Regionalism in International Air Transportation: Cooperation and Competition

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Regionalism in International Air Transportation: Cooperation and Competition REGIONALISM IN INTERNATIONAL AIR TRANSPORTATION: COOPERATION AND COMPETITION Papers from an International Conference organized by The Massachusetts Institute of Technology, held at the Amman Chamber of Commerce, Amman, Jordan, April 19-21, 1983 Under the auspices of Alia: The Royal Jordanian Airline. Copyright0 1984 Alia: The Royal Jordanian Airline P.O. Box 302, Amman, JORDAN PREFACE Alia: The Royal Jordanian Airline is very pleased to present this collec- tion of papers originally presented at the international conference entitled, "Regionalism in International Air Transportation: Cooperation and Com- petition", held in Amman, Jordan during April 19-21, 1983. Regionalism, a method which ideally, allows groups of nations and airli- nes to work together efficiently in air transport operations, while competing with other similar groups, has been proposed as a means to help solve many of the problems currently plaguing the airline industry. Regionalism has been practised in the past, with some difficulty and some success, but its many possibilities have yet to be fully explored. Thus, Alia, a commercial air carrier with a long commitment to regional cooperation and progressive thinking, and the Massachusetts Institute of Technology (MIT), an academic institution with an international reputation for excellence in the ideas and practical applications relating to modern technologies, decided to cooperate in organizing an international forum for discussion of this important concept. As a result of long and dedicated cooperation between the MIT's Depart- ment of Aeronautics & Astronautics, its Center for Advanced Engineering Study Seminar Office, Alia staff members and a wide range of local institu- tions in Amman, the conference was a great success. It was a unique oppor- tunity for senior airline personnel and civil aviation authorities to address the potential of regionalism in commercial, operational and technical areas. As a quick scanning of the list of authors whose papers are published her- ein demonstrates, the participants, representing 25 different countries, were exposed to past experiences, current activities and conceptual approaches to regionalism by some of the aviation community's most respected thinkers and practitioners. Not reflected within the covers of this book are the equal- ly valuable exchanges of ideas which followed each presentation and the high spirit of exploration which characterised the three-day conference. We were fortunate to have welcomed also eleven journalists representing some of the most prestigious journals in the aviation industry, who produ- ced extensive and thoughtful reports which reached a much wider audience of air transportation professionals. Conference participant evaluations re- flected their high satisfaction with program format, content, organization and services. Some 84 percent of those attending the Amman conference expressed interest in a follow-up program on the subject of regionalism. It was most gratifying for Alia to sponsor and host this meeting in Am- man, the capital of a small but historic Arab country which has become an important regional commercial and aviation center. Alia has played a cru- cial role in Jordan's development during the past 20 years, as anticipated by the vision of His Majesty King Hussein, whose interest in aviation and the potential for regional cooperation was demonstrated by his contributions to the conference as both speaker and participant. The regional activities al- ready undertaken by Alia have benefitted from his counsel and encourage- ment, and we remain committed to seeking new cooperative opportunities. With appreciation for the contributions of all program speakers, for the enthusiastic participation of the registrants, the hard work of the MIT and Alia staff members and the cooperation of many Jordanian institutions, this publication is dedicated to a brighter future for the international aviation in- dustry, in the hope that the potential of regionalism - especially in its coo perative form - will be considered and tested in practice as an idea whose time has come. Ali Ghandour December, 1984 Chairman of the Board PREFACE TABLE OF CONTENTS WELCOME ADDRESS by His Majesty King Hussein bin Talal 3 LUNCHEON ADDRESS by Knut Hammarskjold 6 KEYNOTE ADDRESS by Ali Ghandour 11 SESSION I: "THE CONCEPTS FOR REGIONALISM" 17 COMPETITION, INNOVATION & REGULATION IN RE- GIONAL AIRLINE OPERATIONS by Stephen F. Wheatcroft 19 THE ECONOMIC RATIONALE FOR REGIONALISM by Ro- bert W. Simpson 26 SESSION II: "THE PRACTICE OF REGIONALISM" 35 THE EEC AND CIVIL AVIATION: AN EFFORT TO RECON- CILE FREE COMPETITION PRINCIPLES WITH NATIONAL REGULATORY TRADITIONS by Frederick