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U.S. Department of State

Diplomacy in Action

U.S.-Malaysia Air Transport Agreement of June 21, 1997


June 21, 1997

   
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AIR TRANSPORT AGREEMENT BETWEEN THE GOVERMENT OF THE UNITED STATES OF AMERICA AND THE GOVERNMENT OF MALAYSIA

The Government of the United States of America and the Government of Malaysia (hereinafter, "the Parties") ;

 Desiring to promote an international aviation system based oncompetition among airlines in the marketplace with minimumgovernment interference and regulation ;

Desiring to facilitate the expansion of international airtransport opportunities ;

Desiring to make itpossible for airlines to offer thetraveling and shipping public a variety of service options atthe lowest prices that are not discriminatory and do not represent abuse of a dominant position, and wishing toencourage individual airlines to develop and implementinnovative and competitive prices ;

Desiring to ensure the highest degree of safety and security ininternational air transport and reaffirming their grave concernabout acts or threats against the security of aircraft, which jeopardize the safety of persons or property, adversely affectthe operation of air transportation, and undermine publicconfidence in the safety of civil aviation; and Being Parties-to the Convention on International CivilAviation, opened for signature at Chicago on December 7, 1944 ;

Have agreed as follows :

Article 1

Definitions

For the purposes of this Agreement, unless otherwise stated, the term :

1. "Aeronautical authorities" means, in the case of the UnitedStates, the Department of Transportation, or its successor, andin the case of Malaysia, the Minister of Transport and anyperson or agency authorized to perform the functions exercised by the said Minister ;

 2 . "Agreement" means this Agreement, its Annexes, and any amendments thereto ;

3 . "Air transportation" means the public carriage by aircraftof passengers, baggage, cargo, and mail, separately or in combination, for remuneration or hire ; 4 . "Convention" means the Convention on International Civil Aviation, opened for signature at Chicago on December 7, 1944, and includes : a . any amendment that has entered into force under Article 94(a) of the Convention and has been ratified by both Parties, and b . any Annex or any amendment thereto adopted underArticle 90 of the Convention, insofar as such Annex or amendment is at any given time effective for both Parties ; 5 . "Designated airline" means an airline designated . and authorized in accordance with Article 3 of this Agreement ; 6 . "Full cost" means the cost of providing service plus a reasonable charge for administrative overhead ; 7 . "International air transportation" means air transportationthat passes through the airspace over the territory of more than one State ; 8 . "Price" means any fare, rate or charge for the carriage of passengers (and their baggage) and/or cargo (excluding mail) inair transportation charged by airlines, including their agents, and the conditions governing the availability of such . fare, rate or charge ;

. "Stop for non-traffic purposes" means a landing for any' purpose other than taking on or discharging passengers,baggage, cargo and/or mail in air transportation ; 10. "Territory" means the land areas under the sovereignty,jurisdiction, protection, or trusteeship of a Party, and theterritorial waters adjacent thereto ; and 11. "User charge" means a charge imposed on airlines for theprovision of airport, air navigation, or aviation securityfacilities or services including related services and facilities . t=

Article 2

Grant of Rights

1. Each Party grants to the other Party the following rightsfor the conduct of international air transportation by the airlines of the other Party : a. the right to fly across its territory without landing; b. the right to make stops in its territory for non-trafficpurposes; and c . the rights otherwise specified in this Agreement . ;4 2 . . Nothing in this Article shall be deemed to confer on theairline or airlines of one Party the rights to take on board,in the territory of the other Party, passengers, their baggage,cargo, or mail carried for compensation. and destined for another point in the territory of that other Party .

Article 3

Designation and Authorization

1. Each Party shall have the right to designate as manyairlines as it wishes to conduct international air transportation in accordance with this Agreement and towithdraw or alter such designations . Such designations shallbe transmitted to the other Party in writing through diplomatic channels, and shall identify whether the airline is authorizedto conduct the type of air transportation specified in Annex I or in Annex II or both .

