Draft decision on liberalisation of access to air transport market in Africa

UNITED NATIONS

sonat, council

ECA/RCID/CM-CIVAC/99/2 7 June 1999

English

Ordinal: English/French

ECONOMIC COMMISSION FOR AFRICA Conference of African ministers responsible

for civil aviation

Conference of African ministers responsible for civil aviation

Meeting of Experts 9 - 12 November 1999

Ministerial Conference 13- 14 November 1999

Square brackets [ ] placed before text indicate that no firm recommendations are made by the Drafting

Group.

1 The text of the Draft Articles was established by the Working Group for the preparation of the regional meeting of African ministers responsible for civil aviation.

TABLE OF CONTENTS General Explanatory Notes

Article 1 : Definitions

Article 2 : Scope of Application Article 3 : Grant of Rights Article 4 : Pricing and Tariffs Article 5 ; Capacity and Frequency Article 6 : Designation and Authorization Article 7 : Competition

Article 8 : Dispute Settlement Article 9 : Monitoring Body Article 10 Other Provisions

- Commercial Opportunities - Fair Competition

- Settlement of Dispute - Operational Flexibility - Consultation

- Review - Registration

Article 11: Final Clause

Appendices - Form of Declaration of commitments

Appendix l(a) - to be used by States that are not parties to the Abuja

Treaty or have not deposited their instruments of ratification and wish to be parties to the Decision.

Appendix l(b) - to be used by States that are not parties to the Abuja

Treaty or have not deposited their instruments of ratification and wish to limit the extent of their

commitment.

commitment

Appendix 2- Settlement of Dispute

Appendix 3 - Powers and Duties of the Sub-Committee on Air Transport

Appendix 4 - Criteria and Procedures for the Establishment of Scheduled air fares

Appendix 5 - Safety Net and Safeguard Measures

DRAFT

DECISION OF THE AFRICAN MINISTERS IN CHARGE OF CIVIL AVIATION ON AIR TRANSPORT LIBERALISATION IN AFRICA TO BE SUBMITTED TO THE ASSEMBLY OF HEADS OF STATES AND

GOVERNMENTS OF THE AFRICAN ECONOMIC COMMUNITY

WeT African Ministers in charge of civil aviation meeting in Yamoussoukro,_C6te

d'lvoire on 13 and 14 November 1999.

Having regard to the Treaty Establishing the African Economic Community, in particular Articles 61 relating to the integration of air transport and Article 10 relating to the authority of the Assembly of Heads of States and Governments to take decision;

Recalling the Yamoussoukro Declaration on a new African civil aviation policy adopted on 7 October 1988 whose primary objective was to create a conducive environment tor

the development of intra- African and international air services;

Recalling further the decision adopted in Mauritius in September 1994 for the

acceleration of the implementation of the Yamoussoukro Declaration.

Considering the need to harmonize air transport policies in order to eliminate non- physical barriers that hamper the development of air transport services in Africa;

Having regard to the recommendation of the 11th Conference of African Ministers responsible for Transport and Communications held in Cairo on 25 - 27 November

1997;

Mindful of the need to create a conducive environment for the provision of safe, reliable and affordable air transport services necessary for the smooth movement of persons, goods and services in Africa commensurate with the globalisation of the world

economies;

Considering the necessity to adopt measures with the aim of progressively establishing a liberalized intra-African aviation market over a maximum period of live years;

Mindful of the urgent need to introduce liberal provisions concerning traffic rights,

capacity, frequency and pricing to stimulate the development of the inter-African air

transport and result in improved services for users; and

Taking into account the different levels of air transport development, it is necessary to provide for special and transitional provisions for a period not exceeding five years before full liberalization is achieved to allow States Parties that so desire to be

exempted from the full application of this Decision;

HAVE ADOPTED THIS DECISION:

Article 1 Definitions

For purpose of this Decision:

"Abuja Treaty" means the Treaty Establishing the African Economic Community done at Abuja, Nigeria on the 3rd day of June, 1991 and which entired into force on mav

"Aeronautical Authority" means any governmental ministry, authority or person or body authorised to perform any function to which this Decision relates.

"Air Services and Airline" have the meaning respectively assigned to them in Article

96 of the Chicago Convention.

"Eligible Airline" means an air airline licensed to operate scheduled air service by a State Party which has its central administration and principle place of business in that State Party, the majority of whose shares are owned by nationals of such State or group of States or directly by such State or group of States and which is effectively controlled

by nationals of such State or group of States.

[Effective control means a relationship constituted by rights, contracts or any other means which, either separately or jointly, resulting in creating the possibility that a substantial part of the profits from the operations of the eligible designated airline are

retained by a State Party or its nationals.

