With the advent of the aerial transportation mode, in the 20s-30s of the last century, new challenges were to be faced. It was a new mean, the Air, which introduced a mind change in the concept of borders and sovereignty. The vehicle, the aircraft, was also new at that time. Moreover, the transport (the flight) was international, something that added complexity. All in all, these revolutionary transportation mode brought in new modes of crime (hijacking), redefinition of the concept of sovereignty, intricate insurances, and the need to define the contract between the air carrier and the passenger.
Then, the question is how the first international flights were possible. Well, thanks to bilateral agreements: a vis-a-vis agreement dealing with commercial aspects. These agreements were referred to as Air Service Agreements (ASAs): Bilateral air transport agreement between two nations to allow international commercial transit and traffic between and over their territories.. Examples of ASAs include the first one, signed in 1913 between Germany and France, and the Bermudas ASAs signed in 1946 between United Kingdom and the United Stated of America.
Other agreements had a multilateral character, typically signed by a minimum number of countries and dealing with more general aspects. The first multilateral agreement is that of Paris (Paris Convention) in 1919, with a jurisdiccional/political character. It established: the sovereignty of nations over the air; the nationality of the aircraft; universal airworthiness rules; and the rights of the state to take measures on safety. Other multilateral agreements include the Warsaw Treaty in 1929 (related to Air Transport), and the Chicago Convention in 1944 (the sucesor of Paris Convention). Indeed, Chicago’s Convention is a fundamental milestone for the development of civil aviation: Among other things, it gave birth to the International Civil Aviation Organization (ICAO) (See Section 8.2.1).
Originally, airlines were state owned (flag carriers), operating as monopolists in domestic, highly protected markets. This started to change in 1978, with the Deregulation act signed by President Nixon in the United States. It modified the regulation of the US domestic market in the following directions: US airlines had freedom to enter/exit any US domestic market; each airline could determine its frequencies and number of seats in any domestic market; each airline could determine the airfares and number of seats per airfare class. This was revolutionary, the reader should notice that until then the origin- destination pairs to serve, the number of frequencies and seats, and even the fair were regulated. This milestone triggered modifications in the ASAs, moving from traditional ASAs to Open Market ASAs (earliest in 1978-1979). Other landmarks in international airline regulation include: the three-stage liberalization of the intra-European Union market (1988-1993); the Asia-Pacific Economic Community (APEC) multilateral ASA; and the Open Skies Agreement between the EU and the whole USA in 2007. The extent (in the sense the signatory countries allow the others certain rights) of these agreements are typically based on what is known as the freedoms of the air (see Figure 8.4 and Table 8.2).