By Rigas Doganis
Flying off track offers a desirable and topical perception into the workings of overseas air delivery as visible from an economist's point of view.
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Additional resources for Flying Off Course: The Economics of International Airlines, 2nd Edition
The Clearing House speeds up and simplifies the process of clearing inter-airline debts. Airlines that do not use the Clearing House must negotiate individually with each airline whose ticket stubs they might hold. This is slow and laborious and may involve long delays before debts are cleared. Undoubtedly IATA’s most important function has been to set airline fares and cargo rates. Up to 1979 the process for establishing fares was rather rigid (IATA, 1974). It involved the so-called traffic conferences—one covering North and South America, the second covering Europe, the Middle East and Africa, and the third the Pacific region and Australasia.
The two key articles are those dealing with the regulation of tariffs and capacity. , 1984), but both governments must approve such fares and tariffs. In other words, 26 REGULATION OF INTERNATIONAL AIR TRANSPORT ultimate control of tariffs rests with governments. On capacity, some bilaterals require very strict control and sharing of capacity by the airlines of the two countries while others have minimal control. Underlying bilateral agreements is the concept of reciprocity, of an equal and fair exchange of rights between countries very different in size and with airlines of varied strengths.
These are agreements, often confidential, that amplify or subsequently modify particular aspects of the basic air services agreement. Many bilateral agreements reflect protectionist attitudes. They insist on prior agreement on the capacity to be provided on the route and also specify that the agreed capacity should be shared equally by the designated carriers of the two states. 4). At the same time, few if any fifth freedom rights are granted. Most bilaterals with east European countries tend to be very protectionist and also make pooling mandatory.