estimated at between $10 and $13 billion
annually.   Airline companies have often created specialised subsidiaries in this field (Servair for
Air France, Sky Chefs for Lufthansa, SAIR Relations for Swissair) which may sometime also workfor other airlines.  The definition of restaurant services in CPC 64201 includes services provided on
the move (ships and trains are explicitly mentioned, and the clear intention is to include aircraft also).
Whether these services are "directly related to the exercise of traffic rights" is not clear;  the Annex
definition provides no guidance.
68. Fuelling services , which are a typical airport service, also give rise to classification questions.
They are necessary for all types of aviation activity, not just the transport of passengers and freight,
and it would seem odd in principle (and inoperable in practice) to maintain that they are covered bythe GATS when the fuel is supplied to a crop-spr aying aircraft but not when it is supplied to an
airliner.  The retail sale of fuel is not mentioned in W/120, but is nevertheless the subject of a number
of commitments.  CPC classifications in this area are particularly confusing, and offer no real
guidance.
69. General aviation services :  These are services involving the use of aircraft which are not "air
transport" in the sense of carriage of passengers and freight. There is no standard universal detailed
definition of general aviation services except a very rough statistical breakdown by ICAO
14
(instructional flying;  business and pleasure flying;  aerial work;  and other flying).  However theNAFTA includes in its Article 1213 a detailed breakdown of "specialty air services":  "aerial
mapping, aerial surveying, aerial photography, forest fire management, fire fighting, aerialadvertizing, glider towing, parachute jumping, aerial construction, heli-logging, aerial sightseeing,
flight training, aerial inspection and surveillance and aerial spraying services".  If Members were to
decide to draw up a list of general aviation services  along those lines, they would have to take into
account the fact that certain of these services may be already covered at least implicitly by the CPC:
for example CPC 875 photographic services, CPC 92400 adult education services not elsewhere
covered, CPC 87190 other advertising services, CPC 91260 police and fire protection services,
CPC 88110 services incidental to agriculture, CPC 88140 services incidental to forestry and logging.
70. The only data available on general aviation are expressed in physical terms and not in value.
However they show clearly the economic importance of the sector.  It involves 336.000 aircraft
(87 per cent of the world fleet) and 38 million hours flown (9 million for instructional flying,20 million for business and pleasure flying and 9 million for aerial work and other flying) that is
48.7 per cent of the total hours flown in the world.  By comparison, scheduled air services account for
28.1 million hours (35.7 per cent) non-scheduled for 2.6 million (3.3 per cent) and other commercial
air transport operations for 10 million (12 7 per cent).  The utilisation of aircraft is much lower in the
general aviation sector (113 hours per aircraft per year as compared to 798 hours per aircraft per year
in the commercial aviation sector) but the number of pilots concerned is much higher about - 237 000
compared with 150 000 commercial aircraft pilots.
15
                                                     
14 See for instance ICAO, "Civil Aviation Statistics of the World, 1995", December 1996, Tables 1-3,
page 10.
15 Source:  International Federation of Airline Pilot Association.S/C/W/59
Page 19
PART II:  OTHER AIR TRANSPORT SERVICES
71. The second part of this paper is of a purely descriptive nature.  It presents a very summary
account of the regulatory and economic characteristics of air transport services other than those
covered by the Annex.  These are classified and described under two major categories:  A. air
transport services in the strict sense and B. ground services.
B. AIR TRANSPORT SERVICES
72. Air transport activities of all kinds which are undertaken by airline companies take place in a
common regulatory framework dating from the post-war years.  It is based on the Chicago
Convention, bilateral traffic agreements and the reservation of purely domestic transport, by means of
national regulations, to national carriers.  This common framework will be considered below (1.),
before moving to scheduled passenger service (2.);  non-scheduled passenger service (3.);  and freight
transport (4.).
1. The development of the general regulatory framework for air transport
73. The Chicago Convention entered into force on 4 April 1947.16  It is still the basis for the
organization of global air transport.  It has 185 Members, including almost all WTO Members.  The
exceptions are Dominica; the European Community (though the Member States of the EC are all
Members);  Hong Kong, China;  Liechtenstein;  and Macao.  The first Article of the Convention
establishes the principle that each State has complete and exclusive sovereignty over the airspaceabove its territory (Article 6).  This means that the state has the right to control regular air traffic over-
flying its territory:  no regular international air service can take place above the territory of a Member
State, or within its territory, without the permi ssion or other authorization of that state, and in
conformity with the conditions attached to the authorization.  The Convention sets up a similar regime
of national control over charter traffic (Article 5), authorises the restriction of cabotage traffic tonational carriers and prohibits the grant of exclusive cabotage rights to a single partner (Article 7).
74. These principles do not necessarily entail bilateral organization of traffic.  On the contrary,
the International Conference on Aviation held in Chicago in 1944 adopted in its final act two
multilateral instruments
17 which established seven "freedoms".  Under the first of these instruments,
the International Air Services Transit Agreement, each party accorded to all others:
- the privilege to fly across its territory without landing;
- the privilege to land for non-traffic purposes.
This Agreement has been ratified by 115 Members of ICAO and is still in force.
75. Under a second Agreement, The International Air Transport Agreement, each party granted to
all others five freedoms:
- the privilege to fly across its territory without landing;
- the privilege to land for non-traffic purposes;
- the privilege to put down passengers, mail and cargo taken on in the territory
of the State whose nationality the aircraft possesses;
                                                     
16 United Nations Treaty Series, Volume 15, 1948, pages 296 to 361, available at the WTO library and
at the Secretariat.
17 Document ICAO n° 9587 "policy and guidance material on the regulation of international air
transport", 1992, pages 2-7, available at the Secretariat.S/C/W/59
Page 20
- the privilege to take on passengers, mail and cargo destined for the territory of
the state whose nationality the aircraft possesses;
- the privilege to take on passengers, mail and cargo destined for the territory of
any other contracting state and the priv ilege to put down passengers, mail and
cargo coming form any such territory.
76. This second Convention however, has been rati fied by only 19 States, 8 of which afterwards
withdrew from it.  This multilateral framework was completed in 1947 by the drafting of a
"Multilateral Agreement on Commercial Rights in In ternational Civil Air Transport, which contains
provisions relating to market access capacity and tariffs.  This draft Agreement18 envisaged free
access to markets subject to 4 months notice (Article 6-9), a relatively flexible capacity control
operated solely by the state of origin (Article 10-13), provisions on unfair pricing practices
(Articles 14-16) and a system of dispute settlement notably for tariff questions.  This body of
multilateral instruments is now known as the "missing chapters" of the Chicago Convention.
77. In November 1947, after a final attempt in Geneva by the Commission on Multilateral
Agreement on Commercial Rights in International Civil Air Transport to find a mathematical formula
for the multilateral allocation of traffic accepta ble to all sides, ICAO Members turned towards
bilateral solutions.19  The two major aviation powers of the tim e, the US and the UK, early in 1946
reached an Agreement known as Bermuda 1 which would serve as a model for all subsequent bilateralAgreements, at least until the early 1980s.
78. The classical bilateral Agreement of the Bermuda 1 type is based on detailed negotiation of
three "pillars" – routes (traffic rights in the strict sense) capacity and tariffs, plus other provisions of
lesser importance. Each one of these elements has undergone developments over the past 30 years, all
tending towards the erosion of governmental control.
a) Routes
79. Practice over time has led to the identification of eight types of "freedoms" or authorised
flights:
20
- 1st freedom:  the right of an  airline of one country to fly over the territory of
another country  without landing;
- 2nd freedom:  the right of an airline of one country to land in another country
for non-traffic reasons , such as maintenance and refuelling , while en route to
another country;
- 3rd freedom:  the right of an airline of one country to carry traffic from its
country of registration to another country;
- 4th freedom:  the right of an airline of one country to carry traffic from another
country to its own country of registration;
                                                     
18 Document PICAO (Provisional ICAO) 4014, A1-EC/1, March 1947, available at the Secretariat.
19 See in particular John Gunther "Multilateralism in international air transport, the concept and the
quest", in "annals of air and space law, Vol. XIX, part I, 1994, Mc Gill University and "the PICAO years1945-1947" by Duane W. Freer  in ICAO Bulletin n°8, July 1986.
20 Source:  "The Future of International Air Transport Policy", OECD 1997 and "International Civil
Aviation Vocabulary", document OACI n° 9713, Vol. 1, 1998.S/C/W/59
Page 21
- 5th freedom:  the right of an airline of one country to carry trafic between two
countries outside its own country of registration as long as the flight originates
or terminates in its own country of registration;
- 6th freedom:  the right of an airline of one country to carry trafic between two
foreign countries via its own country of registration (this is a combination of
third and fourth freedoms);
- 7th freedom the right of an airline to operate stand-alone services entirely
outside the territory of its home state , to carry trafic between two foreign
states;
-8th freedom:  the  right of an airline to carry traffic between two points within
the territory of a foreign state (cabotage).21
80. In the classical bilateral agreement routes are negotiated between two countries by reference
to pairs of cities (City Pairs) with intermediate stops and extensions (if any).  If the intermediate stopsor extensions take place on the territory of a third county they require the agreement of this country,
expressed in another bilateral agreement.  The following table
22 from the ICAO Manual on the
Regulation of International Air Transport presents  a matrix of the routes resulting from these
negotiations .
Table 3:  Routes for State A (tabular format)
Route Points in State A Intermediate points Points in State C Beyond points
1 City A1 City C1
2 City A2 City B1 City C1
3C i t y  A 3
City A4City C2
City C3Country D
4 City A1 City B2 City C1 City D1
5 Any point or points
in ANorth Africa Cities C1, C2, C3 One point
6 Any point or points
in AMiddle East and
South AsiaAny point or points
in CAustralasia
7 City A3 City B2 City C1 City B2
81. Since ICAO Members are obliged to notify their agreements, the totality of the routes
negotiated in some 3000 bilateral agreements now in  force is available in two documents produced by
ICAO.23  The matrix also identifies all the conditions applicable to routes.24  The increased range of
aircraft has tended to reduce the importance of the negotiation of intermediate stops.  On the other
hand, the negotiation  of extensions (the fifth, sixth and seventh freedoms above) has greatly
increased.  To obtain the eighth freedom remains exceptional.  The other major change in terms of
                                                     