2 . On receipt of such a designation, and of applications fromthe designated airline, in the form and manner prescribed for operating authorizations and technical permissions, the otherParty shall grant appropriate authorizations and permissionswith minimum procedural delay, provided : a. substantial ownership and effective control of thatairline are vested in the Party designating the airline,nationals of that Party, or both; b. the designated airline is qualified to meet theconditions prescribed under the laws and regulationsnormally applied to the operation of international airtransportation by the Party considering the application orapplications ; and c . the Party designating the airline is maintaining andadministering the standards set forth in Article 6 (Safety)and Article 7 (Aviation Security) .

Article 4

Revocation of Authorization

1. Either Party may revoke, suspend or limit the operatingauthorizations or technical permissions of an airlinedesignated by the other Party where : .a. substantial ownership and effective control of thatairline are not vested in the other Party, the Party'snationals, or both ; b. that airline has failed to comply with the laws andregulations referred to in Article 5 (Application of Laws)of this Agreement ; or c. the other Party is not maintaining and administeringthe standards as. set forth in Article 6 (Safety) . 2. Unless immediate action is essential to prevent furthernoncompliance with subparagraphs lb or lc of this Article, therights established by this Article shall be exercised only after consultation with the other Party . 3. This Article does not limit the rights of either Party towithhold, revoke, limit or impose conditions on the operating authorization or technical permission of an airline or airlinesof the other Party in accordance with the provisions ofArticle 7 (Aviation Security) .

Article 5

Application of Laws

1. While entering, within, or leaving the territory of oneParty, its laws and regulations relating to the operation andnavigation of aircraft shall be complied with by the other Party's airlines . 2. While entering, within, or leaving the territory of oneParty, its laws and regulations relating to the admission to ordeparture from its territory of passengers, crew or cargo onaircraft (including regulations relating to entry, clearance, aviation security, immigration, passports, customs andquarantine or, in the case of mail, postal regulations) shallbe complied with by, or on behalf of, such passengers, crew orcargo of the other Party's airlines .

Article 6

Safety,

1. Each Party shall recognize as valid, for the purpose ofoperating the air transportation provided for in thisAgreement, certificates of airworthiness, certificates of competency, and licenses issued or validated by the other Partyand still in force, provided that the requirements for suchcertificates-or licenses at least equal the minimum standardsthat may be established pursuant to the Convention . Each Partymay, however, refuse to recognize as valid for the purpose offlight above its own territory, certificates of competency and licenses granted to or validated for its own nationals by theother Party.

2. Either Party may request consultations concerning thesafety standards maintained by the other Party relating to aeronautical facilities, aircrews, aircraft, and operation ofthe designated airlines . If, following such consultations, one Party finds that-the other Party does not effectively maintainand administer safety standards and requirements in these areas that at least equal the minimum standards that may be  established pursuant to the Convention, the other Party shallbe notified of such findings and the steps considered necessaryto conform with these minimum standards, and the other Partyshall take appropriate corrective action . Each Party reserves the right to withhold, revoke, or limit the operatingauthorization or technical permission of an airline or airlinesdesignated by the other Party in the event the other Party doesnot take such appropriate corrective action within a reasonable time .

Article 7

Aviation Security

1 . In accordance with their rights and obligations underinternational law, the Parties reaffirm that their obligationto each other to protect the security of civil aviation againstacts, of unlawful interference forms an integral part of this Agreement . Without limiting the generality of their rights andobligations under international law, the Parties shall inparticular act in conformity with the provisions of the Convention on Offenses and Certain Other Acts Committed on Board Aircraft, signed at Tokyo on September 14, 1963, the Convention for the Suppression of Unlawful Seizure of Aircraft,signed at The Hague on December 16, 1970, and the Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation, signed at Montreal on September 23, 1971, and the Protocol for the Suppression of Unlawful Acts of Violenceat Airports Serving International Civil Aviation, done at Montreal on February 24,-1988 .

 2 . The Parties shall provide upon request all necessaryassistance to each other to prevent acts of unlawful seizure ofcivil aircraft and other unlawful acts against the safety ofsuch aircraft, of their passengers and crew, and of airportsand air navigation facilities, and to address any other threat to the security of civil air navigation .

