Wednesday, July 13, 2011

The Emerging Lex Aviatica

Blog readers may be interested in Brian F. Havel and Gabriel S. Sanchez's latest article, The Emerging Lex Aviatica, 42 Georgetown J. Int'l L. 639 (2011).  The article is available to download from SSRN here. From the abstract:

Since the advent of international commercial air travel, every airline has been straitjacketed by treaty-based restrictions which mandate that, in order to be eligible to provide international air services on behalf of its home state, it must be owned and controlled by citizens of the home states (or by the home state itself). This citizenship “purity” requirement, commonly referred to as the “nationality rule,” is reinforced by national laws requiring substantial (share) ownership and effective control of national air carriers by the home state or its citizens. The combined effect of these treaty and national law restrictions has been to prevent airlines from merging across borders or from establishing subsidiaries in other states. Consequently, airlines are locked out of transnational capital markets at a time when the global operating environment (including oil price spikes and lingering demand weakness in the wake of the Great Recession) has never been more challenging. In this Article, we identify an emerging normative transition, which we dub the “lex aviatica,” that is attempting to displace the treaty-based nationality rule. This transition is rooted in an evolving consensus among airlines and sympathetic government officials. Thus, in contrast to its concep- tual antecedent, the “lex mercatoria,” through which the merchant class consciously broke with the common law, the emergent lex aviatica suggests a lawmaking process where not only is the state no longer the sole actor or regulator, but there is an appreciably more open-textured collaboration between merchant and state. The Article analyzes how this normative transition could transform the global regulatory order for international aviation, liberating commercial and investment opportunities that will allow the industry that globalized the world to become global itself.


July 13, 2011 | Permalink | Comments (0) | TrackBack (0)

Sunday, July 10, 2011

Climbing Through the Clouds

This week's edition of the Economist has an excellent piece on airlines and globalization, entitled Climbing Through the Clouds, Economist, July 8, 2011 (available here).  However, one strange element of the piece is the fact it identifies the International Air Transport Association as being one time akin to a "global regulator" for the aviation industry.  While it is true that IATA did serve as a cartel facilitator during the days of tightly managed trade in air services, the Association operated under the regulatory supervision of national authorities (e.g., Civil Aeruonautics Board).  Unfortunately, the story implies that IATA was vested with direct authority over international air transport, a rather ridiculous claim given the fact that not even the International Civil Aviation Organization--the intergovernmental institution created by the 1944 Chicago Convention--possesses that level of power.

July 10, 2011 | Permalink | Comments (0) | TrackBack (0)