System of bilateral air service agreements Sample Clauses

System of bilateral air service agreements. Based on Article 6 of the Chicago Convention, all commercial aviation activity is dependant on bilateral air service agreements (ASA). These agreements deal with market access, flight frequency, capacity, applicable fares and tariffs. ASAs can be divided in to three major parts.10 The first part is the bilateral agreement itself. Aside from the administrative provisions, contracting parties use the agreement to determine the method of airline designation (ie which airlines are allowed to fly), the regulation on capacity and the issues concerning tariffs and their approval. Designation used to be single, allowing only one airline from each contracting country to establish air services. An important rule concerning designation, and which still largely determines and distorts the industry structure, is the ‘substantial ownership and effective control’ requirement. The designated airline should be substantially owned and effectively controlled by nationals of the designating country. As the whole system was governed by the desire for equal rights for all signatories to participate in international air transport, fares and capacity were - Fifth freedom: the right to carry revenue traffic between the authorising country and third countries when the service starts or ends in the home country.