Current Model Open Skies Agreement Text

                  Current Model Open Skies Agreement Text

Released by the Bureau of Economic and Business Affairs
Updated April 13, 2004

The Government of the United States of America and theGovernment of [country] (hereinafter, "the Parties");

Desiring to promote an international aviation system based on competitionamong airlines in the marketplace with minimum government interference andregulation;

Desiring to facilitate the expansion of international air transportopportunities;

Desiring to make it possible for airlines to offer the traveling andshipping public a variety of service options at the lowest prices that are notdiscriminatory and do not represent abuse of a dominant position, and wishingto encourage individual airlines to develop and implement innovative andcompetitive prices;

Desiring to ensure the highest degree of safety and security ininternational air transport and reaffirming their grave concern about acts orthreats against the security of aircraft, which jeopardize the safety ofpersons or property, adversely affect the operation of air transportation, andundermine public confidence in the safety of civil aviation; and

Being Parties to the Convention on International Civil Aviation, openedfor signature at Chicago on December 7, 1944;

Have agreed as follows:

Article 1

Definitions

For the purposes of this Agreement, unlessotherwise stated, the term:

1. "Aeronautical authorities" means, in the case of the UnitedStates, the Department of Transportation, or its successor, and in the case of[country], the [appropriate officials], and any person or agency authorized toperform functions exercised by the said [appropriate officials];

2. "Agreement" means this Agreement, its Annexes, and anyamendments thereto;

3. "Air transportation" means the public carriage by aircraft ofpassengers, baggage, cargo, and mail, separately or in combination, forremuneration or hire;

4. "Convention" means the Convention on International CivilAviation, opened for signature at Chicago on December 7, 1944, and includes:

a.     any amendment that has entered into force underArticle 94(a) of the Convention and has been ratified by both Parties, and

b.     any Annex or any amendment thereto adopted underArticle 90 of the Convention, insofar as such Annex or amendment is at anygiven time effective for both Parties;

5. "Designated airline" means an airline designated andauthorized in accordance with Article 3 of this Agreement;

6. "Full cost" means the cost of providing service plus areasonable charge for administrative overhead;

7. "International air transportation" means air transportationthat passes through the airspace over the territory of more than one State;

8. "Price" means any fare, rate or charge for the carriage ofpassengers (and their baggage) and/or cargo (excluding mail) in airtransportation charged by airlines, including their agents, and the conditionsgoverning the availability of such fare, rate or charge;

9. "Stop for non-traffic purposes" means a landing for anypurpose other than taking on or discharging passengers, baggage, cargo and/ormail in air transportation;

10. "Territory" means the land areas under the sovereignty,jurisdiction, protection, or trusteeship of a Party, and the territorial watersadjacent thereto; and

11. "User charge" means a charge imposed on airlines for theprovision of airport, air navigation, or aviation security facilities orservices including related services and facilities.

Article 2

Grant of Rights

1. Each Party grants to the other Party thefollowing rights for the conduct of international air transportation by theairlines of the other Party:

a.     he right to fly across its territory without landing;

b.     the right to make stops in its territory for non-trafficpurposes; and

c.     the rights otherwise specified in this Agreement.

2. Nothing in this Article shall be deemed to confer on the airline orairlines of one Party the rights to take on board, in the territory of theother Party, passengers, their baggage, cargo, or mail carried for compensationand destined for another point in the territory of that other Party.

Article 3

Designation and Authorization

1. Each Party shall have the right todesignate as many airlines as it wishes to conduct international airtransportation in accordance with this Agreement and to withdraw or alter suchdesignations. Such designations shall be transmitted to the other Party inwriting through diplomatic channels, and shall identify whether the airline isauthorized to conduct the type of air transportation specified in Annex I or inAnnex II or both.

2. On receipt of such a designation, and of applications from thedesignated airline, in the form and manner prescribed for operatingauthorizations and technical permissions, the other Party shall grantappropriate authorizations and permissions with minimum procedural delay,provided:

a.     substantial ownership and effective control of thatairline are vested in the Party designating the airline, nationals of thatParty, or both;

b.     the designated airline is qualified to meet theconditions prescribed under the laws and regulations normally applied to theoperation of international air transportation by the Party considering theapplication or applications; and

c.     the Party designating the airline is maintaining andadministering the standards set forth in Article 6 (Safety) and Article 7(Aviation Security).

Article 4

Revocation of Authorization

1. Either Party may revoke, suspend or limitthe operating authorizations or technical permissions of an airline designatedby the other Party where:

a.     substantial ownership and effective control of thatairline are not vested in the other Party, the Party's nationals, or both;

b.     that airline has failed to comply with the laws andregulations referred to in Article 5 (Application of Laws) of this Agreement;or

c.     c. the other Party is not maintaining and administeringthe standards as set forth in Article 6 (Safety).

