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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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