Air Service Agreements: The diplomatic dance that keeps aviation moving

Co-founder and Principal of Air52 Aviation Consultants, Koen Karsbergen brings more than two decades of experience in airline management and strategy to his columns.    

Through Air52, Koen assists airlines, airports, and industry stakeholders with practical solutions for complex challenges, drawing on his extensive background in feasibility studies, fleet and network planning, and airline startups. He also contributes to IATA training courses and serves as faculty for Aviation MBA programs.   

The views and opinions expressed in this column are solely those of the author and do not necessarily reflect the official policy or position of AeroTime.    

Behind every international flight booking lies an intricate diplomatic dance. When you browse routes from Paris to New York, comparing Air France, Delta, and British Airways options, you’re seeing the result of decades of negotiations and carefully balanced rights. These Air Service Agreements (ASAs) shape international aviation, determining which airlines can fly where. 

Unlike the simpler process of driving across borders, international aviation operates under precise diplomatic frameworks. Every international flight exists because governments have negotiated specific terms for market access.  

The freedom framework: Aviation’s nine commandments 

At the heart of these diplomatic negotiations lie the ‘freedoms of the Air’ – nine specific rights that countries can grant each other’s airlines. These freedoms form the foundation of international air services, determining exactly what airlines can and cannot do in international operations. 

First freedom: The right to fly over another country’s territory without landing. Example: British Airways crossing French airspace enroute to Germany. 

Second freedom: The right to make a technical stop in another country without embarking or disembarking passengers or cargo. 

Third freedom: The right to fly passengers from your home country to another. Example: Air France Paris-New York. 

Fourth freedom: The right to fly passengers from another country back to your home country. Example: Air France New York-Paris. 

Fifth freedom: The right to carry traffic between two foreign countries as part of a flight originating or ending in your home country. Example: Singapore Airlines’ New York-Frankfurt-Singapore route. 

Sixth freedom: The right to carry traffic between two foreign countries via your home country. Example: Emirates connecting passengers from Tokyo to Berlin via Dubai. 

Seventh freedom: The right to operate standalone flights between two foreign countries without connecting to the home country. Example: easyJet operating between Ireland and Spain. 

Eighth freedom: The right to carry traffic between two points in a foreign country as part of an international service (consecutive cabotage). 

Ninth freedom: The right to operate domestic flights within a foreign country (pure cabotage) – the rarest and most jealously guarded of all aviation rights. Example: Ryanair operating from Rome to Milan.  

The nationality question 

One crucial aspect of Air Service Agreements that shapes the entire industry is their typically binary nature. Most agreements only allow airlines registered in the two signatory countries to operate third, fourth, and sixth freedom rights between those nations. This restriction explains why we see seemingly complex corporate structures in international airline groups. 

Consider Air France-KLM. Despite operating as a single company since 2004, they maintain separate Air Operator Certificates (AOCs) and registrations in France and the Netherlands. This isn’t just bureaucratic complexity, it’s necessary to preserve access to both countries’ bilateral agreements. If they operated under a single registration, they would lose access to either French or Dutch bilateral rights, potentially decimating their network. 

The modern framework: Beyond basic permissions 

Modern Air Service Agreements shape every aspect of international air transport through specific operational parameters: 

Frequency and capacity limitations determine how often airlines can operate and with what size aircraft. Some agreements limit service to just three weekly narrowbody flights, while others permit multiple daily widebody operations. These limitations directly impact an airline’s ability to serve markets profitably. 

Points of entry restrictions define which cities and airports airlines can serve. Agreements often limit foreign carriers to primary hubs while reserving secondary markets for national carriers. Chinese agreements historically restricted foreign carriers to Beijing, Shanghai, and Guangzhou, creating significant market development challenges for non-Chinese airlines. 

Pricing regulations, though less common nowadays, can impact market dynamics even further. Some agreements require government fare approval or maintain price floors to prevent destructive competition, affecting airlines’ ability to respond to changing market conditions. 

Modern agreements also address ground handling rights, codeshare arrangements, competition policy, safety standards, and environmental considerations – reflecting aviation’s increasing complexity.  

Removing the barriers: The path to Open Skies 

The journey toward liberalization and removing barriers began in 1993 when the United States and the Netherlands signed the first Open Skies agreement. This groundbreaking accord removed most restrictions on routes, capacity, and pricing between the two countries, though it stopped short of allowing domestic flights. It became the template for future liberalization efforts, demonstrating that more open markets could benefit both countries’ aviation sectors and economies. 

