The Quasi-Regulatory Regime of the International Air Transport Association (Iata) and Its Impact Upon the Airline Industry and T
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THE QUASI-REGULATORY REGIME OF THE INTERNATIONAL AIR TRANSPORT ASSOCIATION (IATA) AND ITS IMPACT UPON THE AIRLINE INDUSTRY AND THE CONSUMER Lasantha Hettiarachchi Institute of Air and Space Law, McGill University, Montreal August 2018 A thesis submitted to McGill University in partial fulfilment of the requirements of the degree of Doctor of Civil Laws (DCL) © Lasantha Hettiarachchi, 2018 ABSTRACT The growth of global trade and commerce has contributed to an increase of private non-state entities making transnational rules and standards which regulate industries around the word. IATA is such a non-governmental international organization. Established in 1945 as a trade association of scheduled international airlines, its professed objective was to promote safe, regular and economic air transport for the benefit of the public through mutual cooperation amongst members. At its advent, IATA provided a conference mechanism facilitating airline members to meet, confer, compare costs and agree on air fares and rates applicable for scheduled air transport around the world. This function of tariff coordination, performed with the acquiescence of national governments, was also used by IATA to prescribe rules for service standards, travel agent administration and a multitude of other matters covering international air transport. These rules, formulated as contractual obligations imposed on its members and accredited agents, created direct and indirect implications for airline consumers. Numerous influences such as regulatory pressures, the discontinuation of antitrust immunity, economic challenges from non-scheduled operators and airline alliances that IATA encountered in its seven decades of existence resulted in a significant transformation of the organization. Contemporary IATA is a dynamic and robust commercial enterprise whose sustenance is solely predicated on the revenue generated by supplying products and services to the airline industry. IATA’s commercial pursuits are seamlessly integrated into its regime of rules and standards that are made for members and agents. However, IATA rules invariably also affect the rights and interests of many stakeholders in the airline industry and notably the consumer. Although a considerable amount of academic literature has been produced on IATA and its quasi rules, most of these predate IATA’s transformation into a predominantly commercial enterprise. This thesis therefore proposes to examine contemporary IATA and its transnational quasi-regulations which affect the airline industry in general and the consumer in particular. An analysis of specific IATA resolutions relating to passenger services and travel agents is presented to show the mandatory compliance features contained in these resolutions which affect consumers and third parties. By tracing the historical evolution of IATA and its current commercial pursuits, this thesis seeks to justify increased national regulatory oversight of IATA and its quasi-rules as essential for the protection of consumers. In concluding that states should not abdicate their responsibilities for protecting citizens, this thesis proposes recommendations for national regulatory and oversight measures that will ensure IATA and its quasi-rules are consistent with their declared objective to promote safe, regular and economic air transport for the benefit of the peoples of the world. Page 2 of 320 RÉSUMÉ La croissance du commerce et des échanges mondiaux a contribué à l'augmentation du nombre d’entités privées non étatiques qui décident des règles et normes transnationales régissant les industries autour du monde. L'AITA est une telle organisation internationale non gouvernementale. L’AITA fut établie en 1945 en tant qu'association professionnelle de compagnies aériennes internationales régulières avec pour objectif de promouvoir un transport aérien sûr, régulier et économique dans l'intérêt du public grâce à une coopération mutuelle de ses membres. À son avènement, l'AITA prévoyait un mécanisme permettant aux membres des compagnies aériennes de se rencontrer, de se concerter, ainsi que de comparer les coûts et de se mettre d'accord sur les tarifs applicables au transport aérien régulier dans le monde. Cette fonction de coordination tarifaire, assurée par les gouvernements nationaux, a également été utilisée par l'AITA pour imposer des règles prévoyant des standards de service, d'administration des agents de voyages et une multitude d'autres questions concernant le transport aérien international. Ces règles, formulées comme des obligations contractuelles imposées à ses membres et agents accrédités, ont créé des implications directes et indirectes pour les