4. Three Air Service Agreements

Background

4.1
The proposed treaty actions being considered here are three air services agreements:
Agreement between the Government of Australia and the Government of Hungary relating to Air Services (the Hungary Agreement);
Agreement between the Government of Australia and the Government of the State of Israel relating to Air Services (the Israel Agreement); and
Agreement between the Government of Australia and the Government of the Republic of Mauritius relating to Air Services (the Mauritius Agreement).
4.2
These are being considered together as the issues concerned are similar.

Air services agreements

4.3
The proposed agreements are being made under the Convention on International Civil Aviation 1944, generally referred to as the Chicago Convention.1
4.4
According to the Department of Infrastructure and Regional Development:
Under the framework of the Chicago Convention of 1944, which provides an overarching civil aviation framework, international airlines cannot serve a market between two countries without an air services agreement in place.2
4.5
Each agreement allows:
…the ‘designated airlines’ of each country to operate scheduled air services carrying passengers, baggage, cargo and mail between the two countries on specified routes in accordance with the provisions of the proposed Agreement.3
4.6
To facilitate these services, the proposed agreements also include reciprocal provisions on a range of aviation-related matters such as safety, security, competition laws, customs regulation and the commercial aspects of airline operations, including the ability to establish offices in the territory of each Contracting Party and to sell fares to the public.4
4.7
The proposed agreements allow the Parties to designate any number of airlines to operate the agreed services.5
4.8
Either Party can refuse authority for an airline to operate or impose conditions as necessary.6
4.9
Each Party can designate airlines that are established in that country.7
4.10
Designated airlines are entitled to:
fly across the territory of a Party; and
operate on routes specified in the relevant Annex for the purposes of discharging and taking on passengers, cargo and mail.8
4.11
Another common provision confirms that the domestic laws of each Party applies to designated airlines when they are entering, within or leaving the territory of the Party.9
4.12
Parties to recognise the certificates of airworthiness, competency and licences issued by the other Party, provided the standards under which those certificates, licences and competencies are issued are in accordance with the standards established by the International Civil Aviation Organization (ICAO).10
4.13
Parties can request consultation at any time concerning safety standards maintained by the other Contracting Party.11
4.14
Each Party can arrange within its territory an inspection of the aircraft of the other Party to:
verify the validity of the relevant aircraft documents;
the licencing of its crews; and
to ensure the aircraft equipment and conditions of the aircraft conform to the established standards.12
4.15
Both Parties are required to protect the security of civil aviation against acts of unlawful interference and, in particular, to act in conformity with multilateral conventions relating to aviation security.13
4.16
In relation to aviation security, Parties are obliged to notify the other Party of any differences between its national regulations and the standards established by the ICAO.14
4.17
Parties must ensure adequate measures are applied to protecting aircraft, inspecting passengers, crew, carry on and stowed baggage, cargo and aircraft stores prior to and during boarding or loading.15
4.18
A Party can on request conduct a security assessment in the other Party’s territory.16
4.19
Each Party must ‘use its best efforts’ to encourage those responsible for the provision of airport, airport environmental, air navigation and aviation security facilities and services to levy charges on designated airlines only on the basis that they are reasonable, non-discriminatory, and equitably apportioned.17
4.20
Each agreement lists the equipment and stores used by designated airlines that are not to be subject to import duties or other customs restrictions when they are moved to the other Party.18
4.21
Each designated airline is permitted to set its own fares without government intervention.19
4.22
Each of the designated airlines must have a fair and equal opportunity to operate services under each agreement.20
4.23
Each agreement provides the airlines of each Party with a framework for conducting business. The framework allows airlines to:
employ staff;
sell air transport services to the public;
perform ground handling;
use the services and personnel of any organisation, company or airline working in the Contracting Party;
freely convert and move currency;
enter into code sharing arrangements with any other authorised airline;
utilise leased aircraft to conduct their services; and
access airports and allocation slots on a non-discriminatory basis.21
4.24
Each agreement confirms that each Party’s competition laws apply to the operation of airlines within their respective jurisdictions.22
4.25
The proposed agreements will be implemented through existing legislation, including:
the Air Navigation Act 1920;
the Civil Aviation Act 1988; and
the International Air Services Commission Act 1992.23