3. The Parties shall, in their mutual relations, act inconformity with the aviation security standards and appropriate recommended practices established by the International CivilAviation organization and designated as Annexes to the Convention; they shall require that operators of aircraft oftheir registry, operators of aircraft who have their principal place of business or permanent residence in their territory,and the operators of airports in their territory act inconformity with such aviation security provisions .

4. Each Party agrees to observe the security provisionsrequired by the other Party for entry into, for departure from,and while within the territory of that other Party and to take adequate measures to protect aircraft and to inspectpassengers, crew, and their baggage and carry-on items, as wellas cargo and aircraft stores, prior to and during boarding orloading. Each Party shall also give positive consideration toany request from the other Party for special security measuresto meet a particular threat .

 5. When an incident or threat of an incident of unlawfulseizure of aircraft or other unlawful acts against the safetyof passengers, crew, aircraft, airports or air navigationfacilities occurs, the Parties shall assist each other byfacilitating communications and other appropriate measures intended to terminate rapidly and safely such incident or threat .

6. When a Party has reasonable grounds to believe that theother Party has departed from the aviation security provisions of this Article, the aeronautical authorities of that Party mayrequest immediate consultations with the aeronauticalauthorities of the other Party . Failure to reach a satisfactory agreement within 15 days from the date of such request shall constitute grounds to withhold, revoke, limit, orimpose conditions on the operating authorization and technicalpermissions of an airline or airlines of that Party . When required by an emergency, a Party may take interim action prior to the expiry of 15 days .

Article 8

 Commercial Opportunities

1. The airlines of each Party shall have the right toestablish offices in the territory of the other Party for thepromotion and sale of air transportation .

 2. The designated airlines of each Party shall be entitled, inaccordance with the laws and-regulations of the other Partyrelating to entry, residence, and employment, to bring in andmaintain in the territory of the other Party managerial, sales,a technical, operational, and other specialist staff required for the provision of air transportation .

3. Each. designated airline shall have the right to perform its own ground-handling in the territory of the other Party("self-handling") and shall have the right to perform such services on behalf of other airlines designated by the sameParty 7/ or, at its option, select among competing agents for such services in whole or in part. The rights shall be subjectonly to physical constraints resulting from considerations ofairport safety . Where such considerations preclude self-handling, ground services shall be available on an equalbasis to all airlines ; charges shall be based on the costs of services provided; and such services shall be comparable to thekind and quality of services as if self-handling were possible .

 4 . Any airline of each Party may engage in the sale of airtransportation in the territory of the other Party directlyand, at the airline's discretion, through its agents, except asmay be specifically provided by the charter regulations of thecountry in which the charter originates that relate to the protection of passenger funds, and passenger cancellation andrefund rights . Each airline shall have the right to sell suchtransportation, and any person shall be free to purchase suchtransportation, in the currency of that territory or in freelyconvertible currencies .

5 . Each airline shall have the right to convert and remit toits country, on demand, local revenues in excess of sumslocally disbursed. Conversion and remittance shall be permitted promptly without restrictions or taxation in respectthereof at the rate of exchange applicable to current transactions and remittance on the date the carrier makes the initial application for remittance . .

 6 . The airliners of each Party shall be permitted to pay forlocal expenses, inclu ing purchases of fuel, in the territory of the other Party in local currency . At their discretion, the airlines of each Party may pay for such expenses in theterritory of the other Party in freely convertible currenciesaccording to local currency regulation .

7. In operating or holding out the authorized services on theagreed routes, any designated airline of one Party may enterinto cooperative marketing arrangements such as blocked-space, code-sharing or leasing arrangements, with a) an airline or airlines of either Party; and _1/ The Government of Malaysia recognizes that there may be limitations imposed by local authorities in the United Statesthat-restrict the right of the designated airline(s) ofMalaysia to perform some ground-handling services an airline or airlines of a third country, provided that such third country authorizes or allows comparablearrangements between the airlines of the other Party andother airlines on services to, from and via such third country; provided that all airlines in such arrangements i) hold theappropriate authority and ii) meet the requirements normally applied to such arrangements .