21 Source:  "The Future of International Air Transport Policy", OECD 1997 and "International Civil
Aviation Vocabulary ", document ICAO N°9713, Volume 1, 1998.
22 Source:  ICAO document 9626, 1996, 4.1-4, available at the Secretariat.
23 Source:  ICAO document 9511, "Digest of Bilateral Air Transport Agreements", 1988 and 9511
Supplement 1, 1995, available at the Secretariat.
24 These types of conditions are the following:  additional traffic point(s) allowed, exemption from any
restrictions of certain operations or certain routes, possibility of omission of points along the route with orwithout permission, time restriction on the exercise of some or all of the rights granted, restriction on the
designation of airlines, restrictions on the number of points that may be served on a route, limitations on
capacity frequency and scheduling , traffic rights implication of stopover, routes exchanged for all-cargo flightsonly, routes exchanged for non scheduled flights only, existence of a separate agreement or exchange ofdiplomatic note concerning the route exchange authorisation of code sharing, geographic restriction within acountry or a region, and other or traffic conditions or restrictions.S/C/W/59
Page 22
routes is the appearance of "open skies" agreements, under which any town or airport of either of the
two participating countries can be an entry point for a carrier of the other country.  In this case the
"City Pair" configuration disappears.
82. The negotiation of specific routes also disappears, in favour of the potential opening of all
routes, when a single market for air transport is created, as in the European Union since 1 April 1997.
Article 3 of the European Council Regulation No. 2408/9225 says that "community air carriers shall be
permitted by the Member State(s) concerned to exercise traffic rights on routes within the
Community".  The same may happen, though to a lesser degree, under regional air transport
agreements of the kind which exist in South America and the Caribbean (Andean Pact 1991, Fortaleza
Agreement 1996, Caricom Agreement 1996)26 and in Africa.
(b) Capacity
83. The control of capacity plays an essential part in maintaining the profitability of routes.
There are many possible regulation formulae, but to simplify matters ICAO has identified four basictypes of capacity clause:
- Predetermination is a prior agreement on capacity, reached before operations
begin. It can take the form of specified shares or of a procedure for
coordination, approval and filing;
- The Bermuda 1 clause contains principles which airline companies must
respect in relation to capacity, "an ab initio determination of capacity by each
airline  acting separately". The parties to the bilateral agreement or their
aviation authorities intervene only a posteriori , through consultation
procedures;
- Free determination  consists of agreement by both of the parties not to
impose unilateral restrictions on the volume of traffic, the frequency or
regularity of service, or on the types of aircraft which may be used by the
airline companies designated by the other country;
- The residual clause  groups together clauses which cannot be classified under
any of the categories above, or combinations of these categories.
84. ICAO has further refined its categorization of capacity clauses by distinguishing eleven
significant elements which commonly appear in them.  These may be found in paragraph 36 of the
"Supplementary Notes on the Elements in Bilateral Air Transport Agreements" which are contained in
ICAO's Digest of such Agreements.  The totality of capacity clauses in the three thousand existing
bilateral agreements is available in detail in the compilations cited above (see Footnote 23).
85. The development over time in this matter has been away from predetermination and towards
free determination.  Open skies agreements in their pure form also assume a system of free
determination.  Direct regulation of capacity is tending to give way to the use of competition policy
instruments designed to counter predatory practices.  This may take the form either of case-by-case
application of general instruments (abuse of dominant positions) or of regulations specifically
designed to combat predatory practices in air transport.  In large part these regulations are still being
                                                     
25 OJ No. L240 24/8/92.
26 The text of this agreement is contained in the ICAO working document RPW (San José) – WP2
dated 4 July 1997, available with the Secretariat.S/C/W/59
Page 23
developed.27  Their use is simpler in a domestic market or a "single market" than in a bilateral context,
where they may give rise to conflicts of jurisdiction.  ICAO is also working on the definition of unfair
practices.
(c) Tariffs
86. Air transport has historically been a sector in which prices are fixed and managed
administratively.  Here too (simplifying greatly) three types of tariff clause can be distinguished:  dualapproval – of which Bermuda 1 is the classical type – dual disapproval and the country of origin
method:
- Dual approval  means the approval of tariffs by the aviation authorities of the
two countries and is still the most common type of tariff clause in bilateral
agreements.  It can be either explicit or tacit;
- Dual disapproval  means that tariffs enter into force unless disapproved by
the two aviation authorities;
- Under the  country of origin method  the right of disapproval can only be
exercised by one of the parties when the flights in question originate in its
territory.
87. Various refinements are possible, such as the establishment of a "tariff zone" in which neither
of the parties can disapprove a tariff, or the main tenance of pre-existing tariffs in the absence of
agreement on a new tariff between the airline companies or of approval of the new tariff at
governmental level.  In some cases the approval of a third country may be necessary where a route
involves a stop or an extension on its territory.
88. Historically there has been a trend, which is still continuing, away from dual approval
towards dual disapproval clauses, and the development of open skies agreements, like regionalagreements and "single markets" also tends towards the suppression of tariff clauses.  As in the sphere
of capacity, the use of competition policy instruments is becoming increasingly frequent.
89. Apart from the development in administrative procedures for tariff approval, there has been a
far more important economic development, at the level of the companies themselves – the appearance
of what is called tariff dilution, by which the "official" or full price of a seat may differ greatly fromthe price actually charged.  Several factors account for this, the most important of which are the tariff
structure and the management of seats (yield management).  The industry (in practice IATA's tariff
standards) distinguishes between APEX tickets (A dvance Purchased Excursion) and "full flexible
fares".  APEX tickets are sold at least thirty days in advance, at a lower price, but with a certain
number of restrictions:  a US$ 50 penalty clause in case of a change of flight ("no show") and anobligation to stay for a week (in Europe) or for a Saturday (in the U.S.) in the place of destination.
Fully flexible fare tickets can be bought later and involve no penalties stopover obligations.  The
object of the exercise for the carrier is to maximize revenue, and thus the number of "fully flexible
fares" by releasing APEX fares progressively in such a way as to hold back seats to meet last-minute
demand for full fare tickets.  (This is why one is sometimes "wait-listed" weeks before a flight, when
the aircraft is clearly not full).  To practice yield management the carrier uses data and programmes
                                                     
27 On these points see for example "US Department of Transport Proposed Statement of Enforcement
Policy on Unfair Exclusionary Practices Conduct by Airlines", 6 April 1998 onhttp://www.dot.gov/affairs/dot.6398a.htm "Commission notice concerning the alliance between Lufthansa, SASand United Airlines, 98/C2394/04OJ C239 dated 30 July 1998, and the magaizine Airline BusinessInternational, May 1997, p.p.,70-73, October 1997 p.p. 40-43.S/C/W/59
Page 24
provided by CRS suppliers:  the pioneer in yiel d management was American Airlines, the proprietor
of SABRE.
90. As departure time approaches, yield management gives way to the need to sell off at the
marginal price seats which would otherwise stay empty – hence the invention of "standby flights".
This also explains the emergence of electronic reservation suppliers such as Priceline.com, whereby
the client states the price he is willing to pay for a given journey and the airlines wishing to sell theirlast seats conduct a reverse auction for the business.  Such developments explain why in the
United States, the most mature aviation market, 90 per cent of tickets carry some form of rebate.
91. Another factor of the tariff dilution is that Although IATA Tariff Co-ordination continues to
have anti-trust immunity, conditions of that immun ity have made signficant changes in this activity,
including, but not limited to, transparency of the process and its result, no enforcement of agreed
tariffs by IATA; and, in some regions, allowing airlines to file differences with agreed rates with
notification to IATA, limiting co-ordination to in ter-linable fares and removing anti-trust immunity
for cargo.  As a result, between 1978 and 1985-86 official prices came closer to market levels.
(d) Other elements in bilateral agreements
92.   Bilateral agreements include other provisions, concerning for example unscheduled or
cargo-only flights, dispute settlement procedures, ex emptions from taxes or customs duties (which are
often reciprocity-based) and the recognition by one of the parties of licenses, qualifications orcertificates of  air worthiness issued by the other.   Bilateral agreements also govern the commercial
activities of companies, and ICAO identifies six types of provision in this context:  the right to
establish offices or personnel in the territory of the other party;  the right of a designated company to
sell transport services in the currency of the other party or a freely convertible currency;  the right of a
designated company to provide its own ground services in the territory of the other party, or to choosean agent to do so;  the existence and conditions applicable to CRS services;  the right to convert or
transfer funds;  and a residual category.
93. In the field of multilateral aviation the most important development since the Uruguay Round
is the approval on 30 May 1997 by the Council of IC AO of six recommendations by an expert group
on the regulation of air transport.  The group was created following the world conference on airtransport in November-December 1994.  Its recommendations take the form of model clauses which
ICAO Members are recommended to use as guidance in their bilateral agreements.  The texts of these
recommended clauses are in Annex 2.
94. Some of these clauses have strictly bilateral application - those relating to the settlement of
disputes about unfair pricing practices and the abuse of dominant positions (ATRP/9-2), and thatwhich deals with potential measures of liberalization (ATRP/9-3).  Other clauses are of a more
general nature and sometimes resemble provisions in the GATS or the GATT.  This is the case for the
clause on safeguard mechanisms (ATRP/9-1) which covers the definition of anti-competitive
practices, notably in tariffs, and which has certain similarities with the GATT Anti-Dumping
Agreement and the Reference Paper on Basic Telecommunications.  Recommendation (ATRP/9-4),
on the criteria for air carrier use of market access, deals with the same kind of issue as the definitions
in GATS Article XVIII(l)-(n).  The model clause on ground services (ATRP/9-5A) can be comparedin some respects with the model schedule develo ped for maritime transport.  The model clause on
currency conversion and remittance of earnings (ATRP/9-5B) and that on payment of local expenses
(ATRP/9-5C) have the same purpose as Article XI of the GATS.  The model clause on non-national
personnel and access to local services (ATRP/9-5D) resembles certain horizontal commitments under
Mode 4 and paragraph 9 of the Understanding on commitments in financial services.  The modelclause on sale and marketing of air service products (ATRP/9-5E) deals with the same subject as the
reference to selling and marketing in the Air Transport Annex but has a wider scope (it speaks of salesS/C/W/59
Page 25
made "directly or through agents or other intermediaries of the carrier's choice") and is more precise
in speaking of "the right to establish offices, both on-line and off-line".
95. The degree to which these model clauses have been accepted by ICAO Members in the
351bilateral agreements notified between January 1995 and July 1998 varies considerably from one
clause to another – from 40 per cent of agreements in the case of ATRP/9-3 to 11 per cent for
ATRP/9-5C.  The majority of these bilateral agreements of course involve WTO Members.
2. Scheduled passenger service – economic, trade and regulatory characteristics
96. Scheduled international services were defined in 1952 by the Council of ICAO as follows:
"A series of flights that possesses  all the following characteristics:
(a) it passes through the air space over the territory of more than one state;
(b) it is performed by aircraft for the transport of passengers, mail or cargo for
remuneration in such a manner that each flight is open to use by members ofthe public;
(c) it is operated so as to serve traffic between the same two or more points either
i) according to a published timetable, or ii) with flights so regular or frequent
that they constitute a recognizably systematic series.  This definition
typically encompasses a  service:
- which is part of an international network of services, operating
according to a published time table,
- where the on-demand passenger has a reasonable chance of securing
accommodation,
- which normally operates irrespective of short term fluctuations in
pay-load,
- where stopovers and interlining facilities are offered to the users  with
the appropriate ticket or airway bill  subject to the relevant
international agreement if any".
28
97. In 1996 scheduled passenger services carried 1380 million passengers, 409 million on
international flights, 927 million on domestic flights.  In terms of passenger-kilometres the respective
figures are 1,363,350 millions and 1,047,660 millions.  Operating revenues for all scheduled flights
were US$ 281.5 billion in 1996 – but some US$ 10 billion of this figure should be subtracted, since it
arises from charter activities of regular airline companies.
98. There are no detailed employment statistics for scheduled services – only for the direct
employees of IATA Member companies.  Total employment in these companies in 1996 was
1,532,000, of which pilots, co-pilots and cockpit staff represented 130,000, cabin staff 262,000,
maintenance workers 255,000, commercial staff (ticket sales and promotion) 208,000, airport
handling staff 301,000 and "others" 377,000.  The greater part of these jobs certainly related to
scheduled services.  The indirect employment genera ted by this sector would certainly be very much
larger – perhaps by a factor of five or six.
                                                     