The European Union (EU) has taken this concept even further with its Single Aviation Market. Within the EU, any EU airline can operate any route, including domestic flights within any member state. This creates a truly open aviation market unprecedented in its scope. It allows Lufthansa to operate domestic flights in Spain, while an Irish carrier can base aircraft and crew in France to operate intra-European and domestic routes. 

The EU is now actively working to extend these principles internationally. Through horizontal agreements, they’re replacing traditional nationality clauses in bilateral agreements with provisions recognizing all EU carriers as eligible for route rights. If successful, this could allow scenarios where Lufthansa operates international routes from France to non-EU countries – a revolutionary change in how international aviation rights work. 

In a bold move that caught the attention of many industry observers, Argentina recently embraced the concept of fully liberalized skies, opening its market to unprecedented levels of competition. However, this situation perfectly illustrates a fundamental truth about aviation rights: it takes two to tango. Despite Argentina’s willingness to open its market, the practical impact depends entirely on other countries’ reciprocal willingness to participate in this liberalization dance. This asymmetry highlights how even the most ambitious unilateral liberalization efforts can face practical limitations in an industry that fundamentally depends on bilateral cooperation. 

How ICAO keeps the system running 

By encouraging and assisting governments in this dance, the International Civil Aviation Organization (ICAO) plays a pivotal role in the development and liberalization of Air Service Agreements worldwide.  

It does so in three distinct ways:  

Standardization and guidance 
ICAO provides comprehensive guidance and standardized templates for ASAs through its Template Air Services Agreements, promoting thorough and consistent agreements. 

Database of Air Services Agreements 
Under Article 83 of the Chicago Convention, countries must register their agreements with the ICAO stored in the World Air Services Agreements (WASA) Database, making it the most complete repository of global air services agreements. 

Facilitating negotiations 
ICAO supports governments in their air services negotiations by promoting key priorities such as liberalized market access for airlines and relaxed nationality requirements for airline ownership. By providing a neutral platform and expert guidance, ICAO helps countries navigate the complexities of negotiating and implementing ASAs, especially during the annual ICAO Air Services Negotiation (ICAN) event. This event provides a central meeting place for states to conduct bilateral, regional, or even plurilateral air services negotiations and consultations.  

Strategic implications for airlines 

For airline strategists and network planners, Air Service Agreements represent both opportunities and constraints that fundamentally shape their networks and business models.  

These agreements influence: 

Network development: The availability (or lack) of traffic rights often determines which routes airlines can fly, but also if they can establish hubs and focus cities. The success of major Gulf carriers, for instance, relies heavily on securing liberal sixth freedom rights that allow them to connect passengers through their hubs. 

Fleet planning: Traffic rights influence aircraft acquisition decisions. An airline might prefer to operate high-capacity aircraft on a route, but if the bilateral agreement limits aircraft size or frequency, they might need to adjust their fleet strategy accordingly. 

Partnership strategies: Restrictions in bilateral agreements often drive airlines toward partnerships and alliances. When unable to serve a market directly due to bilateral limitations, airlines might seek interline or codeshare partners or even join an alliance. 

Competitive positioning: Rights secured under Air Service Agreements can create sustainable competitive advantages. First-mover airlines that secure scarce frequency allocations, especially at slot-constrained airports, often maintain market dominance for years. 

The evolution continues 

Today’s aviation landscape continues to evolve. Low-cost carriers push for more liberal agreements to support their expansion. Gulf carriers leverage sixth freedom rights to build global networks through their hubs. And new technology, from longer-range narrowbody aircraft to electric vertical takeoff and landing (eVTOL) vehicles, raises fresh questions about how these agreements should adapt. 

For airlines, understanding and navigating this complex web of agreements remains crucial to strategy and network planning. Each new route must be evaluated not just for its commercial potential but for its political feasibility under existing bilateral agreements. 

For passengers, while the diplomatic intricacies might seem distant, they directly impact flight options, routes, and prices. That Paris-New York flight you were considering? It exists because of carefully negotiated rights, and its price reflects the level of competition allowed under international agreements. 

Next time you’re booking an international flight, remember that you’re not just choosing between airlines – you’re participating in a global system shaped by decades of diplomatic negotiations and careful balancing of national interests. It’s a complex dance that, despite its complications, helps connect our world in ways that would have seemed impossible just a few generations ago. The post Air Service Agreements: The diplomatic dance that keeps aviation moving appeared first on AeroTime.

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