2. Unless immediate action is essential to prevent further noncompliancewith subparagraphs 1b or 1c ofthis Article, the rights established by this Article shall be exercised onlyafter consultation with the other Party.

3. This Article does not limit the rights of either Party to withhold,revoke, limit or impose conditions on the operating authorization or technicalpermission of an airline or airlines of the other Party in accordance with theprovisions of Article 7 (Aviation Security).

Article 5

Application of Laws

1. While entering, within, or leaving theterritory of one Party, its laws and regulations relating to the operation andnavigation of aircraft shall be complied with by the other Party's airlines.

2. While entering, within, or leaving the territory of one Party, its lawsand regulations relating to the admission to or departure from its territory ofpassengers, crew or cargo on aircraft (including regulations relating to entry,clearance, aviation security, immigration, passports, customs and quarantineor, in the case of mail, postal regulations) shall be complied with by, or onbehalf of, such passengers, crew or cargo of the other Party's airlines.

Article 6

Safety

1. Each Party shall recognize as valid, forthe purpose of operating the air transportation provided for in this Agreement,certificates of airworthiness, certificates of competency, and licenses issuedor validated by the other Party and still in force, provided that therequirements for such certificates or licenses at least equal the minimumstandards that may be established pursuant to the Convention. Each Party may,however, refuse to recognize as valid for the purpose of flight above its ownterritory, certificates of competency and licenses granted to or validated forits own nationals by the other Party.

2. Either Party may request consultations concerning the safety standardsmaintained by the other Party relating to aeronautical facilities, aircrews,aircraft, and operation of the designated airlines. If, following suchconsultations, one Party finds that the other Party does not effectivelymaintain and administer safety standards and requirements in these areas thatat least equal the minimum standards that may be established pursuant to theConvention, the other Party shall be notified of such findings and the stepsconsidered necessary to conform with these minimum standards, and the otherParty shall take appropriate corrective action. Each Party reserves the rightto withhold, revoke, or limit the operating authorization or technicalpermission of an airline or airlines designated by the other Party in the eventthe other Party does not take such appropriate corrective action within areasonable time.

Article 7

Aviation Security

1. In accordance with their rights andobligations under international law, the Parties reaffirm that their obligationto each other to protect the security of civil aviation against acts ofunlawful interference forms an integral part of this Agreement. Withoutlimiting the generality of their rights and obligations under internationallaw, the Parties shall in particular act in conformity with the provisions ofthe Convention on Offenses and Certain Other Acts Committed on Board Aircraft,done at Tokyo September 14, 1963, the Convention for the Suppression ofUnlawful Seizure of Aircraft, done at The Hague December 16, 1970, theConvention for the Suppression of Unlawful Acts against the Safety of CivilAviation, done at Montreal September 23, 1971, and the Protocol for theSuppression of Unlawful Acts of Violence at Airports Serving InternationalCivil Aviation, done at Montreal February 24, 1988.

2. The Parties shall provide upon request all necessary assistance to eachother to prevent acts of unlawful seizure of civil aircraft and other unlawfulacts against the safety of such aircraft, of their passengers and crew, and ofairports and air navigation facilities, and to address any other threat to thesecurity of civil air navigation.

3. The Parties shall, in their mutual relations, act inconformity with the aviation security standards and appropriate recommendedpractices established by the International Civil Aviation Organization anddesignated as Annexes to the Convention; they shall require that operators ofaircraft of their registry, operators of aircraft who have their principalplace of business or permanent residence in their territory, and the operatorsof airports in their territory act in conformity with such aviation securityprovisions.

4. Each Party agrees to observe the security provisions required by theother Party for entry into, for departure from, and while within the territoryof that other Party and to take adequate measures to protect aircraft and toinspect passengers, crew, and their baggage and carry-on items, as well ascargo and aircraft stores, prior to and during boarding or loading. Each Partyshall also give positive consideration to any request from the other Party forspecial security measures to meet a particular threat.

5. When an incident or threat of an incident of unlawful seizure ofaircraft or other unlawful acts against the safety of passengers, crew,aircraft, airports or air navigation facilities occurs, the Parties shallassist each other by facilitating communications and other appropriate measuresintended to terminate rapidly and safely such incident or threat.

6. When a Party has reasonable grounds to believe that the other Party hasdeparted from the aviation security provisions of this Article, theaeronautical authorities of that Party may request immediate consultations withthe aeronautical authorities of the other Party. Failure to reach asatisfactory agreement within 15 days from the date of such request shallconstitute grounds to withhold, revoke, limit, or impose conditions on theoperating authorization and technical permissions of an airline or airlines ofthat Party. When required by an emergency, a Party may take interim actionprior to the expiry of 15 days.