Article 9

Customs Duties and Charcres

 1. On arriving in the territory of one Party, aircraftoperated in international air transportation by the designatedairlines of the other Party, their regular equipment, groundequipment, fuel, lubricants, consumable technical supplies, spare parts (including engines), aircraft stores (including butnot limited to such items of food, beverages and liquor,tobacco and other products destined for sale to or use bypassengers in limited quantities during flight), and other items intended for or used solely in connection with the operation or servicing of aircraft engaged in international airtransportation shall be exempt, on the basis of reciprocity,from all import restrictions, property taxes and capitallevies, customs duties, excise taxes, and similar fees and charges that are (i) imposed by the national authorities, and (ii) not based on the cost of services provided,provided that such equipment and supplies remain on board the aircraft .

2. There shall also be exempt, on the basis of reciprocity,from the taxes, levies, duties, fees and charges referred to in .paragraph 1 of this Article, with the exception of chargesbased on the cost of the service provided :

a. aircraft stores introduced into or supplied in theterritory of a Party and taken on board, within reasonablelimits, for use on outbound aircraft of an airline of the other Party engaged in international air transportation, even when these stores are to be used on a part of thejourney performed over the territory of the Party in which they are taken on board ;

b . ground equipment and spare parts (including engines) introduced into the territory of a Party for the servicing,maintenance, or repair of aircraft of an airline of the other Party used in international air transportation ;

c . fuel, lubricants and consumable technical supplies introduced into or supplied in the territory of a Party foruse in an aircraft of an airline of the other Party engagedin international air transportation, even when thesesupplies are to be used on a part of the journey performedover the territory of the Party in which they are taken onboard; and d . advertising and promotional materials for use onoutbound aircraft of an airline of the other Party involved in international air transportation, even when these storesare to be used on a part of the journey performed over theterritory of the Party in which they are taken on board .

 3 . Equipment and supplies referred to in paragraphs 1 and 2 ofthis Article may be required to be kept under the supervisionor control of the appropriate authorities .

 4 . The exemptions provided by this Article shall also beavailable where the designated airlines of one Party have contracted with another airline, which similarly enjoys suchexemptions from the other Party, for the loan or transfer inthe territory of the other Party of the items specified in paragraphs 1 and 2 of this Article .

Article 10

User Charges

1. User charges that may be imposed by the competent chargingauthorities or bodies of each Party on the airlines of theother Party shall be just, reasonable, not unjustly discriminatory, and equitably apportioned among categories of users . In any event, any such user charges shall be assessedon the airlines of the ofl~er Party on terms not less favorablethan the most favorable terms available to any other airline at the time the charges are assessed .

2. User charges imposed on the airlines of the other Party mayreflect, but shall not exceed, the full cost to the competentcharging authorities or bodies of providing the appropriateairport, airport environmental, air navigation, and aviationsecurity facilities and services at the airport or within the airport system. Such full cost may include a reasonable return on assets, after depreciation. Facilities and services for which charges are made shall be provided on an efficient and economic basis .

3 . Each Party shall encourage consultations between thecompetent charging authorities or bodies in its territory andthe airlines using the services and facilities, and shall encourage the competent charging authorities or bodies and theairlines to exchange such information as may be necessary topermit an accurate review of the reasonableness of the charges in accordance with the principles of paragraphs 1 and 2 of this Article . Each Party shall encourage the competent charging authorities to provide users with reasonable notice of anyproposal for changes in user charges to enable users to expresstheir views before changes are made .

 4. Neither Party shall be held, in dispute resolutionprocedures pursuant to Article 14, to be in breach of a provision of this Article, unless (i) •it fails too undertake a review of the charge or practice that is the subject of complaint by the other Party within a reasonable amount of time; or (ii) following such a review it fails to take allsteps within its power to remedy any charge or practice that is inconsistent with this Article .

Article 11

Fair Competition

1. Each Party shall allow a fair and equal opportunity for thedesignated airlines of both Parties to compete in providing theinternationcal air transportation governed by this Agreement .

