Table Of ContentRATE MAKING IN INTERNATIONAL AIR TRANSPORT
RATEMAKING
IN INTERNATIONAL
AIR TRANSPORT
A LEGAL ANALYSIS OF
INTERNATIONAL
AIR FARES AND RATES
PETER P. C. HAANAPPEL
Springer-Science+Business Media, B.V. 1978
To my Mother
ISBN 978-90-268-0979-8 ISBN 978-94-017-4465-2 (eBook)
DOI 10.1007/978-94-017-4465-2
© 1978 Springer Science+Business Media Dordrecht
Originally published by Kluwer B.V., Deventer/The Netherlands in 1978
Softcover reprint of the hardcover 1st edition 1978
All rights reserved. No part of this publication may be reproduced, stored in a retrieval
system, or transmitted in any form or by any means, electronic, mechanical, photo
copying, recording or otherwise, without prior written permission of the publishers.
SUMMARY
Ratemaking in international air transport is a matter of vital
importance for airlines, consumers and Governments. For airlines,
because the level of international air fares and rates forms one of
the bases of their profit-making ability. For consumers, because that
level determines whether they can afford the use of international air
transport. For Governments, because they, as the guardians of the
interests of both the airlines and the consumers, have the task to
strike a just balance between those interests.
International air fares and rates are of two kinds: scheduled
and non-scheduled. The International Air Transport Association (lATA),
the trade association of the world's scheduled international airlines,
determines, under Governmental supervision and control, uniform fares
and rates for scheduled international air services. These services
account for approximately seventy-five percent of total international
air traffic. The remaining twenty-five percent consists of non
scheduled, or charter international air services. International charter
air fares and rates are by and large set by the free forces of the
marketplace, and compete with scheduled international (lATA) air fares
and rates. This book studies both scheduled and charter international
air fares and rates. It examines the role of airlines, airline asso
ciations and Governments in the international ratemaking process.
Furthermore, it analyses the competitive relationship between charter
and scheduled international air fares and rates.
The book's originality lies in the fact that it is the first
comprehensive legal study of ratemaking in international air transport,
encompassing both the scheduled and charter aspects. In addition,
the inquiry takes into account not only the interests of the airlines
and the wishes of their respective Governments, but also and especially,
the interests of the consumer, the user of international air transport.
v
ACKNOWLEDGEMENTS
The author wishes to thank the Faculty of Law of McGill
University for their financial assistance in preparing the manuscript
of this book. He also wishes to express his gratitude to Professor
Ivan A. Vlasic, who supervised the work on the doctoral dissertation
which forms the basis of this book.
VI
ABOUT THE AUTHOR:
Dr. Haanappel was born in the Netherlands in 1949 and has lived in
Canada since 1972. lie received his first legal training at the Faculty
of Law of the Free Uni vers i ty of Amsterdam, from whi ch he graduated in
1972. He is also a graduate of the International Faculty for the
Teaching of Comparative Law in Strasbourg. His aerospace studies at
the Institute of Air and Space Law of McGill University in Montreal led
to a Master of Laws (LL.M.) degree in 1974 and a Doctor of Civil Law
(D.C.L.) degree i.n 1976. "Ratemaking in International Air Transport"
is a slightly modified and updated version of the author's doctoral
dissertation. In June 1976, Dr. Haanappel was appointed Assistant
Professor of Law at the Faculty of Law of McGi 11 Uni vcrs i ty. He also
teaches at McGill's Institute of Air and Space Law and is consultant
research adviser to the Centre for Research of Air and Space Law.
The author's previous air law publications include:
The lATA Conditions of Contract and Carriage for Passengers and
Baggage, IX European Transport Law 650-684 (1974);
Deregulation of the United States System of Government Regulation
of Domestic Civil Aviation in Light of the Overall Structure of
International Civil Aviation, 9 Akron Law Review 65l-6M) (1976);
Background of the Dutch-American Av i at ion Confl j ct, I Annals of
Air and Space Law 63-81 (1976);
International Air Transport Association: Quo Vadis? in: Inter
national Air Transport: Low, Organization and Policies for the
Futuro, Ed. by N.~1. Matte, Carsl'iell/Toronto, Pedone/Paris 67-78
(1977) .
VII
ABBREVIATIONS
AACO Arab Air Carriers Organization
AAFRA Association of African Airlines
ABC Advance Booking Charter
ACAP Aviation Consumer Action Project
ACCA Air Carriers Charter Association
AEA Association of European Airlines
AFCAC African Civil Aviation Conference
AGM Annual General Meeting
APA Airline Passengers Association
APEX Advance Purchase Excursion (Fare)
ASDA/SVLR Association Suisse de Droit Aerien/
Schweizerische Vereinigung fUr Luftrecht
ASTA American Society of Travel Agents
ATA Air Transport Association of America
ATAC Air Transport Association of Canada
ATAF Association des Transporteurs de la
Zone Franc
ATC Air Transport Committee
AVI Aviation Cases
AWST Aviation Week and Space Technology
BEA British European Airways
CAA Civil Aviation Authority
CAAC Civil Aviation Administration of China
CAB Civil Aeronautics Board
CCH Commerce Clearing House, Inc.