28 For a detailed discussion of this definition see ICAO document 9587 "Policy and Guidance Material
on the Regulation of International Air Transport", 1992, p 9-13.S/C/W/59
Page 26
99. The chart below, compiled by ICAO, shows the geographical distribution of scheduled
international and domestic flights.  It shows the percentage distribution of scheduled traffic in 1996,
according to the region of registration of airlines, in terms of tonne kilometres performed.
100. Table 4 indicates  the Top 30 scheduled air carriers in 1996 and their ranking in 1995 and
1987.
Figure 4  Percentage distribution of scheduled traffic in 1996 according to region of registration
of airline – total tonne-kilometre performed
Europe Africa Middle East
Asia/Pacific North America
 Latin America/Caribbean
26.32.0
3.3
27.2
36.54.7
34.62.7
4.6
33.1
19.75.3International and Domestic InternationalS/C/W/59
Page 27Table 4 Top 30 scheduled air carriers in  1996 and their ranking in 1995 and 1987 in terms of TOTAL (international and domestic ) scheduled traffic carrieda
PASSENGER-KM PERFORMED FREIGHT AND MAIL TONNE-KM PERFORMED TOTAL TONNE-KM PERFORMED
CarrierEstimated
1996
(millions)Ranking CarrierEstimated
1996
(millions)Ranking CarrierEstimated
1996
(millions)Ranking
1996 1995 1987 1996 1995 1987 1996 1995 1987
United 187 536 1 1 2 Federal Express 7 894 1 1 11 United 20 502  1 1 2
American 168 174 2 2 3 Lufthansa 6 187 2 2 2 American 18 254 2 2 3
Delta 151 048 3 3 4 Korean Air 5 236 3 3  9 Delta 15 769 3 3 6
Northwest 110 420 4 4 5 Air France 4 812  4 4 5 Northwest 13 254 4 4 4
British Airways 96 700 5 5 9 SIA 4 211 5 7 12 British Airways 13 113 5 5 11
JAL 75 837 6  6 10 JAL 4 069 6 5 4 Lufthansa 12 520 6 6 8
Lufthansa 63 255 7 7 12 KLM 3 926 7 6 7 JAL 10 846 7 7 5
USAir 62 659 8 8 19 United 3 485 8 8 8 Air France 10 747 8 8 9
Continental 60 087 9 9 6 British Airways 3 427 9 10 10 SIA 9 296 9 9 15
Air France 57 480 10 11 13 Cathay Pacific 3 245 10 12 14 Korean Air 8 928 10 11 18
Qantas 55 594 11 10 16 Northwest 3 235 11 9 6 KLM 8 538 11 10 14
SIA 53 647 12 12 14 American 2 994 12 11 18 Federal Express 7 894  12 12 32
KLM 49 050 13 13 17 Delta 2 063 13 13 19 Cathay Pacific 7 050 13 14 20
All Nippon Airways 47 016 14 14 15 Qantas 1 751 14 14 17 Qantas 6 924 14 13 17
TWA 43 621 15 15 8 Nippon Cargo 1 653 15 15 24 Continental 6 178 15 16 7
Southwest 43 581 16  16 31 Swissair 1 561 16 16 21 USAir 6 106 16 15 25
Korean Air 41 643 17 17 25 Alitalia 1 493 17 17 15 All Nippon Airways 4 951 17 17 23
Cathay Pacific 39 945 18 18 22 Malaysia Airlines 1 418 18 20 36 Alitalia 4 914 18 18 21
Alitalia 34 556 19 19 24 Thai Airways 1 387 19 18 30 TWA 4 607  19 19 12
Air Canada 31 074 20 21 18 Asianab1 376 20 21 Southwest 4 085 20 21 43
Thai Airways 29 801 21 20 29 Varig 1 274  21 19 20 Thai Airways 4 075 21 20 29
Malaysia Airlines 26 862 22 23 43 Air Canada 1 140 22 25 23 Air Canada 3 959 22 23 19
Iberia 25 806 23 22 20 All Nippon Airways 1 136 23 24 35 Swissair 3 653 23 22 24
Canadian 24 944 24 24 27 Polar Air Cargoc1 123 24 22 Malaysia Airlines 3 620 24 25 40
America West 24 579 25 25 35 El Al 1 118 25 23 25 Varig 3 297 25 24 26
Varig 21 787 26 26 30 United Parcel Serviceb1 064 26 26 Iberia 3 082 26 26 22
Swissair 21 296 27 27 26 Saudia 884 27 27 31 Canadian  3 002 27 27 31
Air New Zealand 20 795 28 31 34 Iberia 760 28 30  27 Asianab2 621 28 30
SAS 19 448 29 28 28 Air Chinad760 29 29 Saudia 2 592 29 28 27
Saudia 18 980 30 29 23 Canadian 739 30 28 40 Air New Zealand 2 554 30 32 36
aMost 1996 data are computer-generated estimates; thus the ranking may change when final data become available.bStarted operations in 1988.
cStarted operations in 1994.dNo data for individual air carriers were reported by China
prior to 1993.
Source:  ICAO Air Transport Reporting Form A-1 and IATA.S/C/W/59
Page 28
101. In general statistics relating to air transport are very much better than those for other modes of
transport, in terms of their universality, homogeneity and the degree of detail provided, and in terms
of the trustworthiness and recency of the data.  Major sources include the ICAO Statistical Yearbook
(Last edition 1995, published in December 1996).  IATA's "World Air Transport Statistics" (last
edition No. 41, June 1997) and "The World of Civil Aviation 1996-1999" (ICAO circular 271-
AT/112).
102. The main economic developments since the appearance of the Secretariat document
MTN.GNS/W/60 of 4 July 1989 include, in the first place, the fact that the existing trend towards
privatization of airline companies has strengthened and become more general. More than 70 per cent
of airline companies now have a majority of private capital.  The classical  model of the State-owned
"flag carrier" is becoming more rare.  The following table compiled by ICAO lists 30 privatization
operations taking place in 1996 alone.
Table 5:  Partial or full privatization of government-owned airlines
Targeted during 1996Targeted before 1996 and still
under preparationAim achieved during 1996
Air Algérie Aeroflot (Russian Federation) Kenya Airways
Air Niugini Air France Aeropostal (Venezuela)
Air Sénégal Air India
Air Zimbabwe Air Lanka
Armenian Airlines Alitalia
Domodedovo Airlines (Russia) China Eastern Airlines
Kazakhstan Airlines China Southern Airlines
Mozambique Airlines El Al (Israel)
Pakistan International Airlines Estonian Air
Sunair (South Africa) Garuda Indonesia
Ghana Airways
Iberia
Kuwait Airways
LOT-Polish Airways
MALEV-Hungarian Airlines
Pacific East Asia Cargo
(Philippines)
Royal Air Maroc
Sudan Airways
Saoudi Arabian Airlines
South African Airways
Thai Airways International
103. These privatizations have often induced foreign investment in airline companies, subject to
any limits imposed by the law on foreign equity participation.  Such limits are very common, but in
some countries, such as New Zealand, these requirements have been relaxed. It is also significant that
governments no longer invariably come to the rescue of distressed national airlines, and that somebankruptcies and closures have been allowed to take place, notably in developing countries.  In
developed countries there has been a clear tightening of competition policies in relation to State aids.
104. The formation of international alliances is another striking development of recent years.
216 new alliances were formed in 1996 – twice as many as in the previous year.  The magazine
"Airline Business International" of June 1998 gives a complete and up to date picture of thesealliances. The motivation for alliances is usually the need to offer a global service with connections
throughout the world while restraining costs. They also mitigate the effects of  foreign equity
restrictions and of the limitations inherent in bilateral agreements. They can involve many different
forms of cooperation:   consultation and coordination in tariffs, joint operations including pooling of
services and capacity, interlining agreements, route planning, fleet rationalization including code-S/C/W/59
Page 29
sharing, blocked space agreements, coordination of schedules, joint  frequent  flyers programmes,
franchising, computerized reservation systems.  Major global alliances have also been created, such as
Star Alliance (Lufthansa, Air Canada, SAS, South African Airways, Thai Airways, United Airlines
and Varig) and One World, which is centered on British Airways and American Airlines.
105. Competition authorities  concerned about  their potential anti- competitive effects sometimes
require as conditions for approval of such groupings the reduction of capacity or the surrender oflanding-slots at the "hub" airports of  these mega-carriers. The airlines' right to sell these slots is as yet
undetermined.
106. Groupings and concentration can also be observe d on the national level: thus in the US a
complex series of alliances, if approved, could reduce the number of operators to three. Also
noteworthy are the emergence of increasing numbers of low-cost new entrants, such as Ryan Air, and
the creation of low-cost subsidiaries by major operators. In another strategy a major operator may buy
small regional companies or franchise them to carry its customers to hub airports.
107. The creation of regional civil aviation markets, notably in Latin America, and of civil markets
(through the three packages of liberalization on the European level, which will soon be extended to
the European Economic Area and then to Central and East European countries) is also an important
new development.
3. Non-scheduled passenger services: economic, trade and regulatory characteristics
108. Non-scheduled services have no specific definition, and are therefore understood to be all
services  not falling within the definition given above of scheduled services.  However, a partial
definition in the "guidelines for non-scheduled air services" adopted by the Third Air Transport
Conference of 1985
29 says that these services are most often "limited to low price leisure and
discretionary travel or specialised transport of passengers or cargo".  In practice, charter flights veryfrequently involve "affinity groups" travelling on "inclusive tours" which include the block-booking
of airline seats, and very often accommodation or other travel services as well.
109. Non-scheduled passenger services in 1996 accounted for 236,310 passenger-kilometres (a fall
of 9 per cent from the previous year) of which less than one third was due to pure charter companies
and more than two-thirds due to charter operations by regular airlines (e.g. Kuoni package customerstravelling on Swissair). Total revenues from charter services in 1995 were US$ 19 billion (10 billion
for the charter activities of regular airl ines, 9 billion for pure charter companies)
30.  This compares
with revenues of US$ 270 billion for scheduled services.
110. The following table, compiled by IATA, compares the volume of scheduled and non-
scheduled services.
Table 6:  World Passenger-Kilometres flown 1996 – Distribution by type of services
Scheduled Charter All services
International 51.5 % 7.7 % 59.2 %
Domestic 39.6 % 1.2 % 40.8%
Int + Dom 91.1 % 8.9% 100%
                                                     