2. Each Party shall allow each designated airline to determinethe frequency and capacity of the international airtransportation it offers based upon commercial considerations in the marketplace. Consistent with this right, neither Partyshall unilaterally limit the volume of traffic, frequency or regularity of service, or the aircraft type or types operatedby the designated airlines of the other Party, except as may berequired for customs, technical, operational, or environmentalreasons under uniform conditions consistent with Article 15 of the Convention .

3. Neither Party shall impose on the other Party's designatedairlines a first-refusal requirement, uplift ratio,no-objection fee, or any other requirement with respect tocapacity, frequency or traffic that would be inconsistent with the purposes of this Agreement .

4 . Neither Party shall require the filing of schedules, . programs for charter flights, or operational plans by airlinesof the other Party for approval, except as may be required on anon-discriminatory basis to enforce the uniform conditions foreseen by paragraph 2 of this Article or as may bespecifically authorized in an Annex to this Agreement . If a Party requires filings for information purposes, it shallminimize the administrative burdens of filing requirements and procedures on ai-r transportation intermediaries and ondesignated airlines of the other Party .

Article 12

Pricinq

 1. Each Party shall allow prices for air transportation to beestablished . by each designated airline based upon commercial considerations in the marketplace . Intervention by the Parties shall be limited to : a. prevention of unreasonably discriminatory prices orpractices ; b. protection of consumers from prices that areunreasonably high or restrictive due to the abuse of a dominant position; and c. protection cf airlines from prices that areartificially low due to direct or indirect governmental subsidy or support .

2 . Each Party may require notification to or filing with itsaeronautical authorities of prices to be charged to or from its territory by airlines of the other Party . Notification or filing by the airlines of both Parties may be required no morethan 30 days before the proposed date of effectiveness . In individual cases, notification or filing may be permitted onshorter notice than normally required . Neither Party, shall require the notification or filing by airlines of the otherParty of prices charged by charterers to the public, except as may be required on a non-discriminatory basis for information purposes .

 3. Neither Party shall take unilateral action to prevent theinauguration or continuation of a price proposed to be chargedor charged by (i) an airline of either Party for internationalair transportation between the territories of the Parties, or .1: (ii) an airline of one Party for international air transportation between the territory of the other Party and anyother country, including in both cases transportation on an interline or intraline basis . If either Party believes thatany such price is inconsistent with the considerations setforth in paragraph 1 of this Article, it shall request consultations and notify the other Party of the reasons for itsdissatisfaction as soon as possible . These consultations shall be held not later than 30 days after receipt of the request,and the Parties shall cooperate in securing informationnecessary for reasoned resolution of the issue . If the Parties reach agreement with respect to a price for which a notice ofdissatisfaction has been given, each Party shall use its bestefforts to put that agreement into effect . Without such' mutual agreement, the price shall go into effect or continue in effect .

Article 13

Consultations

Either Party may, at any time, request consultations relating to this Agreement . Such consultations shall begin at the earliest possible date, but not later than 60 days from thedate the other Party receives the request unless otherwiseagreed .

Article 14

Settlement of Disputes

1 . Any dispute arising under this Agreement, except those thatmay arise under paragraph 3 of Article 12 (Pricing), that isnot resolved by a first round of formal consultations may bereferred by agreement of the Parties for decision to some person or body. If the Parties do not so agree, the disputeshall, at the request of either Party, be submitted toarbitration in accordance with the procedures set forth below ..

2 . Arbitration shall be by a tribunal of three arbitrators tobe constituted as follows : ,a.

a. Within 30 days after the receipt of a request forarbitration, each Party shall name one arbitrator. Within 60 days after these two arbitrators have been named, they shall by agreement appoint a third arbitrator, who shallact as President of the arbitral tribunal ;

b . If either Party fails to name an arbitrator, or if the third arbitrator is not appointed in accordance withsubparagraph a of this paragraph, either Party may requestthe President of the Council of the International Civil Aviation Organization to appoint the necessary arbitrator or arbitrators within 30 days . If the President of the Council is of the same nationality as one of the Parties,the most senior Vice President who is not disqualified onthat ground shall make the appointment .