"Capacity" means the number of seats offered to the general public on scheduled air

services over a given period.

"Capacity share" means the share of an Eligible Airline of a State Party expressed as a

percentage of the total capacity in a bilateral relationship with another State Party.

"Country of Origin" means the territory of a State Party where air transport starts.

"Decision" includes the Appendix hereto and any amendment to it or this Decision.

"Depository" means the Organization of the African Unity.

"State Party" means an country that is a party to the Abuja Treaty and such other African country, though not a party to the said Treaty, has declared its intention to be bound by this Decision in accordance with paragraph 2.2 of Article 2.

"Tariffs" means the prices to be paid for the carriage of passengers, baggage or cargo (excluding mail) on scheduled air services and the conditions under which these prices apply, including remuneration and conditions offered to travel agencies and other

auxiliary services.

"Third freedom traffic right" means the right of an Eligible Airline of one State Party to put down, in the territory of another State Party, passengers, freight and mail taken

up in the State Party in which it is licensed.

"Fourth freedom traffic right" means the right of an Eligible Airline of one State Party to take on, in the territory of another State Party, passengers, freight and mail for

off-loading in the State Party in which it is licensed.

"Fifth freedom traffic right" means the right of an Eligible Airline of one State Party to carry passengers, freight and mail between two State Parties other than the State

Party in which it is licensed.

"Scheduled Air Services" means a series of flight each possessing all of the following

characteristics"

(i) it passes through the air space over the territory of more than one State Party;

(ii) it is performed by aircraft for the transport of passengers and/or cargo for remuneration in such a manner that on each flight seats are available for individual purchase by members of the public from the airline or from its

authorized agents; and .

(iii) it is operated so as to serve traffic between the same two or more points either according to a published timetable or with flights so regular or frequent that they

constitute a recognizably systematic series.

Article 2 Scope of Application

2 1 This Decision establishes the arrangement among State Parties for the liberalization of scheduled and non-scheduled air transport services within Africa. This Decision supersedes and replaces such provisions in bilateral or multilateral air service

agreements concluded between State Parties to the extent that such provisions are

inconsistent with this Decision. In respect to matters not specifically covered herein this Decision shall be supplemented by such provisions in such bilateral or multilateral

air service agreements.

2.2 By a formal declaration made in writing to the Depository or the Secretariat of the Monitoring Body, as the case may be, through diplomatic channel at the time of adoption of this Decision or thereafter, a State Party shall have the option not to grant and receive the rights and obligations provided for in Articles 3 and 4 for a transitional period not exceeding five years.

2.3 State Party may on six months notice given to the Depository or the Secretariat of the Monitoring Body assume or resume such rights and obligations.

2.4 The exemption of a State Party from the application of this Decision terminates on the date provided for in the Declaration.

2.5 During the transitional period, no State Party shall be obligated to grant any rights hereunder to any State Party not bound thereby to the same extent in respect to such rights. With respect to any measure covered by this Decision, each State Party shall accord immediately and unconditionally to an Eligible airline of another State Party, treatment no less favourable than that it accords to an Eligible Airline of another State Party which has assumed similar commitments as that State Party provided however that the obligation of a State Party to accord most-favoured nation treatment shall be limited to the extent of the obligation assumed by that State Party and on the basis of the principle of reciprocity.

2.6 State Parties undertake not to enter into any obligations that would be more restrictive than this Decision. However, State Parties shall not be precluded from maintaining or developing on a bilateral basis or amongst themselves, arrangements more flexibility than those contained herein.

2.7 The Decision shall not be deemed to impose obligations on a State Party to grant

cabotage rights within the territory of the same State Party.

Article 3

Grant of Rights .

3.1 State Parties grant to each other the free exercise of the rights of the first,

second, third, fourth and fifth freedoms of the air on scheduled and non-scheduled

passenger, cargo and/or mail flights performed by an Eligible Airline to/from their respective territories.

3.2 Notwithstanding the provisions of paragraph 3.1 of this Article, a State Party

may in accordance with the provision of paragraph 2.2 of Article 2 above, by a

declaration made at the time of adoption of this Decision or thereafter, limit its

commitment in respect to fifth freedom rights for a period no longer than 5 years to the following:

(a) grant and receive unrestricted fifth freedom on sectors where there are no third

and fourth freedom operators; and

(b) grant and receive a minimum of 20 percent of the capacity offered on the route

concerned during any given period of time in respect to any sector where thud and

fourth freedom operators exist.

3.3 Cargo operation

State Parties shall grant full and unrestricted traffic rights to the designated

airline for the operation of all cargo services to/from their respective territories.

