Open Skies Agreement Highlights

Open Skies agreements set liberal ground rules for international aviation markets and minimize government intervention. Provisions apply to passenger, all-cargo and combination air transportation and encompass both scheduled and charter services. Key provisions include:

1. Free Market Competition
   No restrictions on international route rights; number of designated airlines; capacity; frequencies; or types of aircraft.
2. Pricing Determined by Market Forces
   A fare can be disallowed only if both governments concur -- "double-disapproval pricing" -- and only for certain, specified reasons intended to ensure competition.
3. Fair and Equal Opportunity to Compete
   For example:
• All carriers -- designated and non-designated -- of both countries may establish sales offices in the other country, and convert earnings and remit them in hard currency promptly and without restrictions. Designated carriers are free to provide their own ground-handling services -- "self handling" -- or choose among competing providers. Airlines and cargo consolidators may arrange ground transport of air cargo and are guaranteed access to customs services.
• User charges are non-discriminatory and based on costs. 
4. Cooperative Marketing Arrangements
   Designated airlines may enter into code-sharing or leasing arrangements with airlines of either country, or with those of third countries, subject to usual regulations. An optional provision authorizes code-sharing between airlines and surface transportation companies.
5. Provisions for Dispute Settlement and Consultation
   Model text includes procedures for resolving differences that arise under the agreement.
6. Liberal Charter Arrangements
   Carriers may choose to operate under the charter regulations of either country.
7. Safety and Security
   Each government agrees to observe high standards of aviation safety and security, and to render assistance to the other in certain circumstances.
8. Optional 7th Freedom All-Cargo Rights
   Provides authority for an airline of one country to operate all-cargo services between the other country and a third country, via flights that are not linked to its homeland.