chapter  3
18 Pages

Airlines as allies

23How to manage the market?
WithPablo Mendes de Leon

In many states, the operation of air transport services is exempt from the application of competition law, because governments wish to keep control of ‘their’ airlines for public policy arguments including: trade relations, developing tourism, connectivity, military and labour issues. These policies translate into ASAs between states, which predetermine (ex ante) economic features such as pricing, capacity and frequencies of the agreed international air services. Such behaviour may be anti-competitive, but it is sanctioned because of its ‘public service’ character.

Competition law is designed to remedy that anti-competitive behaviour by ex post rules. As a corollary, frictions may arise between the said ex ante bilateral provisions, and the ex post competition rules. Thus, this chapter discusses the relationships between public policy goals, as laid down in ASAs, and competition law regimes. The objective of achieving a more harmonised approach towards competition between airlines is emphasised. Discussed is the present call for ‘fair competition’, which is examined by the ICAO. Finally, the chapter provides conclusions on the balance between competition law and air transport law.