29 See ICAO document 9587 "Policy and Guidance Material on the Regulation of International Air
Transport" 1992 pp 83-85.
30 Source: ICAO, Civil Aviation Statistics of the World 1995 (December 1996 Tables 1-27).S/C/W/59
Page 30
111. The regulatory regime for charter flights (meaning those flights provided by pure charter
companies) is substantially different from that for scheduled services. Non-scheduled (charter) flights
are primarily regulated at the national level, the result of Article 5 of the Chicago Convention which
permits non-scheduled flights to overfly and land without prior permission but allows each
Contracting State to determine the conditions under which such flights may pick up or discharge
passengers, cargo and mail.  However, there are bilateral and regional agreements dealing with non-scheduled services.
112. Approximately 10 per cent of bilateral air service agreements as well as 5 regional
agreements
31 deal with market access for non-scheduled air services.  They may take one or more of
the following approaches:  some authorize specific types of non-scheduled flights, such as all-cargo or
inclusive-tour passenger flights;  some prescribe numerical limitations;  some permit non-scheduled
services which the concerned State believes do not harm scheduled services;  some prescribe which
State's charter rules will apply – e.g. the country  of origin;  some specify wide latitude for non-
scheduled flights (one-way, round-trip, passenger/car go, stop-overs);  and some make no distinction
between the authorization granted for scheduled and non-scheduled services.
113. In general, regulations and policies affecting non-scheduled services are more liberal, notably
because there are very often tourist industries in the countries of destination pressing for open and
low-cost air services – despite the general reluctance of aviation authorities to allow their scheduledservices regime to be  undermined by cheaper and more lightly regulated charter flights.  (See the
Secretariat's note on Tourism Services S/C/W/51 dated 21 September 1998).
114. It can also be said that the differences between scheduled and non-scheduled services, both
from the regulatory and the commercial point of view, are tending to disappear.  On the one hand,
"affinity groups" increasingly have only the name in common, and on the other hand travel agenciesand tour operators are increasingly using scheduled services, which as a result of deregulation and
liberalization are becoming cheaper, sometimes to th e point of eliminating the competitive advantage
of charter operators.  This happened in the United States in the late 1970's and early 80's.  In the
European Community, on the internal market and for Community carriers, all legal distinctions
between scheduled and non-scheduled services have disappeared.  The political sensitivity of non-scheduled services has diminished since they no longer represent the only means of exercising
competitive pressure on prices – fierce pressures now  operate in the scheduled sector too.
4. Cargo services – economic, trade and regulatory characteristics
115. There are about 70 companies that operate pure cargo services, 50 of which operate
internationally.  They are all listed in "Aviation Week & Space Technology" of 12 January 1998.This market is estimated to be worth US$ 20 billion annually and could triple in size by 2015.
31 billion kilometre-tonnes were carried in 1996. (In the same year, for comparison, air postal
services amounted to only 254 million kilometre-tonnes).  An increasing share of world trade in high-
value products such as computers is carried by air.  The sector is characterised by competition
between traditional suppliers (forwarding agents and airline companies) and the express delivery
companies, known as "integrators" .  On average traditional suppliers require six days, 36 handling
operations and 18 documents to move a cargo.  It appears that in these respects there have not beengreat improvements in efficiency over the past twenty years and that there may be scope for efficiency
gains.  Traditional suppliers, though they still account for some 94 per cent of the market, are tending
to lose ground to the express delivery companies, which operate much more quickly and are moving
up from express mail and packages to heavier cargoes.  Some forecasts suggest that the share of  the
traditional suppliers could fall to 70 per cent or less by 2013.  (The share of integrators in the US
                                                     
31 For instance the "Multilateral Agreement on Commercial Rights of Non-Scheduled Air Transport in
Europe" dated 30 June 1956 signed by 18 countries under the aegis of the European Civil Aviation Commission(ECAC) which liberalized almost completely the charter activities between those countries.S/C/W/59
Page 31
market rose from 10 per cent in 1984 to 84 per cent today).  The market is growing by 7-8 per cent a
year.
116. Meanwhile the integrators are linking up with management software companies and logistics
companies in order to take advantage of the increase in "outsourcing" of logistics and transport which
is typical of the computer industry, for example.  On the side of the airlines, companies are giving a
higher profile to their cargo divisions, treating them as profit centers and sometimes making themseparate entitities, such as Luftansa Cargo AG.  These companies increasingly provide express
services modelled on those of the integrators.  Nevertheless, 60 per cent of cargoes are still carried by
passenger aircraft or combined flights.  The development of code-barring, which allows on-line
tracing of cargoes, is an important technological advance.
117. The regulation of cargo flights is laid down in principle by bilateral agreements.  The grant of
commercial rights in bilateral air service agreements is for "passengers, cargoes and mail".  Thus all
bilateral air service agreements apply to scheduled  all-cargo services in the same manner as they
cover the more prevalent passenger/cargo combination services.  Of the 3,000 bilateral agreements
now in force only 25 contain specific provisions on all-cargo flights;  these normally contain
additional measures relating to air cargo in such matters as intermodal, capacity and pricing regimes.
118. It would seem that in general, the regime accorded to cargo flights, whether bilaterally or
unilaterally, may be more liberal than that for passenger flights.  States which did not have all-cargocarriers, but which did have traders needing air cargo services beyond what their national airline could
provide through combination services were not reluctant to authorise all-cargo operations, which
could often operate at off-peak times and at unc ongested airports, thus minimising airport capacity
problems.  Thus, because many States saw no need to protect their national airlines from all-cargo
competitors, and found some benefit in authorising such services, all-cargo services were rarelyregulated at such.
119. The development of express delivery companies, with their distribution networks based on
continental hubs, is also a factor tending towards liberalization of air cargo. The negotiation of
"beyond/rights" – that is to say the 5
th, 6th, 7th and 8th "freedoms" – is also very important in the
context of all-cargo flights, given the structure of the networks based on hub and feeder airports. (SeeTable 7 below showing the main cargo airports of the world).
Table 7:  The World's Airports* in 1997, Airport Ranking by Total Cargo, Percent change from 1996
RANK CITY (CODE) TOTAL CARGO (tonnes) % CHG
1 MEMPHIS (MEM) 2 233 489 15.5
2 LOS ANGELES (LAX) 1 872 862 8.9
3 HONG KONG (HKG) 1 813 266 14.0
4 MIAMI (MIA) 1 765 784 3.3
5 TOKYO (NRT) 1 738 795 6.9
6 NEW YORK (JFK) 1 667 581 1.9
7 SEOUL (SEL) 1 567 638 15.1
8 FRANKFURT/MAIN (FRA) 1 514 267 1.1
9 CHICAGO (ORD) 1 407 307 11.7
10 SINGAPORE (SIN) 1 358 044 12.1
11 LOUISVILLE (SDF) 1 345 693 (1.7)
12 LONDON (LHR) 1 260 068 10.5
13 ANCHORAGE (ANC)** 1 259 827 17.4
14 AMSTERDAM (AMS) 1 207 282 7.3
15 PARIS (CDG) 1 072 207 9.5
16 NEWARK (EWR) 1 043 494 8.9
17 TAIPEI (TPE) 913 520 14.7
18 ATLANTA (ATL) 864 944 8.1S/C/W/59
Page 32
RANK CITY (CODE) TOTAL CARGO (tonnes) % CHG
19 DAYTON (DAY) 813 180 6.0
20 DALLAS/FT WORTH AIRPORT (DFW) 810 687 4.7
21 SAN FRANCISCO (SFO) 780 029 9.6
22 BANGKOK (BKK) 771 064 9.7
23 OSAKA (KIX) 744 937 25.7
24 TOKYO (HND) 696 498 3.8
25 OAKLAND (OAK) 678 083 10.2
26 INDIANAPOLIS (IND) 662 923 8.8
27 BRUSSELS (BRU) 530 718 14.4
28 SYDNEY (SYD) 530 601 7.7
29 TOLEDO (TOL) 520 855 51.0
30 HONOLULU (HNL) 500 830 14.8
31 MANILA (MNL) 488 341 26.6
32 PHILADELPHIA (PHL) 485 785 (1.6)
33 SANTAFE DE BOGOTA DC (BOG) 460 496 n.a.
34 BOSTON (BOS) 441 800 6.9
35 DENVER (DEN) 437 203 12.1
36 DUBAI (DXB) 425 157 15.1
37 KUALA LUMPUR (KUL) 418 892 11.0
38 ONTARIO (ONT) 418 804 5.6
39 SAO PAULO (GRU) 404 482 (3.6)
40 COLOGNE (CGN) 398 512 15.8
41 SEATTLE (SEA) 393 786 1.4
42 COPENHAGEN (CPH) 387 699 14.7
43 MINNEAPOLIS/ST PAUL (MSP) 379 096 4.9
44 TORONTO (YYZ) 379 000 12.6
45 CINCINNATI (CVG) 362 631 25.6
46 SHANGHAI (SHA) 359 777 18.0
47 ZURICH (ZRH) 355 301 4.5
48 JAKARTA (CGK) 355 252 8.3
49 WASHINGTON (IAD) 350 249 13.3
50 MELBOURNE (MEL) 348 970 4.9
5. Landing slots
120. The concept of "slots" is defined in ICAO's International Civil Aviation Vocabulary as "the
specific time allocated for an aircraft to land and to take-off".  Slots are limited in number for obvious
physical reasons.  Their commercial value varies considerably "slots at the beginning and the end of
the day are particularly convenient for flights on business, for which first and business class seats are
much in demand.  Slots are thus a scarce physical resource, and are becoming more so as traffic
increases and airports encounter growing difficulty in expending their operations.
121. Airports have a natural preference to allocate slots to large airliners which generate much
higher "user charges" than smaller aircraft while occupying broadly similar time and space.  On their
side, airline companies which hold the majority of slots at their "hub" airports have a clear interest in
slot allocations which benefit their own flights and those of their subsidiaries and allied airlines rather
than those of competitors.  Competition authorities have appreciated the crucial importance of slots,
and for this reason frequently make it a condition of approval of alliances between airlines that theyshould give up some slots at their hub airports to competitors.
122. The regulation of slot allocation is constantly evolving, but in highly simplified terms, it can
be said that there are now three allocation regimes in the world.  The United States and the EU each
have their own regime and the procedures of the IATA constitute the third "common law" regime,S/C/W/59
Page 33
which applies everywhere else in the world. The IATA regime,32 which has no legal status or
enforcement mechanisms, is essentially based on the criterion of past performance, together with
some simple rules intended to create openings for new entrants and to ensure that slots are not
sterilized and left unused by companies (the "use or lose" principle).  It rests on complex multilateral
negotiations taking place every year in which all slots at all world airports are discussed among all
airline companies in a process not unlike a GATT tariff negotiation.  It may take several years to
negotiate the complex cross-concession needed to ensure that a given flight may land at Heathrow
each day at a time which permits suitable connections with alliance partners.  These meetings take
place under the close surveillance of competition authorities.
123. The EU regime33 is quite close to that of IATA but is more precise in a certain respect.  It
prescribes for example that 50 per cent of unused slots must be distributed to new entrance and 50 per
cent used for "re-timing" or for new services, whereas the IATA guide say they must be shared
"equally".  Similarly the EU regime quantifies the "use it or lose it" principle:  slots must be at least80 per cent used or they are withdrawn.  IATA gives no precise indications on this point.  The EU
regime distinguishes two types of airports: fu lly coordinated airports where an independent
coordinator carries out the allocation of slots and airports where allocations take place among the
operators present on the basis of a simple collection of statistics (system market analysis).  The
question whether a slot can be sold is not settled in European law.
124. The US regime distinguishes between the domestic market, on which slots can be sold, the
international market, on which the Federal Aviation Authority allocates slots according to its own
criteria and the market for four "supercongested" airports at which domestic slots are limited in time
and may be reallocated by the FAA to international flights.
125. Opinions in the economic literature as to th e need for multilateral rules on the allocation of
slots vary considerably from one author to another. If rules were to be elaborated the major difficulties
would be problems of access to physically limited resources and to networks, and the non-violation
issue would also be important.
34
6. Ground Services
126. Under the general term of ground services we m ean to bring together all services provided
within or around an airport.  This covers a range of very different services – from air traffic control,
which is normally a service provided by government on a non-commercial basis, to such services as
franchising of shops and car rentals.  The economic importance of these services which are not
directly linked to the main business of the airport is  very great:  the Airport Council International, the
professional organisation of the industry, estimates that 46 per cent of airport revenues derive fromthese non-aviation activities.  The figure is higher in some cases, such as the British Airports
Authority, which was the pioneer in privatization and the development of commercial activities.
ACI's estimates for employment and turnover are al so impressive:  200,000 directly employed by the
airports themselves, 1.6 million other employees on airports and 4 million indirectly employed on
business arising from the airports.  Turnover is estimated at US$ 25 billion of which only half derives
from aviation business in the strict sense.  The indirect economic impact is estimated at
US$ 122 billion.  Annex 3 indicates the traffic at world's top 25 airports.
                                                     