The Agreement with Hungary

4.26
This is the first treaty level air services relationship between Australia and Hungary, and the text is based on Australia’s model air services agreement.24
4.27
A Memorandum of Understanding (MOU), which applies the provisions of the proposed Agreement with Hungary, has been in existence since 2006.25
4.28
Airlines from both countries have utilised the arrangements in the Hungarian MOU. Airlines have used code sharing arrangements with each other and with other airlines of countries to provide air services on routes between Australia and Hungary.26
4.29
The Agreement with Hungary differs from the common provisions in one aspect: designated Hungarian airlines are permitted to have their principal place of business in any of the member states of the European Union (EU).27
4.30
During the public hearing on 16 October 2017, the Committee noted the time that had elapsed since the Hungarian MOU had come into force and the tabling of the Agreement with Hungary.
4.31
The Department of Infrastructure and Regional Development explained that:
In the case of Hungary, that was negotiated, I think, back in 2006. But, following that, Hungary wanted to make further amendments to the text. At the time, we were in negotiations with the EU, and so the EU wouldn't allow Hungary to then bilaterally negotiate with Australia, so we had to wait.
Those negotiations with the European Commission have … stalled for the moment, and the European Commission has now allowed member states to go back and do bilateral discussions. So that is why we're finalising this one at the moment.28

The Agreement with Israel

4.32
The MOU preceding the Israeli Agreement came into force in December 2016.29 Since the MOU came into force, Qantas and El Al Israel Airlines have entered into a codeshare arrangement to provide air services on routes between Australia and Israel.30
4.33
The Agreement with Israel is based on a negotiating text provided by Israel and negotiated to be as close to Australia’s model air services agreement as possible.31
4.34
The Agreement with Israel contains provisions not contained in the other agreements. It is based on a text provided by Israel and negotiated to align with Australia’s model air services agreement as closely as possible.32
4.35
In particular, articles relating to security are differently worded to Australia’s model air services agreement.33
4.36
These articles reflect an Israeli Government practice of requiring more thorough security arrangements on flights to and from Israel. In practice, this usually means a separate, secure, customs boundary and transit areas for passengers, amongst other ground handling changes in relation to who has access to aircraft flying to and from Israel.
4.37
The Department of Infrastructure and Regional Development advised the Committee that, should such additional security arrangements be required, the cost would be borne by the relevant airline. However, at present, the additional security arrangements for flights to Israel are applied at stop over locations between Australia and Israel, notably in Bangkok, Hong Kong and Johannesburg.34

Agreement with Mauritius

4.38
The MOU preceding the Agreement with Mauritius came into force in 2007.35
4.39
Like the Agreement with Hungary, the Agreement with Mauritius is based on Australia’s model air services agreement text.36
4.40
Of the three agreements being considered here, the Agreement with Mauritius is the only renewal:
The proposed agreement with Mauritius will replace an earlier agreement signed in 1995. The new agreement includes a number of modern provisions which strengthen the safety and security framework and also provide greater commercial flexibility to airlines.37

Committee issues

4.41
When considering past air services agreements, the Committee has focussed on:
whether the Department of Infrastructure and Regional Development has considered the notifications to the ICAO by the other Parties to air services agreements. Article 38 of the Chicago Convention requires each Party to notify the ICAO when it finds it impractical to comply in all respects with the standards and practices issued by the ICAO. Such notifications may include circumstances in which a Party exceeds the standards, or cannot meet the standards;38 and
whether the Department of Infrastructure and Regional Development has consulted with the Commonwealth Civil Aviation Safety Authority (CASA) on any safety issues that might be relevant to the air services agreement.39
4.42
When these matters were first raised in May 2014, the Committee considered that the Department’s failure to take these steps in future would be ‘imprudent.’40
4.43
At the public hearing on 16 October 2017, the Department of Infrastructure and Regional Development reported that:
Air Mauritius are the only ones who have direct flights to Australia, and CASA has undertaken a number of ramp inspections and found them to be compliant.41
4.44
In a submission, the Department advised that all three countries under scrutiny here had passed recent audits under the ICAO Universal Safety Oversight Audit Program.42
4.45
Nevertheless, the Committee reiterates that in future, National Interest Analyses (NIAs) accompanying air services agreements should indicate whether the Department has considered any relevant notifications to the ICAO by the other Parties to the agreements. In addition, the Department should ensure that it has consulted with CASA on any safety issues that might be relevant to the air services agreements.
4.46
The Committee recommends that binding treaty action be taken in relation to these air services agreements.

Recommendation 3

4.47
The Committee supports the Agreement between the Government of Australia and the Government of Hungary relating to Air Services and recommends that binding treaty action be taken.