3.4 Non-Scheduled cargo and passengers flights

The State Parties shall grant unrestricted rights for non-scheduled passenger and

cargo flights performed by their respective airlines to/from their respective territories.

Article 4 Pricing and Tariffs

4 1 There shall be no approval required by the aeronautical authorities of State p'arties concerned for tariff to be charged by the designated airlines of State parties tor

the carriage of passenger, cargo and mail to and from their respective territories.

4 2 A State Party may suspend the effectiveness of any tariff filed with it in the event that such State Party proves that such tariffs violate the provisions of Article 8 hereot

relating to unfair competitive behaviour.

4 3 Notwithstanding the provisions of paragraph 4.1 above, a State Party may for a transitional period not exceeding five years, by a Declaration made in accordance with paragraph 2.2 of Article 2, require the maintenance of principles of the country ot

origin rules for the approval of tariff.

Article 5

Capacity and Frequency

5 1 There shall be no limit on the number of frequencies and capacity offered on air services linking any city pair combination between State Parties concerned. Each Eligible Airline will be allowed to mount and operate such capacity and frequency as such airline deems appropriate. Consistent with this right, no State Party shall unilaterally limit the volume of traffic or the aircraft type to be operated.

5 2 Without prejudice to the provisions of paragraph 5.1 above, a State Party

concerned may refuse to authorise the offer of additional capacity by a designated

airline if it proves that such additional capacity, is not in compliance with the provisions of Article 7 relating to unfair competitive behaviour.

Article 6

Designation and Authorization

6.1 Each State Party shall have the right to designate more than one airline on a city pair basis to operate the intra-Africa air transport services in accordance with this Decision. Designation shall be notified to the other State Party in writing through diplomatic channel.

6.2 A State Party may also designate an Eligible Airline from another State Party to operate air services on its behalf provided that such State Party does not itself operate air services into that other State Party.

6.3 A State Party shall have the right to designate a joint air transport operating

organization which joint air transport operating organization shall be accepted by the other State Parties.

6.4 On receipt of such designation, the other State Party shall, in accordance with

its national laws and without delay, grant appropriate authorization and permissions to

the airline designated by the other State Party to operate the services provided that such State Party is satisfied that:

(a) the designate airline qualifies as an "Eligible Airline"; or

(b) the airline has been licensed by the designating State Party to operate scheduled services and meets the operating criteria set forth in paragraph 6.8 below.

6.5 If either State Party is not satisfied that a designated airline operating air

services meets the above condition, it may request consultations.

6.6 An Eligible Airline that has been designated and authorized can start and continue operating the agreed services. Each State Party has the right to withdraw the

designation of an Eligible Airline and to designate another airline or airlines in writing

through diplomatic channel.

6.7 Authorizations for the performance of non-scheduled air transport services by

Eligible Airlines of the State Parties shall automatically be granted by the respective

competent authorities, provided that an application has been submitted to the

appropriate authority, accompanied by the operating certificates of the airline's

country of nationality and the corresponding insurance policies or a certification issued

by the competent national civil aviation authorities to that effect.

6.8 An Eligible Airline, designated in accordance with this paragraph 6.2, 6.3 and 6.,4 above shall, if so requested by the aeronautical authorities of the other State Party

concerned, provide evidence that it has:

a) the aircraft, including aircraft on long term wet-lease, to provide the services;

b) adequate insurance coverage against its liability to passengers and third parties,

and

c) the ability to maintain operational and safety standards in accordance with

international standards generally accepted in the industry.

Article 7 Competition Rules

7.1 State Parties shall allow fair and equal opportunity for the designated airlines to compete in providing air transport services to and from their respective territories.

7.2 For purposes of this Decision, State Parties agree that the following constitute unfair competitive behaviour:

a) charging fares and rates on routes at levels which are, in aggregate, insufficient to cover the costs of providing the services to which they relate;

b) the addition of excessive capacity or frequency of services on a given sector;

When the behaviour referred to in paragraphs (a) and (b) above is:

• sustained rather than temporary; or

• have a serious economic effect on, or cause significant economic damage to another carrier; or

• reflect an apparent intent or have the probable effect, of crippling, excluding or driving another airline out of the market.

Article 8

Settlement of Dispute

8.1 If any dispute arises between States Parties relating to the interpretation or application of this Decision, the States Parties concerned shall in the first place endeavour to settle the dispute by negotiation.

8.2 If the State Parties concerned fail to reach a settlement of the dispute by

negotiation within 21 days, either party may submit the dispute for arbitration in accordance with the arbitration procedures set forth in Appendix 2 hereof.