32 IATA "Scheduling Procedures Guid e", Twenty Fourth Edition, July 1998.
33EEC Regulation N°95/93 of 18 January 1993. Now being revised (Commission Proposal
COM(97)0425).
34For further information on the regulation of slots see OECD papers
DAFFE/CLP/WP2/M(97)2/ANN1 of 16 January 1998 and DAFFE/CLP(98)3 of 14 May 1998. On slotregulation at high density airports see Journal of Air Law and Commerce, May-June 1996 and Air and SpaceLaw, Volume XIX, Number 4/5 1994.S/C/W/59
Page 34
127. The number and complexity of ground services is such that it is not possible to treat them in
detail in this paper, which will simply describe the broad outlines of the economic and regulatory
regime.
128. One major issue which arises in describing and considering the ground services sector is to
what extent it is covered by the GATS.  This relates to the definition of services directly related to the
exercise of traffic rights which is discussed above.  A number of members have made commitmentson the service (see Table 6 of Annex 1).  A second difficulty is that of precise identification of these
services, which often do not correspond with CPC concepts.
129. In the case of air traffic control an acceptable definition is given in ICAO's "Guide to the
facilities and services to be taken into account by providing authorities in de termining the total costs
of air navigation services".
35  Freight transport agency services (CPC 74800) and other supporting and
auxiliary transport services (CPC 74900) are also adequately described.  The question of their
coverage by the Annex is discussed above.
130. For all services between the landing of the aircraft and the passengers leaving the airport,
however, different systems of classification exist.  Two of these have some regulatory and
commercial impact.  The first is the ICAO "Guide to facilities and services to be taken into account in
determining airports' costs",36 which serves as a basis for the pricing of services.  The second is the
list contained in IATA's "Standard ground handling agreement"37 which is the universal reference for
airline companies negotiating contracts with ground services suppliers. The latter largely inspired the
list which defines the scope of the Community directive "on access to the ground handling market at
Community airports" N° 96/67/CE of 15 October 1996. The table in Annex 4 which compares these
two classifications shows that they partially overlap but that taken together they seem to cover the
whole universe of airport services.
131. However these activities are classified, the extreme variability of the organization and
ownership is very striking.  For example, the airport of San Diego, which handles 15 million
passengers annually, has only 20 direct employees.  Frankfurt airport handles three times as many
passengers but has more than 15 000 direct employees.  The table below, taken from a World Bank
study, shows the manner in which ground services are organized in the airport of Buenos Aires.
                                                     
35 (See ICAO Document N°9082/5 of April 1998).
36 Ibid.
37 Ibid.S/C/W/59
Page 35
Table 8 Buenos Aires – Principal Airport Functions
OPERATIONAL
ACTIVITIESTRAFFIC HANDLINGCOMMERCIAL
ACTIVITIES
Air Traffic
ControlCRAGround and
Ramp
HandlingIntercargoDuty Free and
ShoppingInterbaires
Police and
SecurityCRAFreight
HandlingEdcadassaCatering and
RestaurantBuenos Aires
Catering
Ambulance,Fire and
RescueCRABaggage
Handling Intercargo Car Parking Caritas
Maintenance CRAPassengersIntercargoSurface
TransportManuel
Tienda Leon
Special
FacilitiesCRACustoms and
Immigration Customs UnitAdvertising
OtherCaled Air
Force;
Province
Source:  World Bank staff.
132. Historically, airports developed as the property of public authorities, either national, regional
or local.  In some cases, this went hand in hand with private or semi-private use of terminals by airline
companies which in return contributed to investment co sts.  This model is tending to spread as a result
of the development of hub strategies (for example Lufthansa's part-financing of the new terminal at
Munich and the development of company "lounges").
133. Growing investment needs have caused public au thorities to consider privatising the building
and management of airports.  This movement started in the UK but can also be observed in other
developed countries and in developing countries with World Bank participation.38  Privatisation takes
many different forms. Under the perpetual franch ise system the ownership financing and operation of
the airport devolve upon the firm developing it while the government regulates safety and the quality
of services and sometimes prices or profits.  Under the Buy-Build Operate system a private firm buys
an existing airport and expands or improves it as a private facility.  The most common form is known
as "Build Operate Transfer" under which the private company receives a franchise to finance, buildand operate the airport over a long period of up to 50 years after which it is returned to the
government.  There are several other variants.  The United States is unique in having a sophisticated
market in airport revenues bonds which allows local authorities to retain ownership while financing
investments through private sector money.  However, the FAA is planning to privatise five airports
including one major hub in the next five years.
39
134. The logic of privatisation could run counter to the liberalisation of market access and of
Government Procurement, since investors are likely to find monopoly rights attractive, but there is
                                                     
38 See Anil Kapur "Airport Infrastructure, the Emerging Role of the Private Sector", World Bank
Technical Paper No. 313, October 1995.
39 See "Privatizing Airports:  Options and Case Studies" in World Bank "Public Policy for the Private
Sector" Note 82 June 1996.  See also "Airport Privatization:  Meeting the Challenges of the 21st Century: New
Scenarios in Airport Ownership", Airports Council International, Update No. 6, September 1998.S/C/W/59
Page 36
also a contrary movement towards the liberalization of ground handling services in the strict sense –
that is servicing aircraft and passengers.
135. The United States have for a long time permitted "self-handling", meaning the provision of
ground services by the airline companies both for their own flights and for those of other companies.
ICAO has also sought to promote this type of organization through a model clause which may be
included in bilateral agreements (recommendation ATRP 9/5A).
136. Finally the EU, in its Directive 96/67/CE40 has established, according to a calendar and
progressive increases in access, the right of ground service providers to provide these services for
third parties.  The Member States retain the right to  require that the supplier be established within the
Community and to limit the number of suppliers – it being understood that there should be at least two
suppliers in each category (baggage handling, ramp handling, fuel and oil handling, freight and mail
handling) and that at least one of the authorized suppliers should not be under the direct or indirect
control of the airport, or of any company which transports more than 25 per cent of the airport'spassengers.  The Commission application of this Directive has met opposition from certain airports
which argued that physical constraints made it impossible to give effect to this liberalization.  In the
same spirit, competition authorities have sought to  ensure that when several airports serve the same
city the distribution of airline companies between th e airports is not abused by public authorities or
dominant airline companies in order to benefit some carriers at the expense of others.
Information Sources
Relevant sources of information also include the following websites:
http://www.global.amadeus.net/industry/index.htm http://www.sabre.com/index.html
http://www.galileo.com/ http://www.abacus.com.sg/http://www.worldspan.com/inde x.cfm http://www.sita.int/
http://www.iata.org http://www.icao.org
http://www.airports.org
                                                     