3. Except as otherwise agreed, the arbitral tribunal shalldetermine the limits of its jurisdiction in accordance with this Agreement and shall establish its own procedural rulesThe tribunal, once formed, may recommend interim reliefmeasures pending its final determination. At the direction of the tribunal or at the request of either of the Parties, aconference to determine the precise issues to be arbitrated andthe specific procedures to be followed shall be held not laterthan 15 days after the tribunal is fully constituted .

 4. Except as otherwise agreedor as directed by the tribunal,each Party shall submit a memorandum within 45 days of the timethe tribunal is fully constituted. Replies shall be due 60days later . The tribunal shall hold a hearing at the requestof either Party or on its own initiative within 15 days after replies are due .

5 . The tribunal shall attempt to render a written decisionwithin 30 days after completion of the hearing or, if nohearing is held, after the date both replies. are submitted . The decision of the majority of the tribunal shall prevail .

 6 . The Parties may submit requests for clarification of thedecision within 15 days after it is rendered and anyclarification given shall ; be issued within 15 days of such request

7. Each Party shall, to the degree consistent with itsnational law, give full effect to any decision or award of the arbitral tribunal .

8. The expenses of the arbitral tribunal, including the feesand expenses of the arbitrators, shall be shared equally by the Parties . Any expenses incurred by the President of the Council of the International Civil Aviation Organization in connectionwith the procedures of paragraph 2b of this Article shall beconsidered to be part of the expenses of the arbitral tribunal .


Article 15

Termination

 Either Party may, at any time, give notice in writing to the other Party of its decision to terminate this Agreement . Such notice shall be sent simultaneously to the International Civil Aviation Organization . This Agreement shall terminate atmidnight (at the place of receipt of the notice to the otherParty) immediately before the first anniversary of the date ofreceipt of the notice by the other Party, unless the notice is withdrawn by agreement of the Parties before the end of this period .

Article 16

 Reaistration with ICAO

This Agreement and all amendments thereto shall be registered with the International Civil Aviation Organization .

Article 17

Entry into Force

This Agreement shall enter into force on the date of signature . Upon entry into force, this Agreement shallsupersede the Air Transport Agreement and exchange of notessigned at Kuala Lumpur February 2, 1970 as amended . IN WITNESS WHEREOF the undersigned, being duly authorized bytheir respective Governments, have signed this Agreement . DONE AT San Francisco, this 21st day of June, 1997, induplicate, in the English language, which shall be an authentic text . A translation of the Agreement into the Malay languageshall be prepared which shall be considered equally authentic when agreed upon . by an exchange of diplomatic notes that confirm its conform ty with the English language text .

  FOR THE GOVERNMENT OF UNITED STATES OF AMERICA :

 FOR THE GOVERNMENT OF MALAYSIA :

ANNEX I

Scheduled Air Transportation ,

Section 1,

Routes.

Airlines of each Party designated under this Annex shall, inaccordance with the terms of their designation, . be entitled to perform scheduled inter--national air transportation betweenpoints on the following routes : A. Routes for the airline or airlines designated by theGovernment of the United States,: 1. From points behind the United States via the United Statesand intermediate points to a point or points in Malaysia and'beyond. 2 . For all-cargo service or services, between Malaysia and anypoint or points . a . Routes for the airline or airlines designated by the. Government of Malaysia : =J 1. From points behind Malaysia via Malaysia and intermediatepoints to a point or points in the United States and beyond . 2. For all-cargo service or services, between the UnitedStares and any point : or points . Section 2 . ,Operational Flexibility :Each designated airline may, on any or all flights and at itsoption : . Operate flights in either or both directions ; Combine different flight numbers within one aircraft operation; Serve behind, intermediate, and beyond points and points inthe territories of the Parties on the routes in any combination. and in any order; Omit stops at any point or points; Transfer traffic from any of its aircraft to any of its other aircraft at any point on the routes; and