Sorensen 37 REGIONAL AVIATION AGREEMENTS: SUGGESTED OB- JECTIVES FOR THE UNITED STATES by James R. Atwood 45 THE ROLE OF FLEXIBLE FARE STRUCTURE ON THE DE- MAND FOR AIR TRANSPORTATION: THE SOUTH AT- LANTIC CASE by Luiz Carlos Guimaraes Costa and Flavio Frei- tas Faria 53 SESSION III: "CURRENT & PAST EXPERIENCES" 67 THE PROBLEMS AND ADVANTAGES OF A MULTI-NA- TION AIRLINE: THE EXAMPLE OF SCANDINAVIAN AIR- LINES SYSTEM by Hendrik Winberg 69 UNITY & DIVERSITY: THE PATTERN AND DEVELOP- MENT OF AIR SERVICES IN THE SOUTH PACIFIC by John King 81 SESSION IV: "CURRENT REGIONAL ACTIVITIES" 99 REGIONALISM WITHIN ICAO by Duane W. Freer THE CONCEPT & PRACTICE OF REGIONALISM: THE EX- PERIENCE OF THE ARAB AIR CARRIERS ORGANIZA- TION by Amer A. Sharif 108 A REGIONAL EXPERIENCE IN TECHNICAL COOPERA- TION, THE EUROPEAN ATLAS GROUP: CONCEPT ,& REALITIES by Jacques Meline 114 SESSION V: "A GLOBAL VIEW" 127 THE FUTURE OF MULTILATERAL AIR TRANSPORT RE- GULATION IN THE REGIONAL AND GLOBAL CONTEXT by H.A. Wassenbergh 129 OPPORTUNITIES FOR REGIONAL COOPERATION IN IN- TERNATIONAL AIR TRANSPORT by John E. Downs 145 THE ROLE OF REGIONALISM IN GLOBAL AIR TRANS- PORT (Summary) by Secor D. Browne 152 INTERNATIONAL AIR TRANSPORTATION "REGIONALISM" CIA WELCOME ADDRESS BY HIS MAJESTY KING HUSSEIN BIN TALAL OF THE HASHEMITE KINGDOM OF JORDAN DISTINGUISHED GUESTS, It gives me great pleasure to personally welcome you all in our capital, Am- man, and to express our appreciation to both the Massachussetts Institute of Technology and Alia/The Royal Jordanian Airline for their efforts in jointly organizing and sponsoring this important conference on "Regiona- lism in International Air Transportation: Co-operation and Competition". The number of distinguished participants in this symposium, and the wide and diversified representation related to the air transport industry present here today, is an indication of the interest generated in the subjects under discussion in this conference and their importance to the aviation industry. This conference has brought together representatives of the airlines, the aircraft manufacturers, regional and international organizations and the aviation press to help remove impediments which restrict the growth of the aviation industry. The significance of aviation to the world today needs no emphasis. Throughout the past few decades aviation has truly evolved to the point where it provides one of the most important foundations of the interaction of modern global society with its far-reaching effects on the human struggle to achieve its perpetually higher goals and objectives. Furthermore, the benefits of aviation to our national economies are of vi- tal importance. The Jordanian experience is a testimony to the fact that the economy is enhanced by trade exchange through the opening of new mar- kets, by stimulating tourism and the introduction of new products and ideas to people. We will, however, fail to continue to reap the benefits of civil air trans- port if the proper environment for the industry's healthy growth is not pro- vided. Commendable efforts are being made to enhance the potential healthy growth of civil air transport yet limited vision and ignorance, pro- tectionism and the human failing, which tends towards empire building, has created barriers in the face of proper regional planning. This trend has been both expensive, self-defeating and detrimental to possible and attainable ra- pid growth and benefits for aviation worldwide. This conference provides an opportunity not only to revive interest in re- gionalism but also to map out strategies for present and future actions for His Majesty King Hussein has governed Jordan since ascending to the throne in 1952, leading his people through a rapid and well-planned development process. Among the many programs and projects initiated under his leadership was the founding of Alia: The Royal Jordanian Air- line in 1963. His Majesty is also an avid and experienced airman. the comprehensive benefit of people, airlines and the aviation industry in general. It is our hope that the interest you will undoubtedly generate during this conference will continue and produce worldwide tangible results based on your deliberations, recommendations and the subsequent follow-up of your findings. Alia, our own national airline, has always believed that it has a duty to explore the regional approach. Jordan and Alia have made many contribu- tions with some resultant progress in this direction. The Royal Air Academy in Amman regularly trains students from neigh- bouring states in addition to our own. We hope this academy will become the nucleus of a regional Arab academy and that somewhere down the road our hope of creating an adequate regional air university will be realized. Arab Wings remains the region's only truly international business jet charter service
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