Chapter 1 Introduction:Preparing for a New Era in International Aviation 1
Ⅰ REPLACING A FLAWED REGULATORY SYSTEM 1
Ⅱ THE 'CHICAGO SYSTEM' AND A PROPOSAL FOR ITS REFORM 5
A An Overview of The Global Air Transport Industry:Passenger/Cargo Services 6
B A Synoptic View of the 'Chicago System' 8
C Open Skies:Seeking Flexibility within the Chicago System 12
Ⅲ A SUMMARY OF CORE PRINCIPLES FOR A SECOND STAGE PLURILATERAL TREATY 17
Chapter 2 Prelude to Change:A Synthesis of Transatlantic Aviation Relations 1993-2008 23
Ⅰ INTRODUCTION:AN EPISTEMIC COMMUNITY RISES 23
Ⅱ RETHINKING BILATERALISM:THE OPEN SKIES DECADE 1993-2003 25
A Beyond Bilateralism:The Baliles Airline Commission 25
B A Bridge to Multilateralism:The Strategic Implications of U.S.Open Skies 29
C The EC Responds to Open Skies:An Incomplete First 'Mandate' 34
D Webs of Influence:International Organizations and Academic Commentators 40
1 Webs of Influence Ⅰ:International Nongovernmental Organizations 40
2 Webs of Influence Ⅱ:International Governmental Organizations 43
3 Webs of Influence Ⅲ:Academic Commentators 46
E Glimmerings of Multilateralism:Some Tentative U.S.Initiatives 52
Ⅲ FIXING A NEW HORIZON FOR OPEN SKIES:U.S./EC AVIATION RELATIONS AFTER 2003 55
A The Force of EC Nondiscrimination Law:The European Court Destabilizes the Nationality Rule 57
B Managing the Fallout:The Commission Secures A Second (Double) Mandate 61
Ⅳ THE TRAJECTORY OF U.S./EC AIR SERVICES NEGOTIATIONS 2003-2007 67
A Toward a U.S./EC Agreement Ⅰ:Political Stalemate 67
B Toward a U.S./EC Agreement Ⅱ:Breaking the Impasse 71
Ⅴ AN EXECUTIVE BRIEFING ON THE 2007 U.S./EC AIR TRANSPORT AGREEMENT 78
A The 17 Keynote Ideas of the 2007 Agreement 79
B The Second Stage Agenda and Timetable 82
1 The Second Stage Timetable 83
2 A Threat of EU Member State Unilateralism 84
3 The Second Stage Agenda:Toward an OAA? 85
Ⅵ CONCLUSION:VISIONARIES,PRAGMATISTS,AND THE SHAPING OF A POST-CHICAGO GLOBAL AVIATION ORDER 93
Chapter 3 Airspace Sovereignty:The Ontology of the Chicago System of International Air Transport Regulation 97
Ⅰ INTRODUCTION:THE CONCEPTUAL FRAMEWORK OF THE CHICAGO SYSTEM 97
Ⅱ AIRSPACE SOVEREIGNTY 99
Ⅲ AT THE HEART OF THE CHICAGO SYSTEM:THE FREEDOMS OF THE AIR AND BILATERALISM 103
A The Nine Freedoms 103
B Trading the Freedoms: The Rise of Bilateralism 109
1 Ex Post Facto Flexibility:The Moderate Liberalism of Bermuda Ⅰ 111
2 Treaty-Based Rigidity:Bermuda Ⅱ 116
Ⅳ THE VENERABLE DOCTRINE OF CABOTAGE 119
A A Principle of Exclusion 119
B Cabotage in a Multilateral Airspace Environment 122
1 Pooling Airspaces in the EC:Can Cabotage Be Traded Away? 123
2 Cabotage and U.S.International Aviation Policy 126
a The Legal Foundations of U.S.Cabotage 126
b The Durability of U.S.Cabotage Restrictions 128
Ⅴ SOVEREIGNTY AND CITIZENSHIP PURITY: THE NATIONALITY RULE 133
A The Substantial Ownership/Effective Control Dyad 133
B Proscribing Multinational Airlines:The Nationality Rule in Domestic Law 135
1 Case Studies in the Nationality Rule and the Unmaking of a U.S. Government Rulemaking 138
a Airline Citizenship:Law and Policy in the United States 138
b DHL/ASTAR and Virgin America:Citizenship as a Competitive Weapon 143
ⅰ DHL/ASTAR 144
ⅱ Virgin America 150
c The DOT's Noble Failure:The 2005/06 Rulemaking 155
C A Future Without the Nationality Rule? 162
1 Alliances:From Code-Sharing to Contract 162
2 Reforming the Nationality Rule in Domestic Law 164
3 Liberalizing the U.S. Domestic Rules on Ownership and Control 167