Article 9 Monitoring Body

9.1 Pursuant to paragraph 4 of Article 25 of the Abuja Treaty, a Sub-Committee on Air Transport is hereby established which shall be responsible for the overall supervision, follow-up and implementation of this Decision.

9.2 To assist the Sub-Committee in the follow-up of the implementation of this

Decision a Monitoring Body composed of representatives of the ECA, OAU, AFCAC

and AFRAA assisted, as the case may be, by representatives of sub-regional

organizations, is hereby established.

9.3. Secretariat services required by the Monitoring Body shall be provided [by the

ECA]. The duties and responsibilities of the Secretariat of the Monitoring Body are set

forth in Appendix 3 hereof.

Article 10

Miscellaneous Provisions 10.1 Commercial Opportunities

10.1.1 The designated airline of each State Party shall have the right to establish

offices in the territory of the other State Party for the promotion and sale of air

transport services.

10.1.2 Each designated airline on demand, and in accordance with applicable foreign exchange regulations, have the right to convert and remit to the country of its choice, all local revenues from the sale of air transport services and associated activities1 directly linked to air transport in excess of sums locally disbursed, with conversion and remittance permitted promptly without restrictions, discrimination taxation2 in respect thereof in accordance with the applicable foreign exchange rates.

The term "associated activities directly linked to air transport" includes activities closely related to the provision of air services, such as a bus service between the airport and hotels, and where permitted, the provision of ground handling services to other air carriers. The term would not include activities such as revenue from hotels car rentals, investments in local real estate or stocks and bonds, which will presumably be subject to a different

conversion and remittance regime.

The term "without taxation" refers to taxation on the conversion and remittance, not to national income tax which is better dealt with on the basis of a double taxation treaty, or some other arrangement in which the income from the sale of air transportation by foreign airlines is exempted from national income tax on a reciprocal basis However, in the absence of a double taxation treaty or other arrangement, States could use this clause to exempt reciprocally air carriers from foreign income taxes, but should make their intention clear in this regard

10.1.3 The designated airline shall be permitted to pay for its local expenses including purchases of fuel, in local currency.

10.1.4 The designated airline of each State Party shall be entitled, in accordance with the laws and regulation of the other State Party relating to entry, residence and employment, to bring in the territories employees who perform managerial, commercial, technical, operational and other specialist duties which are required for the provision of air transport services.

10.2 Operational Flexibility

In operating scheduled services, each designated airline may, on any or all flights and at is option:

(a) operate flights in either or both directions;

(b) be permitted by the State Parties concerned to combine air services and use the same flight number.

(c) serve intermediate, and beyond points and points in the territories of the State Parties on the routes in any combination and in any order, and

(d) omit stops at any point or points, provided that the service commences at a point in the territory of the State Party designating the airline.

10.3 Cooperative Arrangements

In operating or holding out the authorized services on the agreed routes, a designated airline of one State Party may enter into cooperative marketing arrangements such as blocked-space, code-sharing, franchising or leasing arrangement, with:

(a) an airline or airlines of either State Party, and

(b) an airline or airlines of another African country or a State Party, provided that such African country and such other State Party authorizes or allows similar arrangements between the airlines of the other State Party and other airlines on services to, from and via such third country provided that in approval all such arrangements, a State party shall take into account the interest of consumers and the need to ensure fair and equitable competition by and between the designated airlines.

10.4 Consultation

A State Party may, at any time, request consultation with another State Party (ies) in respect to the interpretation or application of this Decision. Such consultation shall begin at the earliest possible date but not later than 30 days from the date the other Party receives the request.

10.5 Review

This Decision shall be reviewed periodically every three year or earlier if requested by two-third of the State Parties. In such reviews, the Monitoring Body shall propose measures to eliminate gradually existing restrictions.

10.6 Registration

This Decision shall be registered by the Depository and/or monitoring Body with the International Civil Aviation Organization.

Article 11 Final Provisions 11.1 Entry into Force

11.1.1 In accordance with Article 10 of the Abuja Treaty, this Decision shall be automatically enforceable thirty (30) days after the date of its signature by the Chairman of the Assembly at which this Decision was adopted in respect of States that are parties to the Abuja Treaty.

11.1.2 In respect of African States that are not parties to the Abuja Treaty, this Decision shall enter into force 30 days after the date on which such State has communicated its declaration of intention to be bound by this Decision in the form of Appendix l(a), l(b) and l(c) to the Monitoring Body which shall in turn transmit the declaration to the Depository.

11.1.3 The Depository shall inform all States Parties of:

(a) each Declaration made in accordance with the Decision;

(b) date of the deposit and the date of effectiveness of this Decision in respect to that State;

(c) the withdrawal of any Declaration;

(d) the withdrawal from this Decision and the date on which it takes effect, and

(e) the admission of new States.