Recommendation 4

4.48
The Committee supports the Agreement between the Government of Australia and the Government of the State of Israel relating to Air Services and recommends that binding treaty action be taken.

Recommendation 5

4.49
The Committee supports the Agreement between the Government of Australia and the Government of the Republic of Mauritius relating to Air Services and recommends that binding treaty action be taken.

  • 1
    National Interest Analysis [2017] ATNIA 22 with attachment on consultation Agreement between the Government of Australia and the Government of Hungary relating to Air Services (Budapest, 23 September 2016) [2017] ATNIF 26, hereafter referred to as the Hungary NIA, para 9.
  • 2
    Ms Ann Redmond, Acting General Manager, Aviation Industry Policy, Department of Infrastructure and Regional Development, Committee Hansard, Canberra, 16 October 2017, p. 7.
  • 3
    See for example the Hungary NIA, para 10.
  • 4
    National Interest Analysis [2017] ATNIA 21 with attachment on consultation Agreement between the Government of Australia and the Government of the State of Israel relating to Air Services (Sydney, 23 February 2017) [2017] ATNIF 25, hereafter referred to as the Israel NIA, para 10.
  • 5
    National Interest Analysis [2017] ATNIA 23 with attachment on consultation Agreement between the Government of Australia and the Government of the Republic of Mauritius relating to Air Services (Port Louis, 4 February 2016) [2017] ATNIF 75, hereafter referred to as the Mauritius NIA, para 10.
  • 6
    Hungary NIA, para 11.
  • 7
    Israel NIA, para 12.
  • 8
    Mauritius NIA, para 11.
  • 9
    Hungary NIA, para 13.
  • 10
    Israel NIA, para 17.
  • 11
    Mauritius NIA, para 13.
  • 12
    Hungary NIA, para 14.
  • 13
    Israel NIA, para 18.
  • 14
    Mauritius NIA, para 14.
  • 15
    Hungary NIA, para 15.
  • 16
    Hungary NIA, para 15.
  • 17
    Israel NIA, para 19.
  • 18
    Mauritius NIA, para 17.
  • 19
    Hungary NIA, para 19.
  • 20
    Israel NIA, para 21.
  • 21
    Mauritius NIA, para 21.
  • 22
    Hungary NIA, para 22.
  • 23
    Hungary NIA, para 27.
  • 24
    Hungary NIA, para 3.
  • 25
    Hungary NIA, para 4.
  • 26
    Hungary NIA, para 5.
  • 27
    Hungary NIA, para 11.
  • 28
    Ms Redmond, Department of Infrastructure and Regional Development, Committee Hansard, Canberra, 16 October 2017, p. 8.
  • 29
    Israel NIA, para 4.
  • 30
    Israel NIA, para 5.
  • 31
    Ms Redmond, Department of Infrastructure and Regional Development, Committee Hansard, Canberra, 16 October 2017, p. 8.
  • 32
    Israel NIA, para 10.
  • 33
    Agreement between the Government of Australia and the Government of the State of Israel relating to Air Services (Sydney, 23 February 2017) [2017] ATNIF 25, Articles 6 and 9.
  • 34
    Ms Redmond, Department of Infrastructure and Regional Development, Committee Hansard, Canberra, 16 October 2017, p. 9.
  • 35
    Mauritius NIA, para 4.
  • 36
    Mauritius NIA, para 9.
  • 37
    Ms Redmond, Department of Infrastructure and Regional Development, Committee Hansard, Canberra, 16 October 2017, p. 7
  • 38
    Joint Standing Committee on Treaties (JSCOT), Report 139: Treaties tabled on 11 December 2013; referred on 15 January and tabled on 11 February 2014, May 2014, p. 10.
  • 39
    JSCOT, Report 139, p 11.
  • 40
    JSCOT, Report 139, p 12.
  • 41
    Ms Redmond, Department of Infrastructure and Regional Development, Committee Hansard, Canberra, 16 October 2017, p. 8.
  • 42
    Department of Infrastructure and Regional Development, Submission 1, p. 2.

 |  Contents  | 

About this inquiry

This inquiry will examine the following three agreements:

  • Agreement between the Government of Australia and the Government of the State of Israel relating to Air Services (Sydney, 23 February 2017);
  • Agreement between the Government of Australia and the Government of Hungary relating to Air Services (Budapest, 23 September 2016); and
  • Agreement between the Government of Australia and the Government of the Republic of Mauritius relating to Air Services (Port Louis, 4 February 2016).


Past Public Hearings

16 Oct 2017: Canberra