D Conclusion:The Superior Norm of Nationality 171
Ⅵ FETISHIZING SOVEREIGNTY: THE PUBLIC STAKE IN AIR TRANSPORT 172
A Public Airlines and Public Subsidy 172
B The Retreat of the State:The Age of Deregulation 178
1 New Models of Airline Regulation in the United States and EC 178
2 Airline Privatization in the EU 184
Ⅶ THE REGULATORY REFLEX:COMPUTER RESERVATIONS SYSTEMS AND AIRPORT ACCESS 188
A CRS:From Regulation to Deregulation in 20 Years 189
B The Competitive Quandaries of Airport Access 194
Ⅷ THE LATE-MODEL CHICAGO SYSTEM:STRATEGIC ALLIANCES AND CODE-SHARING 198
A Entrepreneurial Circumventions of the Nationality Rule 198
B Global Marketing Alliances 198
1 Strategies for Alliance-Building 198
2 KLM/Northwest and Its Progeny:The Immunity Artifice 203
C Code-Sharing as 'Pseudo-Cabotage' 208
1 A Code-Share Taxonomy 208
2 Does Code-Sharing Violate Cabotage? 213
3 Code-Sharing:A Costly Compromise for U.S. International Aviation Policy-and for the Airline Industry 214
4 Code-Shares and the Consumer 220
Ⅸ MULTILATERALISM AND REGIONALISM IN THE CHICAGO SYSTEM 223
Ⅹ THE CHICAGO SYSTEM ON THE CUSP OF REFORM 231
Chapter 4 Model Jurisdiction Ⅰ:The United States&Airline Deregulation Within and Beyond a Unitary Airspace 235
Ⅰ INTRODUCTION 235
Ⅱ THE LEGAL AND HISTORICAL BACKGROUND 239
A Prologue:An Apt Quotation 239
B The Regulatory Era:The Kitty Hawk Irony 240
1 CAB Route Authority:The 'Grandfather' Syndrome 242
2 CAB Rate Authority:The 'Pullman' Effect 244
3 CAB Antitrust Authority:Regulatory Omnipotence 246
C Deregulation:The Intellectual Premises 248
D Deregulation:A Political Act of Will 251
1 CAB Route Deregulation:The Fruits of Dormancy 255
2 CAB Fare Deregulation:Zones of Flexibility 258
3 CAB Antitrust Deregulation:The Longest Sunset 259
4 A Regulatory Vestige:The Essential Air Service Program 263
E Scrambling the System:Alfred Kahn's Regulated Deregulation 264
Ⅲ EXPORTING DEREGULATION: PROBING THE LIMITS OF BILATERALISM 268
A The Emergence of an Open Skies International Aviation Policy 268
B The IATCA:An Ambivalent Challenge to Bilateralism 272
1 The IATCA's 'Soft Law' Approach to the Chicago System 274
2 Protecting U.S. Carriers:The IATCA's 'Hard Law' Approach 275
C The IATCA and the Chicago System:Enduring Regulation 279
1 International Designation:Public Franchises and Private Profits 279
2 International Fares:Zonalism and Unilateralism 283
3 International Antitrust Regulation:Wielding the Wand of Immunity 285
a Avoiding the Sunset 285
b Two Case Studies in Alliance Approval and Antitrust Immunity:The Force of Bilateral 'Specificity' 287
c Immunity Proceedings:The Conflict of Competition and Aviation Policy 293
d The SkyTeam Proceedings:Slouching Toward Regulatory Incoherence 297
e Mixing Competition Policy and Politics:The Instability of Immunity Jurisprudence 301
D Moving Beyond Open Skies:The Need to Reconceptualize U.S. International Aviation Strategy 302
1 Open Skies and Retrenchment:U.S. Bilateral Relations 1978-92 302
2 U.S./Europe:A Continuing Story of Aeropolitical Discord 305
3 Resisting Open Skies:The U.S./Asia/Oceania Market 309
4 The U.S. Response:Aerodiplomacy Trumps Retaliation and Denunciation 312
5 A Reconceptualization of Open Skies-Some Preliminary Thoughts 318
a IATCA and the 2007 U.S./EC Air Transport Agreement 322
b The Risks of More Bilateralism 325
Ⅳ A CRITIQUE OF U.S. FEDERAL AIRLINE DEREGULATION 326
A Lessons from the U.S. Experience 326
B Securing Competition in a Deregulated Airline Industry 327