11.2. Withdrawal

112 1 A State Party may withdraw from this Decision by a formal notification in writing addressed to the Depository of its intention to do so or in the circumstances contemplated by Article 104 of the Abuja Treaty. The Depository shall within 30 days of receipt of the notification of withdrawal notify the other State Parties.

112 2 Notwithstanding the notice of withdrawal, this Decision shall continue to be in force for one year after the date of receipt of the notification by the Depository.

11.3 Appendices

The appendices attached hereto form part of this Decision and any reference to this Decision shall include a reference to the applicable Appendix.

*****

APPENDICES

Appendix 1 - Form of Declaration of commitment

Appendix l(a) - to be used by States that are not parties to the Abuja Treaty or have not deposited their instruments of ratification and wish to be parties to the Decision.

Appendix l(b) - to be used by States that are not parties to the Abuja Treaty or have not deposited their instruments of ratification and wish to limit the extent of their commitment.

Appendix l(c) - to be used by States that are parties to the Abuja Treaty who wish to limit the extent of their commitment

Appendix 2 - Settlement of Dispute

Appendix 3 - Powers and Duties of the Sub-Committee on Air Transport

Appendix 4 - Criteria and Procedures for the Establishment of

Scheduled air fares

Appendix 5 - Safety Net and Safeguard Measures

****

APPENDIX l(a) [Letter Head]

Form of Declaration of Commitment3

Date

[The Secretary General [The Monitoring Body

Organization of African Unity Economic Commission for Africa

P. O. Box 3243 P- O. Box 3001

Addis Ababa] Addis Ababa]

Subject: Declaration of Commitment

We, the undersigned Government, have the honor to refer to the Decision

N° ... adopted by the Assembly of Heads of States and Governments of the African Economic Community on [insert date of Decision] covering [ insert official title of

Decision].

By this Declaration of commitment, we solemnly declare to be bound by

the Decision in its entirety and undertake to fully implement the said Decision to the

fullest extent as if we were a party thereto.

We further inform you that we have taken all the necessary administrative and constitutional measures to give full effect to the Decision and this Declaration.

Our rights and obligations under the said Decision shall be effective 30 days after the receipt by you of this Declaration.

For the Government of [Insert name]

By:[ signature ]

Its: [ [insert title of signatory ]

3 This form is to be used by States that are not parties to the Abuja Treaty or have not deposited their instruments of ratification and wish to be parties to the Decision.

APPENDIX l(b) [Letter Head]

Form of Declaration of Commitment4

Date

[The Secretary General [The Monitoring Body

Organization of African Unity Economic Commission for Africa

P. O. Box 3243 P. o. Box 3001

Addis Ababa] Addis Ababa]

Subject: Declaration of Commitment

We, the undersigned Government, have the honor to refer to the Decision N° ... adopted by the Assembly of Heads of States and Governments of the African Economic Community on [insert date of Decision] covering [ insert official title of

Decision].

By this Declaration of commitment, we solemnly declare to be bound by the Decision in its entirety and undertake to fully implement the said Decision to the fullest extent as if we were a party thereto, except to the extent provided below for a maximum transitional period of [ insert period but not to exceed five years from date

of declaration]:

1. Grant of traffic Rights

1.1 In accordance with the provisions of paragraph 3.2 of Article 3 of the said Decision, we commit ourselves to grant during the transitional period fifth freedom traffic to the designated airline of State Parties on the following basis:

(a) to grant and receive unrestricted fifth freedom on sectors where there are no

third and fourth freedom operators; and

(b) to grant and receive at least 20 percent [or such other higher percentage] of the capacity offered on any point within our territory to any point or points in the territory of another State Party in respect to any sector where third and fourth freedom operators

exist.

4 This form is to be used by States that are not parties to the Abuja Treaty or have not deposited their

instruments of ratification and wish to limit the extent of their commitment.

2. Pricing and Tariffs

2 1 In accordance with the provisions of paragraph 4.3 of Article 4 of the said Decision, we elect to apply during such transitional period in our relation with other State Parties the principle of the country of origin rules for the approval of tariff to be charged by the designated airlines of State Parties for the carriage of passenger, cargo

and mail.

2 2 We confirm that after [insert cutoff date], there shall be no approval for tariff to be charged by the designated airlines of State parties for the carnage of passenger,

cargo and mail.

3. All other provisions of the Decision shall remain valid and binding on us.

4 This Declaration shall terminate at the latest on [insert date] and thereafter the undersigned Government shall be bound to the fullest extent by the terms of this

Decision.