CFR Code of Federal Regulations
CNR Canadian National Railways
CP Air Canadian Pacific Airlines
CTC Canadian Transport Commission
DOT Department of Transportation
EARB European Airlines Research Bureau
EC Executive Committee
ECAC European Civil Aviation Conference
ECSC European Coal and Steel Community
EEC European Economic Community
FCC Federal Communications Commission
FMC Federal Maritime Commission
IACA International Air Carrier Association
lATA International Air Transport Association
ICAO International Civil Aviation Organization
ICC Interstate Commerce Commission
ICEO International Charter Enforcement
Organization
ICRC International Committee of the Red Cross
IMF International Monetary Fund
INTELSAT International Telecommunications Satellite
Organization
ITA Institut de Transport Aerien
IX
ITC Inclusive Tour Charter
IUV International Unit of Value
JALC Journal of Air Law and Commerce
JT Joint Traffic Conference
KLM KLM - Royal Dutch Airlines
LJ Law Journal
LR Law Review
NACA National Air Carrier Association
NSIT Non-Scheduled and Inclusive Tour Study
Group
OM Orient Airlines Assocjation
OCA Office of the Consumer Advocate
OPEC Organization of Petroleum Exporting
Countries
OTC One-Stop-Inclusive Tour Charter
Pan Am Pan American World Airways
PICAO Provisional International Civil Aviation
Organization
PL Public Law
RFDA Revue Fran~aise de Droit Aerien
RGA Revue Generale de l'Air
RSC Revised Statutes of Canada
RTKLS Revenue Tonne Kilometres
SAS Scandinavian Airlines System
SDR Special Drawing Rights
SEC Special Event Charter
TC Traffic Conference
TC Res. Traffic Conference Resolution
TGC Travel Group Charter
TIA Trans International Airlines
TIAS Treaties and Other International Acts
Series
TS Treaty Series
TWA Trans World Airlines
UK United Kingdom of Great Britain and
Northern Ireland
UNCTAD United Nations Conference on Trade and
Development
UNO United Nations Organization
UPU Universal Postal Union
USA United States of America
USC United States Code
USCA United States Court of Appeals
USDC United States District Court
USSR Union of Socialist Soviet Republics
UTA Union de Transports Aeriens
x
TABLE OF CONTENTS
Page
INTRODUCTION 1
CHAPTER I: TIlE REGULATORY FRAMEWORK OF INTERNATIONAL
RATE~lAKING ................................. . 9
Para. I. The Chicago Conference and the Establishment
of lATA ................................... " . 10
Para. II. The Bermuda and Subsequent Bilateral Air
Transport Agreement s ....................... . 15
Para. I II. Attempts at Multilateralism ................ . 23
CHAPTER II: CHARACTER OF lATA .......................... . 33
Para. 1. lATA a Private or Quasi-Public International
Organization? ............................. . 34
Cal Ownership of the lATA Airlines ....... . 37
Cb) lATA's Quasi-Public Functions ........ . 39
Para. II. lATA an International Cartel? ............. . 41
CHAPTER III: ORGANIZATION AND ACTIVITIES OF lATA ....... . 51
Para. l. The Trade Association ..................... . 51
Para. II. The Traffic Conferences ................... . 57
Para. Ill. Activities of lATA ........................ . 63
CHAPTER IV: GOVERNMENT CO~TROL OF INTERNATIONAL RATE-
~lAKING .................................... . 75
Para. l. Rationale for Government Control .......... . 75
Para. II. Government Control of lATA ................ . 78
Pan. III. The U.S. Civi.l Aeronautics Board .......... . 81
CHAPTER V: THE ~lAKING OF lATA FARES AND RATES ........ . 93
Para. 1. Passenger Fares ........................... . 95
Para. II. Cargo Rates ............................... . 99
Para. III. Currency Matters .......................... . 101
CHAPTER VI: NON-lATA INTERNATIONAL AIR TARI FFS ........ . lOS
Para. I. Scheduled International Air Tariffs of Non-
lATA Airlines 10C)
Para. II. ~on-Scheduled International Air Tariffs .... lOS
Par:J. 1 I I. Rapprochement between lATA and Charter Air-
1 ines ..................................... . 118
Para. IV. Covcrnment Ordered International Air Tariffs l2()
CHAPTER VI I: THE NORTH ATLANTfC BATTLEFIELD ............ . 131
Para. 1. Peri od 1945 - 19bO ........................ . 132
Para. II. Period 1960 - 1970 ........................ . 133
Para. III. Period after 1970 ......................... . 135
CHAPTER VIII: ALTERNATIVES TO Tlil PRESE'lT INTERNATfONAL
RATHlAKINC; SYSTE~I .......................... 143
Para. I. The Free Competition Alternative........... 14:')
Para. II. The Intergovernmental Alternative.......... [44
Para. [II. The "New [ATA" Alternative................. 14()
POSTSCRIPTU~I ............. "............................... 1S l
APPENDICES ................................................ 15.)
BIBL 1O GRAPIlY .............................................. 16:')
A. Books :Jnd ThL'ses .. ,................................. 16.)
B. Articles
XI
Description:Ratemaking in international air transport is a matter of vital importance for airlines, consumers and Governments. For airlines, because the level of international air fares and rates forms one of the bases of their profit-making ability. For consumers, because that level determines whether they can
