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the industry’s enormous growth over time.
First, at a general level, the Convention confirmed the emerging realization that civilian
air transportation was an activity of potentially enormous global importance, deserving to
be nurtured and promoted through a set of internationally accepted rules for the rights of
access to markets. In trying to define what these rules would be, the Convention, for the
first time in the history of aviation, had to confront seriously the choice between a “liberal”
and a “protectionist” regulatory environment for international services. This fundamental
choice has been at the center of much controversy ever since. The USA advocated at the
2 The term “State” is used in this chapter interchangeably with the less formal “country” or “nation.”
Background on the International Regulatory Environment 21
time a liberal framework based on a regime that would place few restrictions on access
to the world’s air transportation markets and permit open competition among airlines,
including the right to set market-driven flight frequencies and airfares. However, most
other States, led by the UK, advocated a much more restrictive system for reasons of
national security and of preserving airspace sovereignty, as well as of facilitating the
growth of the then-nascent airline industry. An apparent underlying concern of this group
was that a liberal competitive environment might lead to dominance by US airlines, which
were believed to be much stronger, financially and in many other respects, than the airlines
of other nations at the time. Using the threat of refusing landing rights as their bargaining
tool, the protectionist group largely prevailed.
Rather than establishing a universal set of rules, the Convention thus decided to simply
create a framework within which such rules could be established for regulating air trans-
port services on a bilateral basis, i.e., between pairs of countries . As a result, bilateral
air service agreements (
ASAs) between States emerged as the instrument for initiating
or modifying international transportation services and for regulating these services. The
principal initial “model” for such agreements was developed only two years later, through
the 1946 “Bermuda I” Agreement, which established the ground rules for US -UK air
services. Bilateral
ASAs continue to be prevalent today, but multilateral
ASAs have also
become increasingly common and important in recent years. The key provisions of the
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