1 The Structural Unpredictability of U.S. Deregulation 327
2 An Enduring Business Model:Complex,Costly Hub-and-Spoke Networks 331
3 CRS:Adjusting to a Post-Regulatory Environment 335
4 Loyalty Programs and Slot/Gate Scarcity:Enduring Non-Price Entry Barriers 340
5 The Death and Life of A Merger Policy for the U.S. Airline Industry 347
a Mergers in the Reagan Era:Laissez-Faire under CAB/DOT Review 348
b After 1989:Stronger Surveillance by the Antitrust Division 352
6 Finding the Proper Regulatory Tempo:A Case Study of the 1998 Predatory Pricing Guidelines 357
a The DOT Enters a Jurisprudential Minefield 357
b The Rational Side of Predation 362
c The DOT Abandons Regulatory a Priorism 365
C Portents of Reregulation:An Industry in Perpetual Transition 368
1 The Lessons of the September 11,2001 'Stabilization' Package 368
a The First Approach of Reregulation:The September 11,2001 'Stabilization' Package 369
b Lessons of the Stabilization Act 373
2 2008:The Reregulation Debate Redux 374
D U.S. Airline Deregulation:An Unfinished Experiment 378
Chapter 5 Model Jurisdiction Ⅱ:The European Community&An Experiment in Multilateral Airline Liberalization 381
Ⅰ INTRODUCTION:AN OVERVIEW OF THE EU AIR TRANSPORT INDUSTRY 381
Ⅱ THE SUPRANATIONAL LEGAL AND POLICY FOUNDATIONS OF EC AIRLINE DEREGULATION 386
A General Principles of the Community Legal Order 386
B The Community Institutions and EC Air Transport Liberalization 388
1 The Council of the European Union 388
2 The European Commission 389
3 The European Parliament 391
4 The European Court of Justice 393
C The Legislative Foundations of the Single Aviation Market:A 'Package' Deal 401
D The EC Treaty's Competition Code:Still Leading from the Center 410
1 The Primary and Secondary Sources of EC Competition Law 411
a Regulating Private Action:Articles 81 and 82,Regulation 1 of 2003 411
b Applying Competition Law to the Airlines 416
c Merger Control in the EC 418
d Regulating Public Action:State Aids 422
E Toward Multilateralism:The EC's External Aviation Relations 424
1 The Open Skies Rulings and the External Competence of the EC 424
2 A Synthesis of the Community's External Competence 432
Ⅲ AN APPRAISAL OF MULTILATERAL AIRLINE DEREGULATION IN THE EC:GUIDEPOSTS FOR THE ERA BEYOND OPEN SKIES 434
A The Demonstration Effect of the European Experiment 434
B Reprising the U.S. Experience:Protecting Competition in a Deregulated Era 435
1 Europe's FTC:The Shifting Role of the European Commission 435
2 Two Case Studies in Supranational Trusteeship:The Article 82 'Dominance' Factor 438
a An Early Example:British Midland v.Aer Lingus 439
b Focusing on the Competitive Structure:The Travel Agency Incentives Case 443
3 Airline Mergers and Alliances:A New Commission Activism 450
a Europe's Airline Culture:Cooperation Trumps Merger 450
b Case Studies in the Commission's Scrutiny of Transatlantic Alliances 453
ⅰ The Nebulous World of Transnational EU Mergers:Air France-KLM 456
ⅱ A Case Study in Community Merger Policy:The easyJet Challenge to Air France-KLM 459
c Conclusion:When the Mergers Come 466
C Regulatory Challenges of Multilateral Airline Liberalization Ⅰ:Issues Common to the U.S.Experience 469
1 Computer Reservations Systems in Europe 469
2 The Infrastructure Challenge 473
3 Passenger Rights:Overexuberant Regulation? 477
D Regulatory Challenges of Multilateral Airline Liberalization Ⅱ:Issues Beyond the U.S. Experience 482
1 Building the Community's External Aviation Policy Ⅰ:The Chicago Bilateral System After the ECJ Open Skies Rulings 482