40 OJ No.L 272/36 of 25 October 1996.S/C/W/59
Page 37
ANNEX 1:  TABLES
Table 1:  WTO Members  - with MFN obligat ions for Repair and Maintenance Services
(Bold areas are symbolising countries with commitments)
1995 1998
Number of
aircraftNumber of
repair andmaintenance
facilitiesNumber of
aircraftNumber of
repair andmaintenance
facilitiesNew facilities
established
Member
Angola 24 25
Antigua & Barbuda 12 9
Argentina 71 80 1 +1
Australia 207 2 231 2
Austria 68 1 74 1
Bahrain 1 2
Bangladesh 7 8
Barbados 1 0
Belgium 111 1 132 2 +1
Belize 0 0
Benin 0 0
Bolivia 21 18
Botswana 1 1
Brazil 194 3 219 4 +1
Brunei Darassalam 14 20
Bulgaria 88 47
Burkina Faso 2 2
Burundi 0 0
Cameroon 6 6
Central African Rep. 0 0
Chad 1 1
Chile 42 53
Colombia 94 92 1 +1
Congo 5 5
Congo, Dem. Rep. 32 30
Costa Rica 12 1 11 1
Cote d'Ivoire 17 1 18 1
Cuba 94 42
Cyprus 19 19
Czech Republic 35 1 43 1S/C/W/59
Page 38
1995 1998
Number of
aircraftNumber of
repair and
maintenance
facilitiesNumber of
aircraftNumber of
repair and
maintenance
facilitiesNew facilities
established
Denmark 66 1 67 1
Djibouti 4 2
Dominica 0 0
Dominican Rep. 4 0
Ecuador 24 24
Egypt 58 64
El Salvador 15 20
Fiji 5 7
Finland 45 51
France 483 7 443 11 +4
Gabon 4 8
Gambia 1 11
Germany 474 5 575 9 +4
Ghana 12 14
Greece 53 1 42 1
Grenada 0 0
Guatemala 8 8
Guinea Bissau 1 0
Guinea, Rep. 2 1
Guyana 1 1
Haiti 1 0
Honduras 5 1
Hong Kong 100 1 0 2 +1
Hungary 35 1 31 1
Iceland 18 1 22 1
India 128 134
Indonesia 223 196
Ireland 52 6 74 6
Israel 36 2 40 2
Italy 245 2 202 2
Jamaica 10 14
Japan 485 476
Kenya 14 10
Korea 190 226
Lesotho 1
Liechtenstein 0 132
Luxembourg 16 1 17 1
Macau 0 74
Madagascar 8 6S/C/W/59
Page 39
1995 1998
Number of
aircraftNumber of
repair and
maintenance
facilitiesNumber of
aircraftNumber of
repair and
maintenance
facilitiesNew facilities
established
Malawi 2 3
Malaysia 124 1 131 1
Maldives 1 1
Mali 0 1
Malta 16 13
Mauritania 2 1
Mauritius 10 8
Mexico 217 2 203 2
Morocco 42 1 34 1
Mongolia 20 3
Mozambique 7 5
Myanmar 8 5
Namibia 2 2
Netherlands 154 5 145 5
New Zealand 60 1 55 2 +1
Nicaragua 1 1
Niger 1 1
Nigeria 103 100
Norway 40 40
Pakistan 51 49
Panama 10 15
Papua New Guinea 10 10
Paraguay 6 6
Peru 49 46
Philippines 60 104
Poland 56 41
Portugal 46 1 75 1
Qatar 4 11
Romania 48 45 1 +1
Rwanda 1 0
St Kitts & Nevis 0 0
Saint Lucia 0 0
St.Vincent & Grn. 0 0
Senegal 2 1
Sierra Leone 1 1
Singapore 101 5 149 7 +2S/C/W/59
Page 40
1995 1998
Number of
aircraftNumber of
repair and
maintenance
facilitiesNumber of
aircraftNumber of
repair and
maintenance
facilitiesNew facilities
established
Slovak Republic 4 15
Slovenia 11 7
Solomon Islands 1 2
South Africa 59 1 135 2 +1
Spain 249 1 269 1
Sri Lanka 16 9
Suriname 0 1
Swaziland 5 5
Sweden 230 2 207 2
Switzerland 124 3 96 3
Tanzania 10 4
Togo 2 5
Trinidad & Tobago 13 13
Tunisia 25 28
Turkey 107 138
Uganda 6 9
United Arab Emirates 33 1 45 1
United Kingdom 610 11 758 14 +3
United States 5576 66 6090 75 +8
Uruguay 77 4
Venezuela 75 75
Zambia 8 5
Zimbabwe 12 8S/C/W/59
Page 41
Table 2:  CRS Vendors in WTO Members with MF N obligations for Computer Reservations Systems
(Bold areas are symbolising countries with commitments)
Members1995
Number of Vendors1998
Number of Vendors Evolution
Angola 2 1 -1
Antigua & Barbuda 1 2 +1
Argentina 4 3 -1
Australia 5 5
Bahrain 2 2
Bangladesh 1 2 +1
Barbados 1 2 +1
Belize 2 2
Benin 1 1
Bolivia 2 1
Botswana 1 1
Brazil 4 3 -1
Brunei Darassalam 1 2 +1
Burkina Faso 1 1
Burundi 0 0
Cameroon 1 1
Canada 6 4 -2
Central African Rep. 0 1 +1
Chad 0 1 +1
Chile 5 3 -2
Colombia 3 2 -1
Congo 1 2 +1
Congo, Dem. Rep. 3 0 -3
Costa Rica 4 2 -2
Côte d'Ivoire 1 1
Cuba 1 0 -1
Cyprus 2 4 +2
Czech Republic 3 4 +1
Djibouti 0 0
Dominica 0 1 +1
Dominican Rep. 2 2
Ecuador 4 2 -2S/C/W/59
Page 42
Members1995
Number of Vendors1998
Number of Vendors Evolution
Egypt 4 4
El Salvador 3 2 -1
Fiji 1 1
Gabon 1 1
Gambia 0 0
Ghana 1 0 -1
Grenada 1 2 +1
Guatemala 4 3 -1
Guinea Bissau 0 1 +1
Guinea, Rep. 1 1
Guyana 2 2
Haiti 2 2
Honduras 2 2
Hong Kong 4 3 -1
Hungary 4 4
India 5 4 -1
Indonesia 2 3 +1
Israel 4 3 -1
Jamaica 2 2
Japan 3 3
Kenya 1 1
Lesotho 1 1
Macau 0 0
Madagascar 0 1 +1
Malawi 1 1
Malaysia 5 3 -2
Maldives 0 0
Mali 1 1
Malta 1 2 +1
Mauritania 0 1 +1
Mauritius 1 1
Mexico 5 4 -1
Morocco 2 2
Mongolia 0 0
Mozambique 1 0 -1
Myanmar 0 0
Namibia 0 1 +1
New Zealand 3 4 +1S/C/W/59
Page 43
Members1995
Number of Vendors1998
Number of Vendors Evolution
Nicaragua 3 2 -1
Niger 0 1 +1
Nigeria 3 1 -2
Pakistan 1 4 +3
Panama 4 2 -2
Papua New Guinea 1 1
Paraguay 2 2
Peru 3 2 -1
Philippines 3 4 +1
Qatar 3 2 -1
Rwanda 0 0
St Kitts & Nevis 0 1 +1
Saint Lucia 1 1
St.Vincent & Grn. 1 2 +1
Senegal 1 1
Sierra Leone 0 0
Slovak Republic 2 3 +1
Solomon Islands 0 0
South Africa 4 4
Sri Lanka 1 2 +1
Suriname 2 0 -2
Swaziland 1 1
Tanzania 1 1
Togo 1 1
Trinidad & Tobago 1 2 +1
Tunisia 0 1 +1
Turkey 4 3 -1
Uganda 1 0 -1
United Arab Emirates 2 2
Uruguay 4 2 -2
Venezuela 4 3 -1
Zambia 1 0 -1
Zimbabwe 0 0S/C/W/59
Page 44
Table 3:  Insert Analysis of Commitments Made by  Members on Maintenance Services (Number of Full,
Partial and Non-Commitments by Mode of Supply)
Mode 1 Mode 2 Mode 3 Mode 4
M a i n t e n a n c e f pnf pnf pnFpn
Australia41x* x x x
Austria x x x x
Bulgaria x* x x x
Canada x x x x
Chile x x x x
Cuba x x x x
Czech Rep. x* x x x
Ecuador x x x x
El Salvador x x x x
EC42x* x x x
Finland x* x x x
Gambia x x x x
Guatemala x x x x
Guyana x x x x
Honduras x* x x x
Hungary x x x x
Iceland x* x x x
Japan x* x x x
Kenya x* x x x
Korea
Morocco x x x43x44x
Nicaragua x x x x
Norway x* x x x
Panama x x x x
Philippines x* x x x
Poland x x x x
Romania x* x x x
Slovak Rep. x* x x x
Slovenia x* x x x
Suriname x x x x
Sweden x* x x x
Switzerland x* x x x
Thailand x x x x
Turkey x x x x
USA45x* x x x
TOTAL 15 0 17* 31 0 3 23 8 4 1 32 1
                                                     
41 Sui generis technical definition:  covers establishment mainly engaged in periodic maintenance and
repair (routine and emergency) of airframes (including wings, doors, control surface), avionics, engine and
engine components, hydraulics, pressurisation and electrical  systems and landing gear.  Includes painting, other
fuselage surface treatments and repair of flight deck (a nd other) transparencies. Further includes rotary and
glider aircraft".
42 Counting EC as one.
43 For "maintenance and repair for  general aviation".
44 For "maintenance  and repair of airline aircraft", hence a double count.
45 Sui generis  definition. "Aircraft repair and maintenance activities, when undertaken on an aircraft or
part thereof, while it is withdrawn from service.  Does not include line maintenance or other repair ormaintenance activities undertaken by an air carrier (include s its agent  or contractors) on aircraft it owns, lease
or operates".S/C/W/59
Page 45
Table 4: Insert Analysis of Commitments Made by  Members on Selling and Marketing Services (Number
of Full, Partial and Non-Commitments by Mode of Supply)
Mode 1 Mode 2 Mode 3 Mode 4
Selling and
Marketingf pnf Pnf pnf Pn
Austria x x x X
Bulgaria46xxx X
Chile47x* x x X
Cuba48xxx X
Czech Rep.49xx x X
EC50xxx X
Finland x x x X
Guatemala51xx x x
Honduras52xx x x
Iceland x x x X
Japan x x x X
Kenya x x x53xX
Korea54x* x x X
Morocco x x x X
New Zealand x x55xx56xx57X
Norway x x x X
Romania x x x X
Slovak Rep.58xx x X
Slovenia x x x X
Suriname x x x X
Sweden x x x X
Thailand59xx xX
Turkey x60xxx61
T O T A L 1 5 182 1 031 7 1712 0 2
                                                     
46 "Including CRS".
47 Sui generis  definition:  "opening of offices/issue and sales of air transport fares and ticket".
48 See above footnote 8.
49 "Including CRS".
50 Counting EC as one.
51 Sui generis  definition with elements of CPC "sales or marketing of transport services (CPC7410-
747120) (including travel agency, tour operators  and tourist guide services".
52 Sui generis  definition with elements of CPC "sales or marketing of transport services (CPC7410-
74712) (including travel agency, tour operators  and tourist guide services".
53 "Unbound except for advertizing activities and the setting up of regional offices" hence a double
counting, none for the activities mentioned, unbound for the rest.
54 Sui generis  definition: "services defined in provisions 34 (general air transport agency services) and
32 (air cargo transport agency) of Article 2 of the aviation act. "General air transport agency" means anenterprise which undertakes to make contracts for the inte rnational transport of passengers or cargoes by aircraft
(excluding the services of acting for the other persons in the application procedure for visa or passport) onbehalf of air transport services firms by compensation. "Air cargo transport agency" means an enterprise which
undertakes to make contracts for cargo transport by aircraft on behalf of air transport services firm or general air
transport agency services firms for compensation".
55 Unbound  for a series of agricultural products covered under CPC 01, 02, 211, 213-216, 22, 2399 and
261, hence a double count.
56 Idem .
57 Idem .
58 Including CRS.
59 Included in a CPC item, CPC 746 "supporting services for air transport".
60 "Foreign companies may sell their tickets by opening sales offices in Turkey".
61 See question footnote 5.S/C/W/59
Page 46
Table 5:  Analysis of Commitments Made by Me mbers on Computer Reservation Services (Number of
Full, Partial and Non-Commitments by Mode of Supply)
Mode 1 Mode 2 Mode 3 Mode 4
C R S f pnf Pnf pnFpn
Australia62xxx x
Austria x x x x
Bulgaria63xxx x
Canada64xx xx
Chile x x x x
Costa Rica x x x x
Cuba65xxx x
Czech Rep.66xx x x
Ecuador x x x x
EC67xxx x
Finland x x x x
Guatemala x x x x
Guyana x x x x
Honduras x x x x
Hungary x x x x
Iceland x x x x
Japan x x x x
Kenya x x x x
Korea x x x x
Morocco x x x x
New Zealand x x x x
Norway x x x x
Romania x x x x
Slovak Rep.68xx x x
Slovenia x x x x
                                                     
62 Sui generis definition:  "activities of establishment engaged in providing and maintaining computer
reservation to other enterprise engaged in the provision of travel agency services, including transport and
accommodation booking, tour and travel wholesaling/re tailing – to establishments  engaged in providing
reservation services (such as travel agencies etc).  CR S services related to air carriers include the provision of
information on air carrier schedules, space availability and tariffs".
63 Included in selling and marketing.
64 Investment control.
65 Includes CRS and selling and marketing in a wider category: CPC 7469 "other supporting services of
air transport".
66 Included in selling and marketing.
67 Counting EC as one.
68 Included in selling and marketing.S/C/W/59
Page 47
Mode 1 Mode 2 Mode 3 Mode 4
C R S f pnf Pnf pnFpn
Suriname x x x x
Sweden x x x x
T u r k e y xxxx69
T O T A L 2 4 132 7 012 2 1512 6 1
                                                     
