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Competition, Alliances - Create A New Horizon For Airline Industry
Leading Aviation Experts Focus on Coming Change at CCH Forum
(RIVERWOODS, ILL., September 10, 1999) Big changes are on the horizon for the
airline industry and a new, global landscape can be expected to emerge as the economic
forces of free trade, deregulation, the Internet and globalization collide, according to
aviation experts who attended The Coming Revolution in Airline Competition aviation
forum organized by CCH INCORPORATEDs Aviation Law Reports. CCH, a
leading provider of business and regulatory law information hosted the forum at which
airline executives, leading aviation law practitioners and industry experts gathered to
examine the building market tensions in domestic and international aviation that will
thrust the airline industry into a new era.
Coming Change: Alliances Lead the Way, But Not Likely to Survive New Order
Casting off the constraints of the bilateral treaty regime that governs civil aviation,
carriers have turned to global alliances to meet the demands of a progressively more
competitive, global industry and more sophisticated customer base, noted conference
keynote speaker Paul V. Mifsud, Vice President, Government and Legal Affairs, U.S., KLM
Royal Dutch Airlines.
Under the traditional bilateral regime, which was established by the Chicago Convention
in 1944, countries negotiate one-on-one for air rights. In recent years, however,
alliances through which foreign-owned carriers partner with domestic airlines to
serve cities that ordinarily would not receive international service have been
creatively used by air carriers to broaden markets and expand the airline industry.
However, neither alliances nor the bilateral scheme that gave birth to the alliance
concept, are likely to see the light of the industrys new day, Mifsud noted,
pointing to safety and antitrust concerns, as well as the overriding restraints of the
Conference speaker Michael G. Whitaker, United Airlines Vice President of International
and Regulatory Affairs agreed, stating that while the alliance concept has successfully
allowed carriers to move toward open skies, the bilateral regimes constraints have
effectively constructed a "brick wall" that prevents further progress down this
Future Dimension is Multilateral
The time for change has come and "the logical place to go from here is a
multilateral system" that eliminates the regulatory hurdles of the current bilateral
system, Whitaker said. A true multilateral air transport regime would permit carrier
mergers, consolidations and cross-border ownership and control of airlines, effectively
ending the need for most alliances.
The Honorable Gerald L. Baliles, former Attorney General and Governor of Virginia and
member of the CCH Aviation Law Advisory Council cautioned, however, that infrastructure
issues will have to be addressed first, before a new multilateral regime is adopted.
"Not much will happen until there is a commitment in the U.S. and Europe to air
traffic control reform," said Baliles, who also is former chair of the National
Commission to Ensure a Strong and Competitive Airline Industry (National Airline
The new multilateral framework, he stated, "depends on the capacity of the air
traffic control systems to handle it." If reform of the air traffic control system
doesnt happen, including consolidation of the system in Europe and a steady
user-generated revenue stream for the U.S. system, nothing else will, he concluded.
Closer Look at Multilateral Framework to Follow at Chicago Convention
Conference moderator Brian F. Havel, author of In Search of Open Skies: Law and
Policy for a New Era in International Aviation and Associate Professor at DePaul
University College of Law, noted that many of the countries that created the antiquated
bilateral system that now regulates international air transport are planning to meet with
U.S. federal regulators in Chicago in December to discuss the dimensions of a new
Havel, CCH Aviation Law Advisory Council Chair, said that the December meeting was more
likely to lead to a consensus on where to go in the future rather than a binding treaty.
But setting up a consensus, Havel suggested, might prove in the end to be as good as
getting a final treaty. Airlines will take their cue from their governments
willingness to support liberalization, and we may even see U.S. airlines acquiring control
of foreign airlines and forcing Washington to abandon strict U.S. laws on foreign
ownership of airlines, he said.
CCH Aviation Law Advisory Council and Aviation Law Reports
Joining conference speakers Paul Mifsud and Michael Whitaker in the timely discussion
of The Coming Revolution in Airline Competition were members of the CCH Aviation
Law Advisory Council.
Brian F. Havel, Council Chair, is Associate Professor at DePaul University
College of Law. An expert in the field of international economic law, he is the author of In
Search of Open Skies: Law and Policy for a New Era in International Aviation, a
comprehensive study of airline deregulation in the U.S. and European Union. Before coming
to Chicago, Professor Havel practiced in the areas of international antitrust and
corporate litigation with the New York law firm of Paul, Weiss, Rifkind, Wharton &
Hon. Gerald L. Baliles has a distinguished record of leadership in economic
development, as partner at Hunton & Williams in Virginia, and as the former Attorney
General and Governor of Virginia. In 1993, President Clinton appointed him to chair the
National Commission to Ensure a Strong and Competitive Airline Industry. More recently,
Gov. Baliles assisted the U.S. in negotiating an "open skies" air transport
agreement with Japan.
James L. Devall is managing partner of the Washington, D.C. firm of Zuckert,
Scoutt & Rasenberger, where he represents non-U.S. air carriers and aviation-
related businesses in areas of international aviation and regulatory matters.
Previously, he held a position with the U.S. Office of Management and Budget in the
Executive Office of the President. He is a member of the European Air Law Association, an
Adjunct Professor of Law at American University, Washington, D.C. and has served as
president of the International Aviation Club of Washington.
Phillip J. Kolczynski manages his own law firm in California. His practice is
national in scope, concentrating in aviation, product liability and business litigation.
Previously, he was a trial attorney in the Aviation Unit, U.S. Department of Justice, and
the Federal Aviation Administration. While at the Justice Department, Mr. Kolczynski was
an instructor at the Attorney Generals Civil Trial Advocacy Institute.
Kenneth P. Nolan is managing partner of the New York office of Speiser, Krause,
Nolan & Granito, specializing in aviation personal injury and wrongful death
litigation. He has successfully handled over 70 million-dollar verdicts and settlements,
nine involving airliner crashes, including the KAL shootdown and the Pan Am Lockerbie
disaster. He serves as editor in chief of Litigation, published by the American Bar
Association. He is a member of the Aeronautical Committee of the Association of the Bar of
the City of New York and a member of the Board of Directors of the New York State Trial
Kenneth P. Quinn is a member of the Washington, D.C. firm of Winthrop, Stimson,
Putnam and Roberts, where he specializes in aviation and international law. He served
as Counselor to the Secretary of Transportation and later as Chief Counsel for the Federal
Aviation Administration. Mr. Quinn is a member of the Governing Committee of the American
Bar Association Forum on Air and Space Law, and served as its Chairman for two terms.
About CCH Aviation Law Reports
For over fifty years, CCH has been a leading provider of aviation law information,
tracking, explaining and analyzing aviation law developments for aviation lawyers, the
nations leading air carriers and aircraft manufacturers. Since 1947, the CCH
Aviation Law Reports publication has served as a comprehensive and authoritative
source for aviation cases, laws, regulations, agency decisions and new developments,
providing complete coverage of the federal regulation of civil aviation. For more
information about CCHs Aviation Law Reports call 1-800-449-6435.
About CCH INCORPORATED
CCH INCORPORATED, headquartered in Riverwoods, Ill., was founded in 1913 and has
served four generations of business professionals and their clients. The company produces
more than 700 electronic and print products for the tax, legal, securities, human
resources, health care and small business markets. CCH is a wholly owned subsidiary of
Wolters Kluwer U.S. The CCH web site can be accessed at www.cch.com.
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