2 Building the Community's External Aviation Policy Ⅱ:More Verticality and a European Common Aviation Area 488
3 A Concluding Note on the Community's External Aviation Policy 492
E A Conceptual Conflict:The Community Licensing System and the Right of Establishment 492
F Dipping into the Well of Public Subsidy:The Battle Against 'State Aids' 495
1 Two Flag Carriers Under Scrutiny:Olympic and Alitalia 497
2 A New State Aids Challenge:Airport Subsidies 502
3 Should State Aids Be a Transitional Phenomenon? 506
G Conclusion:Some Counterpoints to the EC Deregulation Experiment 507
1 Two General Counterpoints 509
a The Commission's 'Industrial Policy' 509
b A Partial Deregulation of the 'Aviation' Industry 510
2 Three Specific Counterpoints 511
a The Anomaly of Public Service Obligation (PSO) Routes 511
b A Doomed Suggestion:Fare Reregulation 513
c A Cautionary Tale of External Relations 515
Chapter 6 Conclusion:A Proposal for a Second Stage U.S./EC Air Transport Agreement 517
Ⅰ INTRODUCTION:THE CHANGE IMPERATIVE 517
Ⅱ THE IMPERATIVES OF LIBERALIZATION AND GLOBALIZATION 518
A The Global Regulatory Backdrop to Airline Deregulation 518
B A Constitutional Symmetry:U.S./EC Airline Deregulation 521
Ⅲ THE FOUNDATIONS OF A NEW PLURILATERAL AIRSPACE 522
A Introduction:The Narrowness of Open Skies 522
B Visualizing a Multilateral Air Transport Regime 524
C GATS Gradualism:A Search for the Highest Common Denominator 526
1 Introduction 526
2 Applying the GATS Framework Principles to Global Air Transport 528
a The GATS Trade Principles 530
b Most-Favored-Nation 530
c National Treatment 534
d Market Access 535
3 A Critique of the GATS Approach to Multilateralism 535
4 Conclusion:Politics and the GATS 540
D A Plurilateral Reconceptualization of the U.S./EC Second Stage Negotiations 542
E Some Guiding Principles for the Negotiators 544
1 Principle 1:The End of Managed Trade 546
2 Principle 2:The End of Cabotage and Chicago's Contrivance of 'Freedoms' 547
3 Principle 3:A New Doctrine of 'Regulatory' Nationality 548
4 Principle 4:An End to Pricing Controls 550
5 Principle 5:A 'Deep Integration' Program of Regulatory Convergence 551
a Convergence in Air Transport Competition Law and Policy 553
ⅰ Introduction:Globalizing Trends in Competition Law Enforcement 553
ⅱ A Proposal for Competition Surveillance of the Airlines 559
(a)Shaping a Common Body of Competition Law 560
(b)A Rule of Abstention for Competition Enforcement Agencies 561
ⅲ Conclusion 562
b The End of Operating Aid for Failing Carriers 562
c Resetting the Tempo of Regulation:Abstention and Convergence 564
ⅰ A Code for Airport Constraints 566
ⅱ Labor Rights in a Plurilateral Setting 567
6 Principle 6:A Mandatory Supranational Dispute Settlement/Appellate Mechanism 570
a Introduction 570
b A Sector-Specific Supranational Tribunal 572
c Advancing to Private Supranational Dispute Settlement 576
d Private Supranational Dispute Settlement:A Constitutional Possibility? 578
e Conclusion 580
7 Principle 7:Adopting the EC 'Community Designation Clause' for Countries outside the Second Stage Plurilateral 581
Ⅳ BEYOND OPEN SKIES: THE POLITICAL CHALLENGE OF AUTHENTIC LIBERALIZATION 583
Appendix Ⅰ Department of Transportation Statement of United States International Air Transportation Policy May 3,1995 589
Appendix Ⅱ Model U.S. Open Skies Agreement 601
Appendix Ⅲ 2007 U.S./EC Air Transport Agreement 615
Tables of Cases and Administrative Proceedings 659
Select Bibliography 669
Index 695