69 See question footnote 5.S/C/W/59
Page 48Table 6:  Other Commitments taken in Air Transport Services (Number of Full, Partial and Non-Commitments by Mode of Supply)
Mode 1 Mode 2 Mode 3 Mode 4
fp nfpn f pn F pn
CPC 731
passenger
transportationby airSierra
L
70
GambiaSierra L
GambiaSierra L
GambiaSierra L
Gambia
CPC 732
freighttransportationby air
CPC 734 rental
services of
aircraft withoperatorNic
71.
Gambia
PolandBrunei Nic.
Gambia
BruneiPolandNic.
Gambia
PolandBrunei Nic.
Gambia
BruneiPoland
CPC 746supportingservices for airtransportSierra L
Mex.
72
GambiaCuba
73
Nic74.Mex. Sierra L
Mex.GambiaCuba
75
Nic.Sierra L
GambiaCuba
76
Nic.Mex. Sierra L
Mex.GambiaCuba
77
Nic.
                                                     
70 The schedule indicates "Air transport Services (CPC 731-746)" but must be read "CPC731, CPC 746" as a series of services compr ised in between those two items
are space transport, land transport and maritime transport services.
71 Nic. stands for Nicaragua.
72 The CPC 746 entry is divided in two subcategories, "airport and helicopter administration services" and "supporting services f or air transport" with a different
regime for mode 1, hence the double count for this mode.
73 Only for CPC 7469 "other supporting services for air transport".
74 Although the CPC reference quoted for that Commitment is CPC 8868**.
75 Idem .
76 Idem .
77 Idem .S/C/W/59
Page 49Mode 1 Mode 2 Mode 3 Mode 4
fp nfpn f pn F pn
Ground
operation ofsupport
equipmentChile* Chile Chile ChileS/C/W/59
Page 50
Table 7:  MFN Exemptions in Air Transport Services
Members MaintenanceSelling/
MarketingCRS Others
Austria X x
Bulgaria X x
Canada x X x
European
Community78Xx
Finland X x
Iceland X x
Korea x79
Kuwait x X x
Liechtenstein X x
Norway X x
Poland Xx x x80
Romania X
Singapore x
Slovenia X x
Sweden X x
Switzerland X x
Thailand X x81x
Turkey xxx82
USA x83xx
TOTAL 2 17 16 7
                                                     
78 Counting EC as one.
79 "Access to foreign CRS through the SITA network is allowed only for domestic travel agencies
which want to access CRS designated by carriers of the country indicated in the nextcolumn/USA/indefinite/access to foreig n CRS through the SITA network could be limited or otherwise affected
by negotiations on granting and receiving traffic rights".
80 "All passenger and freight transport services ex cluding maritime transport/reciprocity requirement
concerning supply of transport services by suppliers of countries concerned – in,. into and across the territory of
such countries/all countries/indefinite/system of recipr ocal agreements – existing and future – on transport
cooperation (or of similar character) and promotion and protection of foreign investments, implementing, amongothers – transportation quotas resulting from bilaterally agreed system of permits".
81 "Only airlines/CRS partners which are in Amadeus system can bring in and install their own systems
in Thailand/countries whose CRS operators are in Amadeus system and intend to bring in and install thesystems to any travel agencies in Thailand/indefinite/to ensure that local operators are able to make complete
access to the Amadeus system within a certain period of time".
82 "To apply, on the basis of reciprocity, restrictions, prohibitions, different treatment and different
tariffs to the goods and transportation vehicles of the countries which apply restrictions, prohibitions and
different treatment to the Turkish road air and maritime transportation vehicles/all countries/indefinite/desire to
secure the smooth functioning of mutual transportation services".
83 Sui generis definition of selling and marketing:  "including sales, other than by airlines, of passenger
charters and forwarding of air freight other than by airlines".S/C/W/59
Page 51
ANNEX 2
RECOMMENDATIONS OF THE ICAO AIR TRANSPORT REGULATION PANEL
(Montreal, 14 February 1997)
RECOMMENDATION ATRP/9-1
THE PANEL RECOMMENDS:
that States wishing to move towards liberalization of air services in their bilateral and
multilateral relationships might consider mutually agreeing on the kinds of competitive practices by a
carrier or carriers which would be regarded as unfair, including using some or all of the following as
signals of possible unfair competitive behaviour meriting closer examination:
(a) charging fares and rates on routes at levels which are, in the aggregate, insufficient to
cover the costs of providing the services to which they relate;
(b) the addition of excessive capacity or frequency of service;
(c) the practices in question are sustained rather than temporary;
(d) the practices in question have a serious economic effect on, or cause significant
economic damage to, another carrier;
(e) the practices in question reflect an apparent intent or have the probable effect, of
crippling, excluding or driving another carrier from the market; and
(f) behaviour indicating an abuse of dominant position on a route.
RECOMMENDATION ATRP/9-2
THE PANEL RECOMMENDS:
that States wishing to move towards liberalization of air services in their bilateral or regional
relationships include in their arrangements, at their discretion, in order to mediate or resolve disputes
arising from allegedly unfair competitive practices or abuse of a dominant position a provision for one
or both of the following elements for a dispute settlement mechanism:
(g) “High Level” meeting, up to Ministerial level, which parties could use when
consultations were unable to resolve a dispute concerning allegedly unfair
competitive practices;
(h) a provision for a Mediator or dispute settlement panel, to be constituted from a roster
of suitably qualified aviation experts maintained by ICAO.  A dispute settlement
panel's determination on the substance of a dispute should preferably be binding on
the parties but its decision on the remedy might be recommendatory.  Furthermore, a
dispute settlement panel should be able to give interim relief along the lines of thatcontained in the dispute settlement mechanism presented to the World-wide Air
Transport Conference, viz the panel could be “a sked by an involved party to rule first
on the need for and continuance of any freeze or reversion to the status quo ante;
damages could be awarded against the complainant when any such freeze orS/C/W/59
Page 52
reversion is found to be unjustified”  The parties would, however, need to agree in
advance, inter alia, on:
(i) the terms of reference, procedures, guiding principles or criteria and terms of
access to the dispute settlement panel (including whether the parties only or
whether private interests such as airlines would have access), bearing in mind
the objective and need for a simple, responsive and expeditious process; and
(ii) how a decision of the dispute settlement panel and any remedy it might
develop would be implemented; and
that ICAO develop and keep up to date, for the purpose of the foregoing mechanism, a list of
air transport experts to be available as mediators or members of dispute settlement panels.84
RECOMMENDATION ATRP/9-3THE PANEL RECOMMENDS:
that States which are moving toward the liberalization of international air services should
consider using measures to ensure effective and sustained participation in international air transport;
the following being an indicative list of potential measures:
(i) capacity:  sharing capacity in terms of equal opportunity, to include matching a
greater capacity of a competing airline or airlines; progressively allowing thetraditional 50/50 exercise of capacity shares up to, for example, 70/30, in stages;
allowing mutually agreed incremental capacity increases; using load factor or other
general market criteria to trigger automatic increases in capacity; applying a system
whereby an airline offering greater capacity may only increase this capacity by the
same amount as an airline offering lesser capacity; allowing all-cargo capacity to beoperated on the basis of forecasts of demand; setting seasonal capacity according to
market forecasts and reassessing the appropriateness of the capacity so established
after the fact based on the experience of the air carriers; allowing airlines to shift
capacity between passenger and cargo operations; providing for exceptions to agreed
capacity limits for new aircraft introduction and for seasonal service; treatingcodesharing differently than own-aircraft flights for purposes of capacity;
(j) tariffs:  implementing flexible tariff systems to enhance fair and effective
competition by allowing air carriers to respond to air transport markets; allowing
tariff flexibility within pricing zones (recognizing that implementation is
complicated); moving in stages from dual approval, to country of origin, to dualdisapproval concepts; not regulating certain tariffs, such as cargo rates, non-
scheduled (charter), premium and certain discount fares; allowing a fixed variation in
fare levels;
(k) market access:  increasing the number of airlines designated; moving from single to
multiple designation; granting of multilateral 3
rd, 4th and 5th freedom traffic rights in a
regional arrangement; using forms of market access such as codesharing, alliances,
wet-leasing of aircraft; providing a “head start” with respect to certain critical trafficpoints when market access restrictions are removed; having a protected start-up
period for new entry; applying aircraft size restrictions only to regional services;
                                                     
