Open Skies Agreement

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Open Skies Agreement

A Brief Introduction About the Open Skies Agreement

An open skies agreement is an agreement between two or more countries, which allows unrestricted air travel between them. This agreement seeks to minimize governmental control over passenger and cargo flights and hence “open the skies” for the air transportation industry.

The open skies agreement definition is a contract that defines how air travel shall be conducted between the countries, and a process is laid down to make such air transportation as seamless as possible. It seeks to create a free market for the air travel industry. With such an agreement in place, the airlines are free to make procedures that are required for efficient air travel, and they can decide the prices that they wish to charge based on their commercials of the market.

This agreement is created to allow any number of airlines to fly from the territory of the contracting parties without any restriction on the number of flights, number of destinations, number of seats, the price of such travel and so on. However, in practice might be a few restrictions as deemed necessary by the parties.

Who Takes the Open Skies Agreement? – People Involved

This agreement is entered into between the countries that wish to reduce the restrictions on air travel. These agreements can be bilateral or multilateral. They can be entered into between two or more countries.

Purpose of the Open Skies Agreement – Why Do You Need It?

The purpose of an open skies agreement is to reduce the restrictions on air travel. If such an agreement is created between certain countries, it can lead to an increase in international air travel, reduce the prices of such travel, and it also minimizes the need for governmental regulation. This agreement helps the airlines of the countries to provide air travel that is affordable, convenient, and efficient to its customers. As there are no restrictions, it leads to more competition between all the airlines, which proves to be beneficial for the customers.

The advantage of open skies agreement for airlines is that there are more passenger and cargo traffic, there is competitive pricing between airlines, there is scope for the creation of more jobs, and extremely efficient airline procedures are established. It leads to a win-win situation for all the parties concerned. Airlines compete with one another for increased market share and use many techniques to attract more customers.

These agreements are challenged sometimes as they might put domestic airlines at a disadvantage as compared to international airlines. However, this is a fallout that is difficult to avoid. Creating this agreement is a way of preventing a few airlines from creating a monopoly in the air travel industry, which will decrease the competition in the market.

Contents of the Open Skies Agreement – Inclusions

The agreement will first mention the names of the countries that are entering into it and the intention behind creating such a contract. It will then include the following clauses:

  1. Grant of Rights: Under this clause, each country grants to the other certain rights that are required for conducting international air transportation. This includes the right to fly across its territory, the right to make stops in its territory, etc.
  2. Authorization: Through this clause, a party shall grant the requisite authorizations and permissions to an airline of the other party who has made an application regarding the operation of international air travel.
  3. Safety: This clause lays down that each party shall recognize as valid certificates of competency, licenses, certificates of airworthiness that are issued by the other party for air transportation.
  4. Commercial opportunities: This clause gives the right to both parties to establish offices in the territory of the other party for the promotion of air transport and travel.
  5. Fair competition: Through this clause, the parties agree to allow a fair and equal opportunity to each other and their airlines to compete in the provision of international air transport.
  6. Pricing: The prices for international air travel shall be laid down by the airlines of both parties by their commercial considerations.
  7. Settlement of disputes: This clause will define how any dispute that arises under this agreement shall be dealt with. Most agreements usually have a mandatory arbitration clause for the resolution of such disputes.
  8. Termination: Termination clause provides the method through which the agreement may be terminated by the parties.

How to Draft the Open Skies Agreement?

The following are the steps that should be followed while drafting an open skies agreement:

  • The countries will conduct extensive negotiations on the various issues that are connected with this type of agreement. This shall include giving of authorizations, the licenses that are required, how charges and customs duties shall be dealt with.
  • The agreement must be drafted very carefully while providing for all matters that are incidental to international air travel.
  • The agreement must provide a method for the resolution of any dispute that might arise as this may affect the relations between the parties.
  • The agreement must mention the date on which it shall come into force. This is the date on which both parties sign the contract.
  • The parties must sign the agreement to make it binding on themselves.
  • This agreement may be required to be registered with the International Civil Aviation Organization.

Negotiation Strategy

  • The negotiations are of utmost importance in this agreement as it can have an impact on the relations between the two countries.
  • The parties must simplify the entire process of international air travel as this can have enormous advantages for them and their airlines.
  • The agreement will have reciprocal benefits for both parties, and they must make sure that it is incredibly balanced.

Benefits and Drawbacks of the Open Skies Agreement

The following are the open skies agreement benefits and drawbacks:

  • This agreement helps to increase international travel and trade between the countries that have created it. This, in turn, spurs the economic growth of such countries and boosts their economy.
  • When such an agreement is in place, it reduces the scope of interference and regulation by the governments of the countries. This is important for the independent functioning of the airlines.
  • When there is no governmental regulation, it leads to lower prices of air travel, which in turn increases the business of the airlines. Customers enjoy significant discounts on air travel.
  • As the market is open, there is increased competition between all the airlines, which leads to competitive pricing. This is essential for the industry to function well and for the airlines to serve the customers efficiently.
  • In the absence of this agreement, the government can regulate the prices, routes, or capacity planning of airlines, and this can have undesirable results.

What Happens in Case of Violation?

In case there is a dispute among the parties about the terms under this agreement, they can attempt to resolve the dispute through consultations. A party that wishes to commence consultations can request the same. The consultations should be concluded within 30 days from the date on which a party makes such a request for consultation.

If the dispute is not resolved through consultations within such period of 30 days, the parties may submit the dispute to arbitration. The arbitral tribunal(1) generally consists of three arbitrators. The parties select an arbitrator each, and these two arbitrators shall appoint a third arbitrator who shall act as President of the tribunal. The arbitration clause will also lay down the venue in which the arbitral proceedings shall about and the language in which it shall be conducted. The proceedings shall be concluded within such time as will be laid down in the agreement. All the arbitration expenses will be shared equally by the parties.

In conclusion, an open skies agreement is significant as it relaxes the rules related to international air travel and opens up the skies for the airlines of the contracting parties. This has many benefits for the countries, the airlines, and end-user customers. It helps to boost the economic growth of the countries and has a positive effect on the travel and tourism industry.

The airlines can carry out their operations in a simplified manner, and the procedure for the same is made easy. It has been noticed that countries that have entered into this agreement have witnessed more business in the air travel industry and more economic growth as well. Hence this agreement is an essential part of successful international relations between countries. It increases the trade between such countries, which is essential for a healthy economy.