consommateurs aériens. De nombreuses influences telles que les contraintes réglementaires, l'abandon de l'immunité antitrust, les défis économiques des opérateurs non réguliers et les alliances aériennes que l'AITA a rencontrées au cours de ses sept décennies d'existence ont entraîné une transformation significative. Ainsi, l'AITA contemporaine est une entreprise commerciale dynamique et robuste dont la subsistance est basée sur les seuls revenus générés par la vente de produits et de services à l'industrie du transport aérien. Les activités commerciales de l'AITA sont parfaitement intégrées dans son régime de règles et de normes créées pour ses membres et agents. Cependant, les règles de l'AITA affectent également inévitablement les droits et les intérêts de nombreuses parties prenantes de l'industrie du transport aérien tel que le consommateur. Bien que l’AITA, ainsi que ses quasi-règles, aient fait l’objet de nombreuses études, la majeure partie de cette littérature et de ces analyses sont antérieures à la transformation de l'AITA en tant qu’entreprise commerciale. Cette thèse propose donc d'examiner l'AITA contemporaine et ses quasi-réglementations transnationales qui affectent tant l'industrie du transport aérien en général que le consommateur en particulier. Une analyse des résolutions de l'AITA relatives aux services de passagers et aux agents de voyages est présentée afin d’illustrer les caractéristiques de conformité obligatoires contenues dans ces résolutions qui affectent les consommateurs et les tiers. En retraçant l'évolution historique de l'AITA et ses activités commerciales actuelles, cette thèse cherche à justifier le renforcement de la surveillance réglementaire nationale de l'AITA et de ses quasi-règles en tant qu'éléments essentiels pour la protection des consommateurs. En concluant que les États ne devraient pas renoncer à leurs responsabilités de protection des citoyens, cette thèse émet des recommandations telles que des mesures nationales de régulation et de contrôle qui assureront que l’AITA et ses quasi-règles sont conformes à leur objectif déclaré de promouvoir un transport aérien sûr, régulier et économique au profit des peuples du monde. Page 3 of 320 Acknowledgements The completion of this thesis brings an end to a most memorable chapter in my life. The exhilaration and relief I feel on being able to complete the thesis is tremendous! Spending several years intermittently in Montreal to pursue doctoral studies whilst continuing a demanding law practise in Sri Lanka was very challenging. However, with the grace of God and the generous help of a number of wonderful people I am able to heave a sigh of relief today! I take this opportunity to express my sincere gratitude, heartfelt appreciation and love to all those who helped me through this endeavour, walked with me, laughed with me and saw me through some very challenging times in the past 6 years I was involved with doctoral studies. I wish to express my profound gratitude to my supervisor, Professor Paul Stephen Dempsey, for the guidance and encouragement provided to me through the DCL programme. I am very grateful to him for sharing his knowledge, experience and great wisdom. I also wish to thank my thesis committee members, Professors Richard Janda and Genevieve Saumier for the valuable insights and advise provided to me. I am very grateful for the opportunity to be enlightened by the wisdom and knowledge of both Professors Janda and Saumier, and their valuable time and patience! It was indeed the best thesis committee one could hope for! I will be failing in my duty if I do not mention the generous funding made available to me by the Graduate Faculty of Law which helped immensely to defray my tuition and living expenses in Montreal. I wish to thank Professors, Rosalie Jukier, Angela Campbell and Richard Gold for making my student life a pleasant and memorable experience. My sincere appreciation to, Lina, Nozomi and Bianca at Graduate Studies, who were, prompt, accommodating and very helpful, to me on administrative matters and the Law Library staff for their ready assistance. I am deeply grateful to Professor Ram Jakhu, and the ever-cheerful Maria D’Amico at the Institute of Air & Space Law, for their generous advice and ready help. I fondly remember late Professors Michael Milde and Donald Bunker for their guidance and friendship over the years. I thank my DCL colleagues Blair, Geoffery Conrad, Geoffery Smith, Marika, Priscilla, Kuzi, and Tanveer whose friendship and company greatly enriched my stay in Montreal. I am very grateful to Shireen Gomes for transcribing the draft, Lukas Vanhonnaeker for translating the Abstract, Eliza Bateman for proof reading, Dhananga Pathirana for editing footnotes, and Swasha Fernando for formatting the thesis. I owe a deep debt of gratitude to colleagues and staff of my law chambers whose