5 In respect to matters covered by the foregoing paragraphs, we confirm our understanding that during the transitional period, the obligations of other State Parties to grant any rights to us will be strictly equivalent to our commitment hereunder.

6 We further inform you that we have taken all the necessary administrative and constitutional measures to give full effect to the Decision and this Declaration.

7. Our rights and obligations under the said Decision shall be effective 30 days

after the receipt by you of this Declaration.

For the Government of [Insert name)

By:[ signature 7

Its: [ [insert title of signatory ]

APPENDIX l(c) [Letter Head]

Form of Declaration of Commitment5

Date:

The Secretary General

Organization of African Unity P. O. Box 3243

Addis Ababa

Subject: Declaration of Commitment

I have the honor to refer to the Decision N° ... adopted by the Assembly of Heads of States and Governments of the African Economic Community on [ insert date of Decision] covering [ insert official title of Decision]. Pursuant to paragraph 2.2 of Article 2 of the said Decision, I have the further honor to inform you that the undersigned Government has opted to limit its commitment for a maximum transitional period of [ insert period but not to exceed five years from date of declaration] as

follows:

1- Grant of traffic Rights

1.1 In accordance with the provisions of paragraph 3.2 of Article 3 of the said Decision, we commit ourselves to grant during the transitional period fifth freedom

traffic to the designated airline of State Parties on the following basis:

(a) to grant and receive unrestricted fifth freedom on sectors where there are no

third and fourth freedom operators; and '

(b) to grant and receive a minimum of 20 percent [or such other higher percentage]

of the capacity offered on the route concerned during any given period of time in

respect to any sector where third and fourth freedom operators exist.

2. Pricing / Tariffs

2.1 In accordance with the provisions of paragraph 4.3 of Article 4 of the said Decision, we elect to apply during such transitional period in our relation with other

5 This form is to be used by States that are parties to the Abuja Treaty who wish to limit the extent of

their commitment

State Parties the principle of the country of origin rules for the approval of tariff to be

charged by the designated airlines of State Parties for the carriage of passenger, cargo and mail.

2.2 We confirm that after [insert cutoff date], there shall be no approval for tariff

to be charged by the designated airlines of State parties for the carriage of passenger,

cargo and mail.

3. All other provisions of the Decision shall remain valid and binding on us.

4. This Declaration shall terminate at the latest on [insert date] and thereafter the undersigned Government shall be bound to the fullest extent by the terms of this

Decision.

5. In respect to matters covered by the foregoing paragraphs, we confirm our understanding that during the transitional period, the obligations of other State Parties to grant any rights to us will be strictly equivalent to our commitment hereunder.

For the Government of [Insert name]

By:[ signature ]

Its:[ [insert title of signatory ]

APPENDIX 2 ARBITRATION PROCEDURE

1. Arbitration shall be by a tribunal of three arbitrators who shall be constituted as

in the following manner:

(a) Within 30 days after the receipt of a request for arbitration, each States Party shall appoint one arbitrator. Within 60 days after the appointment of the second arbitrator, the two arbitrators shall by agreement appoint a national of a third

state as the third arbitrator, who shall act as President of the tribunal;

(b) If either State Party fails to name an arbitrator, or if the third arbitrator is not appointed in accordance with sub-paragraph (a) of this paragraph, either State Party may request the [Secretary General of the OAUJ [the Monitoring Body] to

appoint the necessary arbitrator or arbitrators within 30 days.

2. Except as hereinafter provided or as otherwise agreed by the parties, the tribunal shall determine the limits of its jurisdiction and shall establish its own procedural rules.

The tribunal, once formed, may recommend interim relief measures pending its final determination. At the direction of the tribunal or at the request of either of the State Parties, a conference to determine the precise issues to be arbitrated and the specific procedures to be followed shall be held not later than 15 days after the tribunal is fully

constituted.

3. Except as otherwise agreed or as directed by the tribunal, each party shall submit a memorandum within 45 days of the time the tribunal is fully constituted Each party may submit replies shall within 60 days of submission of the memorandum of the other party. The tribunal shall hold a hearing at the request of either party or on its

own initiative within 15 days after replies are due.

4. The tribunal shall attempt to render a written decision within 30 days after completion of the hearing or, if no hearing is held, after the date both replies are

submitted. The decision shall be taken by majority vote.

5. The States Parties concerned may submit requests for clarification of the decision within 15 days after it is rendered and any clarification given shall be issued

within 15 days of such request.

6. The expenses of the tribunal including the fees and expenses of the arbitrators

shall be shared equally by the parties.

7. The decisions of the tribunal shall not be open to appeal and must be complied

with within the time periods established therein. If a State Party does not comply with

them, the other State Parties can adopt measures restricting the operation of the airlines of the State Party in question or other measures aimed at achieving compliance.

