Air Transport connectivity is based on the concept of moving passengers, mail and

cargo with the least amount of transit points in order to make the trip as short as
possible, at the lowest price possible, while continuously ensuring users are satisfied.

In order to optimize connectivity, a strong supporting framework is needed that

includes, among others: market access (e.g. liberalization), optimal use of air navigation
services (including ASBUs), aircraft, airport systems, facilitation and security,
intermodality and airline activities. If conditions are met, connectivity brings concrete
value that includes:

 positive end-user experience;

 more travel;
 greater economic development; and
 increased traffic growth

ICAO contributes to improving connectivity in various areas through market access,

consumer protection, etc. by fostering various initiatives within this framework. This
includes, for example, the facilitation of international agreements to liberalize the
current restrictions through policy and guidance material.

Not only have overly complex bilateral agreement frameworks added significantly to the
cost of doing business, but they have limited choice and competition and have created
impediments to the continued growth of air traffic. Since the early 1990s, in response to
demands by the aviation industry to reduce regulatory barriers, States began negotiating
more liberal bilateral and multilateral agreements, including “open skies” agreements,
which allowed the industry to do business in more favourable operating environments
so they could expand in new markets.

In 2015 ICAO adopted a long-term vision for international air transport liberalization,
which provided ICAO Member States with the resolve to actively pursue continued
liberalization of international air transport, for the benefit of all stakeholders and the
economy at large. The efforts are guided by the need to ensure the highest levels of
safety and security and the principle of fair and equal opportunity for all States and their
stakeholders.

Liberalization benefits

One notable trend involves the conclusion of bilateral “open-skies” air services
agreements, which provide for full market access without restrictions on Third, Fourth
and Fifth Freedom traffic rights, designation, capacity, frequencies, codesharing and
tariffs. The first such agreement was concluded in 1992 between the Netherlands and
the United States. Since then, an increasing number of Open-skies Agreements (OSAs)
have been signed. As of September 2016, over 300 OSAs involving more than 150
States have been concluded, with the United States leading with a total of 119 signed
OSAs. An increasing number of countries have also signed OSAs with the European
Union or its members.

Liberalization has been one of the main drivers of the continuous growth of air traffic.
Measures enabling expanded market and capital access for air transport have resulted
in enhanced connectivity with the corresponding benefits of sustainable economic
development at State and regional level, and the emergence of strong carriers and
airports that are more passenger-friendly. Opening up the air transport market has led to
an increased and more efficient utilization of airspace, more competitive fares and
more choices for the travelling public.

Liberalizing measures and subsequently, enhanced connectivity, have an overall

positive impact on tourism, employment and the economy at large. Improved
connectivity in air cargo enhances the level of productivity, opens up new markets,
boosts exports and increases competition and choice in the home market from foreign-
based producers. The many States that seek regulatory convergence on liberalization
and competition issues at the bilateral and regional levels, shows the importance of
liberalization.

A look at the challenges in one region: Latin America (LATAM)

Infrastructure deficiencies have long been an issue in the Latin American Region. Major
airports in Argentina, Colombia, Ecuador, Mexico and Peru face growth constraints.
Among the world’s 134 economies analysed by the World Economic Forum, for
example, Panama ranks 6th, Ecuador 39th, Chile 47th and Mexico 61st in quality of air
transport infrastructure, but Argentina (86th), Brazil (94th), Colombia (76th), El Salvador
(74th), Peru (80th) and Venezuela (127th) are below average.

While plans are in place to address these issues, relief is years away at best, so there
will be lost opportunities for creating jobs and spurring economic growth. The projected
expansion of the aviation sector in the region will also bring the need for effective
regulatory oversight that keeps pace with this growth, as well as the recruitment and
training of the necessary skilled manpower. The most likely scenario is that airlines in
Latin America and the Caribbean region will need to train an average of 6,250 pilots a
year until 2030 while the industry is only able to train 1,945 pilots a year.
Liberalization in this region

Following the consolidation of small airlines in the sub-region of Central America in the
early 90s, other separate, but virtually identical open-skies agreements with the United
States were concluded in 1997. In 1995, the United States-Canada Aviation Agreement
had already entered into force, based mostly on the open-skies model.

In South America and the Caribbean, regional air transport liberalization initiatives have
resulted in the adoption of agreements by the Andean Community (CAN), the Caribbean
Community  (CARICOM) and the Southern Common Market (MECROSUR), between
1991 and 1999; and the Air Transport Agreement of the Association of Caribbean States
(ACS), in 2008. All of these initiatives aim to harmonize air transport policies and to
liberalize the granting of traffic rights and market access.

An example

Though many countries in the Latin American region follow liberalized policies, one of
the most liberalized ones is Brazil.

The United States-Brazil Open Skies agreement, which entered into force on May 21,
2018, will pave the way for the completion of the joint-venture between American
Airlines (AA, Dallas/Fort Worth) and LATAM Airlines (LA, Santiago de Chile Int’l), the
American carrier has said.

The joint-venture, first put forward in 2016, will cover all flights operated by either of the
carriers involved between the US and Canada on one side and Brazil, Chile, Colombia,
Paraguay, Peru, and Uruguay on the other. The partnership has already been approved
by the regulators in Brazil, Colombia, and Uruguay, while the go-ahead in Chile is still
pending.

The two carriers already have a dominant position on the key US-Brazil market, with
over 40 per cent market share by capacity between them.

LATAM’s rival Azul Linhas Aéreas Brasileiras has openly expressed its intention to enter
into a joint-venture with United Airlines, although the American carrier has been more
cautious about such a move, having a Star Alliance partner in Brazil in Avianca Brasil.
United is a minor shareholder in Azul with a 5% stake.

For its part, Delta Air Lines, which owns a 9.5% stake in Gol Linhas Aéreas Inteligentes,
has ruled out tightening this cooperation.

ICAO’s World Aviation Forum in Brazil

ICAO’s Fourth ICAO World Aviation Forum (IWAF 2018) will be held from 17 –
19 September 2018, in Fortaleza, Brazil. The Forum is aimed at high-level government
officials responsible for aviation, transport and infrastructure, finance, economy, and
tourism, and key industry and financial partners. With the theme of Promoting
Investment for Aviation Development, the event is intended to create an enabling
environment to discuss approaches to maximize aviation benefits and explore ways of
mobilizing long-term financial resources for aviation development, especially for the
development and modernization of quality aviation infrastructure. The Forum also aims
at mainstreaming the priorities of the aviation sector in global, regional and national
agendas in support of the ICAO No Country Left Behind (NCLB) initiative and ultimately
to contribute to the attainment of the United Nations Sustainable Development Goals
(SDGs) and the Agenda 2030.