6 . Serve points behind any point in its territory with orwithout change of aircraft or flight number and may hold out and advertise such services to the public as throughservices; without directional or geographic limitation and without lossof any right to carry traffic otherwise permissible under this . Agreement ; provided that, with the exception of all-cargoh services, the services serves a point in the territory of theParty designating the airline . Section 3 Change of Gauce, On any seggtent or segments of the routes above, any designatedairline may perform international air transportation withoutany limitation as to change, at any point on the route, in typeor number of aircraft operated ; provides} that, with the exception of all-cargo services, in the outbound direction, thetransportation beyond such point is a continuation of thetransportation from the territory of the Party that hasdesignated the airline and, in the inbound direction, the transportation to the territory of the Party that hasdesignated the airline is a continuation of the transportationfrom beyond such point . .9 ion 42rIntermodal Services Notwithstanding .any other provision of this Agreement, airlines and indirect providers of cargo transportation of both Partiesshall be permitted, without restriction, to employ inconnection with international air transportation any surfacetransportation for cargo to or from any points in the territories of the Parties or in third countries, includingtransport to and from all airports with customs facilities, and including,, where applicable, the right to transport cargo inbond under applicable laws and regulations . Such cargo,whether moving by surface or by air, shall have access toairport customs processing and facilities . Airlines may elect to perform their own surface transportation or to provide itthrough arrangements with other surface carriers, includingsurface transportation operated by other airlines and indirect providers of cargo air transportation. Such intermodal cargoservices may be offered at a single, through price for the airand surface transportation combined, provided that shippers arenot misled as to the facts concerning such transportation .

 ANNEX II

Charter Air Transportation

Section I,

Airlines of each Party designated under this Annex shall, in accordance with the terms of their designation, have the rightto carry international charter traffic of passengers (and theiraccompanying baggage) and/or cargo (including, but not limited to, freight forwarder ., split, and combination. (passenger/cargo)charters) : Between . any point or points in the territory of the Party that has designated the airline and any point or points inthe territory of the other Party; and Between any point or points in the territory of the otherParty and any point or points in a third country orcountri", provide4 that, except with respect to cargocharters, _such service constitutes part of a continuousoperation,.' with or without a change of aircraft, thatincludes service to the homeland for the purpose ofcarrying local traffic between the homeland and the territory of the other Party . In the performance of services covered by this Annex, airlinesof each Party designated under this Annex shall also have theright : (1) to make stopovers at any points whether within oroutside of the territory of either Party; (2) to carry transit traffic through the other Party's territory; (3) to combine onthe same aircraft traffic originating in one Party's territory,traffi;: originating in the other Party's territory, and trafficoriginating in third countries ; and (4) to perform international air transportation without any limitation as tochange, at any point on the route, in type or number ofaircraft operated; provided that, except with respect to cargocharters, in the outbound direction, the transportation beyond such point is a . continuation of the- transportation from the territory of the Party that has designated the airline and inthe inbound direction, the transportation to the territory ofthe Party that has designated the airline is a continuation of the transportation from beyond such point . Each Party shall extend favorable consideration to applications by airlines of the other Party to carry traffic not covered bythis Annex_ on the basis of comity and reciprocity . .$ection 2; Any airline designated by either Party performing international charter air transportation originating in the territory ofeither Party, whether on a one-way or round-trip basis, shall have the option of complying with the charter laws,regulations, and rules either of its homeland or of the other Party. If a Party applies different rules, regulations, terms, conditions, or limitations to one or more of its airlines, or to airlines of different countries, each designated airlineshall be subject to the least restrictive of such criteria . However, nothing contained in the above paragraph shall limitthe rights of either Party to require airlines designated under this Annex by either Party. to adhere to requirements relating to the protection of passenger funds and passenger cancellation and refund rights . Section 3 Except with respect to the consumer protection rules referredto in the preceding paragraph above, neither Party shall require•-an airline designated under-this Annex by the other Party, in respect of the carriage of traffic from the territoryof that other Party or of a third country on a one-way or round-trip basis, to submit more than a declaration ofconformity with the applicable laws, regulations and rulesreferred to under Section 2 of this Annex or of a waiver of these laws, regulations,, or rules granted by the applicable aeronautical authorities .