APPENDIX 3 DUTIES AND RESPONSIBILITIES OF THE MONITORING BODY 1. Powers of the Monitoring Body

The Monitoring Body, as established under Article 9 of the Decision, shall have the following powers to:

a) Receive complaints and state its view on any disputes resulting from the application and/or interpretation of this Decision and recommend solution to the

dispute;

b) On request of State party state its view on predatory and unfair competition

practices;

c) analyze and plan for the periodic review of this Decision; and present report to

appropriate meetings at experts and ministerial levels.

d) request the competent national and international bodies, for the support required

to carry out studies, seminars, work programs and other measures aimed at enhancing and updating air transport services;

e) constitute if necessary working groups for the implementation of this Decision;

f) receive Declarations made in accordance with the Decision, any withdrawal of

any Declaration and other complaints and requests and shall inform the

Depository accordingly.

g) Organize if necessary special meeting of ministers in charge of civil aviation,

h) prepare for adoption by the States Party necessary annexes

i) Provide technical assistance on request, to sub regional organization and States

arty in the implementation of the Decision.

2. Seat of the Committee

The seat of the Monitoring Body shall be within the ECA.

APPENDIX 4

CRITERIA AND PROCEDURES FOR THE ESTALISHMENT OF TARIFFS 1. This Annex establishes the criteria and procedures to be applied with respect to the establishment of scheduled air fares on any route between an airport in one State Party and an airport in another State Party.

Criteria

2. State Parties shall approve air fares established at reasonable levels, taking into account all relevant factors in particular the operational cost, types of services, reasonable profit, the competitive market situation, including the fares of the other air carriers operating on the route, and the need to prevent predatory pricing. However, the fact that a proposed air fare is lower than that offered by another air airline operating on the route shall not be sufficient reason for withholding approval. These tariffs shall, if possible, be agreed by the applicant Eligible Airline and wherever possible through the use of procedures of the international or regional tariff co ordination mechanism.

Procedure

3. Subject to paragraphs 7 below, any proposed tariff to be charged for carriage between the territories of the States Parties shall not require approval by the aeronautical authorities the State Parties concerned.

4. An Eligible Airline shall file its tariff with both aeronautical authorities of States Parties concerned at least 30 days before its proposed effective date. The tariffs shall be filed individually or following consultation with other air carriers.

5. Aeronautical authorities shall not require air carriers to submit their fares for approval or filing more than 60 days before they come into effect.

6. Notwithstanding the foregoing provisions, the aeronautical authorities of the States Parties concerned shall not require the filing of tariffs for the carriage of cargo between parties in their territories. Such tariffs will take effect when the airlines do decide.

Country of Origin Rule

7. Notwithstanding the provisions of paragraph 3 above, Each State Party that has made a declaration in accordance with paragraph 2.2 shall have the right to approve or

disapprove tariffs for one-way or round-trip carriage originating in its territory to points in the territory of other State Parties that commences in its own territory.

8. An air fare, once approved, shall remain in force until it expires or is replaced.

It may however be prolonged after its original date of expiry for a period nor exceeding 12 months.

9. A State Party shall permit an air airline of another State Party operating a direct or indirect scheduled air service, on giving due notice, to match an air fare already approved between the same city pairs.

10. Only third- and fourth-freedom air carriers shall be permitted toact as price leaders.

11. Tariffs shall be filed subject to approval by the civil aviation authorities of the State Parties concerned. To this end an Eligible Airline shalljftle its fares with both aeronautical authorities of States Parties concerned at least 30 days before its proposed effective date. The tariffs shall be filed individually or following consultation with other air carriers.

12. This Decision shall not prevent Member Stares from concluding arrangements that are more flexible than the provisions of herein provided or from maintaining such arrangements in force.

Dispute Settlement

13. In the event that a tariff that has come into effect in accordance with the above provision is considered by the aeronautical authorities of one State Party to be causing serious damage to another airline, the aeronautical authorities may request consultation.

14. When a State Party concerned (the first State) decides in conformity with the above Article, not to approve a scheduled air fare, it shall inform the other State concerted (the second State) in writing within 21 days of the fare being filed, stating its

reasons.

15. If the second State disagrees with the decision of the first State, it shall so notify the first State within seven days of being informed, providing the information on which its decision is based and requests consultations. Each State Party shall supply, all relevant information requested by the other. Either of the State Parties concerned may request that [the Secretary general] [Monitoring Body] be represented at the consultations.

16. If the first State has insufficient information to reach a decision on the fare, it may request the second State to enter into consultations before the expiry of the Zlday period prescribed in paragraph 1.