84The Council will address later in 1997 the establishment of a list of air transport experts from which
States cold draw for the purposes of mediation or a dispute settlement panel.  States will be advised when the listis available for use.S/C/W/59
Page 53
allowing unilateral operation of airlines of foreign countries without any operation by
national air carrier(s); removing restrictions on regional services; excluding cargo
rights from all restrictions;
(l) other:  facilitating non-scheduled flights for inbound tourists (subject to the national
regulations of the receiving State); permitting non-reciprocal, extra-bilateral service
(including cabotage and 5th freedom) to undeserved cities or on undeserved routes;
phasing in more flexible regulation in key commercial areas in a co-ordinated
fashion; assessing the economic results of bilateral agreements on a quantitative basis
in view of market circumstances to enhance co-operation such as alliances between
and among airlines serving the territory; and waiving the usual bilateral ownership
and control provisions; and
that ICAO should, drawing on the experience of States, keep the list of participation measures
current and analyze, where possible, examples of their use by States.
RECOMMENDATION ATRP/9-4
THE PANEL RECOMMENDS:
that States wishing to accept broadened criteria for air carrier use of market access in their
bilateral and multilateral air services agreements agree to authorize market access for a designated aircarrier which:
(m) has its principal place of business and permanent residence in the territory of the
designating State, and
(n) has and maintains a strong link to the designating State.
In judging the existence of a strong link, States should take into account elements such as the
designated air carrier establishing itself, and having a substantial amount of its operations and capital
investment in physical facilities in the designating State, paying income tax and registering its aircraft
there, and employing a significant number of nationals in managerial, technical and operational
positions.
Where a State believes it requires conditions or exceptions concerning the use of the principal
place of business and permanent residence criterion based on national security, strategic, economic or
commercial reasons this should be the subject of bilateral or multilateral negotiations or consultations,
as appropriate.
RECOMMENDATION ATRP/9-5
THE PANEL RECOMMENDS:
that States be encouraged to use, wherever appropriate in their bilateral and multilateral air
service agreements, the following model clauses and accompanying notes on commercial matters,
which are intended to assist regulatory authorities in removing restrictions and moving to a morecompetitive environment.
GROUND HANDLING
Model Clause
Each Party shall authorize air carrier(s) of the other Party/Parties, at each carrier's choice, to:
(o) perform its own ground handling services;S/C/W/59
Page 54
(p) handle another or other air carrier(s);
(q) join with others in forming a service-providing entity; and/or
(r) select among competing service providers.
CURRENCY CONVERSION AND REMITTANCE OF EARNINGS
Model Clause
Each Party shall permit air carrier(s) of the other Party/Parties to convert and remit abroad to
a carrier's choice of State, on demand, all local revenues from the sale of air transport services and
associated activities directly linked to air transport in excess of sums locally disbursed, with
conversion and remittance permitted promptly without restrictions, discrimination or taxation in
respect thereof at the rate of exchange applicable as of the date of the request for conversion and
remittance.
PAYMENT OF LOCAL EXPENSES
Model Clause
Each Party shall permit air carriers of the other Party/Parties to pay for local expenses in its
territory, including purchases of fuel, in local currency; or at the option of the air carriers and whereauthorized, in any freely convertible currency.
NON-NATIONAL PERSONNEL AND ACCESS TO LOCAL SERVICES
Model Clause
Each Party shall permit air carriers of the other Party/Parties to:
bring in to its territory and maintain non-nationa l employees who perform managerial, commercial,
technical, operational and other specialist duties which are required for the provision of air transport
services, consistent with the laws and regulations of the receiving State concerning entry, residence
and employment; anduse the services and personnel of any other organization, company or airline operating in its territory
and authorized to provide such services.
SALE AND MARKETING OF AIR SERVICE PRODUCTS
Model Clause
Each Party shall accord air carriers of the other Party/Parties the right to sell and market
international air services and related products in its territory (directly or through agents or other
intermediaries of the carrier's choice), including the right to establish offices, both on-line and off-
line.
RECOMMENDATION ATRP/9-6
THE PANEL RECOMMENDS:
that States take the necessary action to ensure that consumers are fully informed and protected
with respect to codeshared flights operating to or from their territory and that, as a minimum,
passengers be provided with the necessary information in the following ways:orally and, if possible, in writing at the time of booking;
in written form, on the ticket itself and/or (if not possible), on the itinerary document accompanying
the ticket, or on any other document replacing the ticket, such as a written confirmation, including
information on whom to contact in case of a problem and a clear indication of which airline is
responsible in case of damage or accident; and orally again, by the airline's ground staff at all stagesof the journey.S/C/W/59
Page 55ANNEX 3
Scheduled and non-scheduled traffic at world’s major airports (top 25 airports ranked by TOTAL passengers, 1996)a
Passengers embarked and disembarked Aircraft movements
Rank
No.Airport (ranking by total
Commercial aircraftmovementsgiven in brackets)1996
(thousands)1995
(thousands)Change
1996/95(%)Average
Changeper annum1996/87 (%)1996
1
(thousands)1995
(thousands)Change
1996/95(%)Average
changeper annum1996/87 (%)
1 Chicago (1) 69 133 67 255 2.8 2.3 836.5 828.2 1.0 1.8
2 Atlanta (4) 63 345 57 735 9.7 3.2 579.9 578.2 0.3 3.0
3 Dallas/Ft. Worth (2) 58 035 55 771 4.1 3.7 833.1 864.2 3.6 3.8
4 Los Angeles (3) 57 975 53 909 7.5 2.9 733.3 703.1 4.3 2.3
5 London Heathrow (12) 56 038 54 132 3.5 5.5 426.8 421.3 1.3 3.7
6 Tokyo Haneda (48) 46 632 45 823 1.8 5.1 202.5 201.7 0.4 3.4
7 San Francisco (15) 39 247 36 260 8.2 3.1  399.3 396.1 0.8 1.5
8 Frankfurt (19) 38 761 37 401 3.6 6.2 372.0 365.8 1.7 4.1
9 Seoul (46) 34 708 30 687 13.1 17.1 221.0 197.0 12.2 15.2
10 Miami (6) 33 505 33 236 0.8 3.8 462.4 498.8 7.3 4.8
11 Denver (13) 32 264 31 028 4.0 0.0 416.5 437.0 4.7 1.5
12 Paris Charles de Gaulle (22) 31 824 27 995 13.7 7.9 360.4 325.3 10.8 9.8
13 New York Kennedy (25) 31 015 30 328 2.3 0.3 334.6 323.6 3.4 2.9
14 Detroit (7) 30 614 29 013 5.5 5.0 455.0 432.1 5.3 3.4
15 Las Vegas (22) 30 471 28 001 8.8  8.5 343.4 363.0 5.4 2.7
16 Phoenix (11) 30 377 27 820 9.2 8.3 427.0 417.0 2.4 3.3
17 Hong Kong (56) 30 212 27 424 10.2  10.1 161.5 150.4 7.4 9.0
18 Minneapolis (8) 29 612 26 783 10.6 5.8 442.7 413.0 7.2 4.9
19 New York Newark (10) 29 073 26 567 9.4 2.4 428.4 399.6 7.2 2.8
20 Amsterdam (27) 27 753 24 857 11.7 8.5 316.9 290.7 9.0 6.8
21 Paris Orly (36) 27 365 26 577 3.0  3.3 244.1 232.7 4.9 4.0
22 St. Louis (5) 27 275 25 719 6.0 3.3 469.3 474.0 1.0 3.0
23 Houston (20) 26 476 24 725 7.1 6.2 371.0 353.7 4.9 4.0
24 Orlando (30) 25 549 22 470 13.7 6.2 305.7 309.1 1.1 3.8
25 Tokyo Narita (79) 25 408 22 326 13.8 3.1 122.2 121.0 1.0 8.7
T 0 T A L 932 666 873 842 6.7 4.5 10 265.6 10 096.6 1.7 2.5
aAircraft movements for 1996 have been estimated.
Source : ICAO Air Transport Reporting Form I and Airports Council International.S/C/W/59
Page 56
ANNEX 4
IATA STANDARD LIST OF GROUND
HANDLING SERVICESGUIDE TO THE FACILITIES AND SERVICES TO BE
TAKEN INTO ACCOUNT IN DETERMINING AIRPORT
SECTION 1. REPRESENTATION AND
 ACCOMMODATION1.1 General
SECTION 2. LOAD CONTROL,COMMUNICATIONS AND DEPARTURECONTROL SYSTEM2.1 Load Control2.2 Communications2.3 Departure Control System (DCS)SECTION 3. UNIT LOAD DEVICE (ULD)CONTROL3.1 Handling3.2 Administration
SECTION 4. PASSENGERS AND BAGGAGE4.1 General4.2 Departure4.3 Arrival
4.4 Baggage Handling
4.5 Remote/Off Airport Services4.6 Intermodal Transportation
SECTION 5. CARGO AND POST OFFICEMAIL5.1 Cargo Handling – General
5.2 Outbound (Export) Cargo
5.3 Inbound (Import) Cargo
5.4 Transfer/Transit Cargo
5.5 Post Office Mail
SECTION 6. RAMP
6.1 Marshalling
6.2 Parking
6.3 Ramp to Flight Deck Communication
6.4 Loading/Embarking andUnloading/Disembarking
6.5 Starting
6.6 Safety Measures
6.7 Moving of Aircraft
SECTION 7. AIRCRAFT SERVICING
7.1 Exterior Cleaning
7.2 Interior Cleaning
7.3 Toilet Service
7.4 Water Service
7.5 Cooling and Heating
7.6 De-Icing/Anti-Icing Services and Snow/Ice
Removal According to the Carrier's
Instructions
7.7 Cabin Equipment and Inflight EntertainmentMaterial
7.8 Storage of Cabin MaterialCOSTS APPROACH , LANDING AND TAKE -OFF
FACILITIES AND SERVICES
Landing area with cleared approaches and taxiways
with necessary drainage, fencing, etc. Also, lights forapproach, landing, taxiing and take-off, as well ascommunications and other sp ecial aids for approach,
landing and take-off (sometimes provided by otherthan the airport operator).Approach and aerodrome control: air traffic control forapproach, landing, taxiing and take-off with necessarycommunications, including satellites services.(Approach and aerodrome control is sometimes partlyor wholly provided by other than the airport operator.Meteorological services (frequently provided by anentity other than the airport operator).Fire and ambulance service in attendance.
Terminals, aircraft parkin g space, hangars and
other facilities and services provided for aircraftoperators
Passenger and public waiting rooms and concourses
with necessary heating, lighting, janitor service,approach roads, etc.Accommodation for airline offices, traffic counters andair crews, and for the handling of passengers andcargo.Assistance in handling passengers and cargo, andnecessary equipment.Special servicing of aircraft (air conditioning,cleaning, etc.)Towing and other handling of aircraft.Space for parking and long-term storage of aircraftHangar, workshop, stores, garage and other technicalaccommodationLand leased to aircraft  operators for various purposes.Provision of aircraft fuel (usually via concessions) andother technical supplies, and also of maintenance andrepairs for aircraft.Communication facilities (aircraft operating agencymessages – Class B)Common services such as the provision of light, heat,power and heating fuel.
Security measures, equipment, facilities and
personnel for the following functions
Inspection/screening of passengers and cabin baggage.
Security in departure/arrival lounges, includingtransfer/transit lounges.Security of airside areas.Security of landside areas.S/C/W/59
Page 57
IATA STANDARD LIST OF GROUND
HANDLING SERVICESGUIDE TO THE FACILITIES AND SERVICES TO BE
TAKEN INTO ACCOUNT IN DETERMINING AIRPORT
SECTION 8. FUEL AND OIL
8.1 Fuelling and/or Defuelling
8.2 Replenishing of Oils and Fluids
SECTION 9. AIRCRAFT MAINTENANCE
9.1 Routine Services
9.2 Non-routine Services
9.3 Material Handling
9.4 Parking and Hangar Space
SECTION 10. FLIGHT OPERATIONS AND
CREW ADMINISTRATION10.1 General
10.2 Flight Preparation at the Airport of Departure
10.3 Flight Preparation at a Point Different fromthe Airport of Departure
10.4 In-flight Assistance
10.5 Post-flight Activities
10.6 In-flight Re-despatch
10.7 Crew Administration
SECTION 11. SURFACE TRANSPORT
11.1 General
11.2 Special Transport
SECTION 12. CATERING SERVICES
12.1 Liaison and Administration
12.2 Catering Ramp Handling
SECTION 13. SUPERVISION ANDADMINISTRATION
13.1 Supervisory Functions of Services Providedby Others
13.2 Administrative Functions
SECTION 14. SECURITY
14.1 Passengers and Baggage Screening andReconciliation
14.2 Cargo and Post Office Mail
14.3 Catering
14.4 Aircraft Security
14.5 Additional Security ServicesAccommodation for other than aircraft operators
Accommodation for shops, hotels, restaurants, ground
transport providers, banks/money exchanges, postoffice, telegraph office, etc.Facilities paid for directly by the public (car parking,sightseeing, etc.)Accommodation for necessary government activities,customs, immigration, public health, agriculturalquarantine, etc.Land rented to other than aircraft operators (includinggrazing rights, etc.)
Noise alleviation and prevention
Noise monitoring systems, noise suppressing
equipment and noise barriers.Land or property acquired around airports.Soundproofing of buildings near airports and othernoise alleviation measures arising from legal orgovernmental requirements.
__________