ANNEX III

 Principles of Non-Discrimination

Within And Competition among Computer Reservations Systems. Recognizing that Article 11 (Fair Competition) of thisAgreement guarantees the airlines of both Parties "a fair and equal opportunity to, compete," Considering that one of the most important aspects of theability of an airline to compete is its ability to inform thepublic of its services in a fair and impartial manner, andthat, therefore, the quality of information about airlineservices available to travel agents who directly distribute such information to the traveling public and the ability of anairline to offer those agents competitive computer reservationssystems ~'(CRSs), represent the foundation for an airline'scompetitive opportunities, andY Considering- that it is equally necessary to ensure that theinterests of the consumers of air transport products areprotected from any misuse of such information and its misleading presentation and that airlines and travel agentshave_ access to effectively competitive computer reservations systems : 1. The Parties agree that CRSs will have integrated primarydisplays for which . a . Information regarding international air services,including the construction of connections on those.c.,service-shall be edited and displayed based onnon-discriminatory and objective criteria that are notinfluenced, directly or indirectly, by airline or marketidentity. Such criteria shall apply uniformly to all participating airlines. b . CRS data bases shall be as comprehensive as possible . c_ CRS vendors shall not delete information submitted byparticipating airlines; .such information shall be accurate and transparent; for example, code-shared and ;..change-of-gauge flights and flights with stops should be:clearly identified .as having those characteristics . d. All CRSs that are available to travel agents whodirectly distribute info-rmation about airline services tothe traveling. public in either Party's territory shall not only be obligated to, but shall also be entitled to,operate in conformance with the CRS rules that apply in theterritory where the CRS is being operated .
2 e . Travel agents shall be allowed to use any of thesecondary displays available through the CRS so long as thetravel agent makes a specific request for that display . 2. A Party shall require that eachCRS vendor operating in itsterritory allow all airlines willing to pay any applicablenon-discriminatory fee to participate in its CRS .. A Partyshall require that all distribution facilities that a systemvendor provides shall be offered on a non-discriminatory basisto participating airlines . 'A Party. shall require that CRSvendors display, on a non-discriminatory, objective,carrier-neutral and market-neutral basis, the international air services of participating airlines in all markets in which they wish to sell those services. Upon request, a CRS vendor shalldisclose-details of its data base update and storage procedures, -its criteria for editing and ranking information, the weight,, given .to such criteria, and the criteria used for selection of connect points and inclusion. of connecting flights . . 3. CRS vendors operating in the territory of one Party shallbe entitled to bring in, maintain, and make freely available. :; their CRSs to travel agencies or travel companies whoseprincipal business is the distribution of travel-related products in the territory of the. other Party if the CRS complies with these principles . 4 . Neither Party shall, in its territory, impose or permit tobe imposed on the CRS vendors of the other Party more stringentrequirements with respect to access to and use of communicationfacilities, selection and use of technical CRS hardware and software, and the technical installation of CRS �r.r,rdware, than those imposed on its own CRS vendors . 5. Neither Party shall, in its territory, impose or permit to,be .imposed on the CRS vendors of the other Party morerestrictive requirements with respect to CRS displays(including edit and display parameters), operation, or sale than those imposed on its own CRS vendors . 6. CRSs in use in-the territory of one Party that comply withthese principles and other relevant non-discriminatory . regulatory, technical, and security standards shall be entitledto effective and unimpaired access in the territory of the other Party. One aspect of this is that a designated airline shall participate in such a system as fully in its homeland territory as it does in any system offered to travel agents in the territory of the other Party. Owners/operators of CRSs of one Party shall have the same opportunity to own/operate CRSs thatconform to these principles within the territory of theother Party as do owners/operators of that Party . Each Partyshall ensure that its airlines and its CRS vendors do not discriminate against travel agents in their homeland territorybecause of their use ' possession of a CRS also operated in the territory of the other Party.



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