17. Consultations shall be completed within 21 days of being requested. If disagreements still persist, the matter shall be put to arbitration at the request of either of the States concerned. The two State Parties may agree to prolong the consultations or to proceed directly to arbitration without consultations.

18. Arbitration shall be carried out by a panel of three arbitrators unless the State Parties concerned agree on a single arbitrator. The State Parties concerned shall each nominate one member of the panel and seek to agree on the third member (who shall be a national of a third State Party and act as panel chairman). Alternatively they may nominate a single arbitrator. The appointment of the panel shall be completed within

seven days. A panel's decisions shall be reached by a majority of votes.

19. In the event of failure by either State Party concerned to nominate a member of the panel or to agree on the appointment of a third member, the [the Secretary general]

[Monitoring Body] shall be informed forthwith who shall complete the panel within three days.

20. The arbitration shall be completed within a period of 21 days of completion of the panel or nomination of the single arbitrator. The State Parties concerned may, however, agree to extend this period. The [Secretary general] [Monitoring Body] shall have right to attend as an observer. The arbitrators shall make clear the extent to which the award is based on the criteria in paragraph 2 above.

21. The arbitration award shall be notified immediately to [the Secretary general]

[Monitoring Body].

22. In the absence of any decision within this period, the award shall be deemed confirmed by the tribunal. An award so deemed confirmed shall become binding on the States concerned.

23. During the consultation and arbitration procedure, the relevant existing air fares shall continue in force until any new fare has entered into force.

sjs ij: ^; sfe s{e

APPENDIX 5

SAFETY NET AND SAFEGAURD MEASURES (JCAO Version)

Whereas it is necessary to adopt measures for the elimination of abuses that reduce the participation of the designated airline of a State Party on a country - market pair;

Whereas the establishment of mechanism to ensure a minimum level of participation to avoid a rapid and significant decline of the capacity share offered in the market by a designated airline of a State Party or to prevent uncompetitive behaviour is desirable for a and healthy competition;

The State Parties agree on the following additional measures:

1. Safety net

1.1 Each State Party will have the right to impose a capacity freeze as an extraordinary measure in the event a rapid and significant decline in that party's participation in a country-pair market.

1.2 Such capacity freeze will last for a maximum finite period of [one year,

renewable once].

1.3 State Parties concerned shall closely monitor to enable them to react jointly to relevant changes in the situation and to deploy mutual efforts to seek, at the earliest, possible the correction of the problem and removal of the freeze.

2. Safeguard measures

2.1 Each party would agree that, in order to maintain sustained competition, no designated airline shall engage in:

a) the introduction by a designated airline into a market of an excessively low price which is likely to have significant adverse impacts on a competing designated airline or airlines (price dumping);

b) the introduction by a designated airline into a market of an excessively low price which is likely to be perceived as specifically designed, targeted and intended to keep out a new entrant airline or to drive out a weaker incumbent (price predation);

c) the introduction by a designated airline or airlines into a market of a price increase which is unreasonably high because of a lack of price competition, or abuse of a dominant position, or collusion (inordinately

high pricing);

d) the introduction by a designated airline or airlines into a market of a price which is unduly or unjustly discriminatory (price discrimination);

e) the introduction into a market of capacity far in excess of anticipated

demand which is likely to have significant adverse impacts upon a competing designated airline or airlines (capacity dumping);

f) the introduction by a designated airline into a market of capacity which is likely to be perceived as specifically designed, targeted and intended to drive out a weaker incumbent (capacity predation);

g) the intentional under supply by a designated airline or airlines of adequate capacity in a market, which is contrary to agreed objectives of a healthy and sustained competition (capacity insufficiency); or

h) the allocation of capacity by a designated airline or airlines between components or segments of a market in a manner which is unduly discriminatory (capacity discrimination).

3. Dispute Resolution

In the event of disagreement between the State Parties concerned as to whether or not a proposed or actual pricing or capacity action by a designated airline constitutes a practice proscribed by this Appendix, the State Parties shall immediately consult within 15 days. If they agree that the action is contrary to this Appendix, either of the State Parties concerned shall act to end it promptly. If they disagree, either State Parties concerned shall refer the disagreement to the dispute resolution mechanism set forth in Appendix 2 or Appendix 3 as applicable, provided, however, that during such

arbitration proceedings:

a) the complainant State Party shall have the option to impose a temporary freeze or temporary reversion to the status quo ante as appropriate;

b) the tribunal shall, if so requested by either of the State Parties concerned to rule first on the need for and continuance of any freeze or reversion to the status quo ante; and damages could be awarded against the complainant State Party when any such freeze or reversion is found to be unjustified.