Article 8

Commercial Opportunities

1. The airlines of each Party shall have theright to establish offices in the territory of the other Party for thepromotion and sale of air transportation.

2. The designated airlines of each Party shall be entitled, in accordancewith the laws and regulations of the other Party relating to entry, residence,and employment, to bring in and maintain in the territory of the other Partymanagerial, sales, technical, operational, and other specialist staff requiredfor the provision of air transportation.

3. Each designated airline shall have the right to perform its ownground-handling in the territory of the other Party ("self-handling")or, at its option, select among competing agents for such services in whole orin part. The rights shall be subject only to physical constraints resultingfrom considerations of airport safety. Where such considerations precludeself-handling, ground services shall be available on an equal basis to allairlines; charges shall be based on the costs of services provided; and suchservices shall be comparable to the kind and quality of services as ifself-handling were possible.

4. Any airline of each Party may engage in the sale of air transportationin the territory of the other Party directly and, at the airline's discretion,through its agents, except as may be specifically provided by the charterregulations of the country in which the charter originates that relate to theprotection of passenger funds, and passenger cancellation and refund rights.Each airline shall have the right to sell such transportation, and any personshall be free to purchase such transportation, in the currency of thatterritory or in freely convertible currencies.

5. Each airline shall have the right to convert and remit to its country,on demand, local revenues in excess of sums locally disbursed. Conversion andremittance shall be permitted promptly without restrictions or taxation inrespect thereof at the rate of exchange applicable to current transactions andremittance on the date the carrier makes the initial application forremittance.

6. The airlines of each Party shall be permitted to pay for localexpenses, including purchases of fuel, in the territory of the other Party inlocal currency. At their discretion, the airlines of each Party may pay forsuch expenses in the territory of the other Party in freely convertiblecurrencies according to local currency regulation.

7. In operating or holding out the authorized services on the agreedroutes, any designated airline of one Party may enter into cooperativemarketing arrangements such as blocked-space, code-sharing or leasingarrangements, with

a.     an airline or airlines of either Party;

b.     an airline or airlines of a third country; [and

c.     a surface transportation provider of any country;]

provided that all participants in such arrangements (i)hold the appropriate authority and (ii) meet the requirements normally appliedto such arrangements.

8. Notwithstanding any other provision of this Agreement, airlines andindirect providers of cargo transportation of both Parties shall be permitted,without restriction, to employ in connection with international airtransportation any surface transportation for cargo to or from any points inthe territories of the Parties or in third countries, including transport toand from all airports with customs facilities, and including, where applicable,the right to transport cargo in bond under applicable laws and regulations.Such cargo, whether moving by surface or by air, shall have access to airportcustoms processing and facilities. Airlines may elect to perform their ownsurface transportation or to provide it through arrangements with other surfacecarriers, including surface transportation operated by other airlines andindirect providers of cargo air transportation. Such intermodal cargo servicesmay be offered at a single, through price for the air and surfacetransportation combined, provided that shippers are not misled as to the factsconcerning such transportation.

Article 9

Customs Duties and Charges

1. On arriving in the territory of one Party,aircraft operated in international air transportation by the designatedairlines of the other Party, their regular equipment, ground equipment, fuel,lubricants, consumable technical supplies, spare parts (including engines),aircraft stores (including but not limited to such items of food, beverages andliquor, tobacco and other products destined for sale to or use by passengers inlimited quantities during flight), and other items intended for or used solelyin connection with the operation or servicing of aircraft engaged ininternational air transportation shall be exempt, on the basis of reciprocity,from all import restrictions, property taxes and capital levies, customsduties, excise taxes, and similar fees and charges that are (a) imposed by thenational authorities, and (b) not based on the cost of services provided,provided that such equipment and supplies remain on board the aircraft.

2. There shall also be exempt, on the basis of reciprocity, from thetaxes, levies, duties, fees and charges referred to in paragraph 1 of thisArticle, with the exception of charges based on the cost of the service provided:

a.     aircraft stores introduced into or supplied in theterritory of a Party and taken on board, within reasonable limits, for use onoutbound aircraft of an airline of the other Party engaged in international airtransportation, even when these stores are to be used on a part of the journeyperformed over the territory of the Party in which they are taken on board;

b.     ground equipment and spare parts (including engines)introduced into the territory of a Party for the servicing, maintenance, orrepair of aircraft of an airline of the other Party used in international airtransportation;

c.     fuel, lubricants and consumable technical suppliesintroduced into or supplied in the territory of a Party for use in an aircraftof an airline of the other Party engaged in international air transportation,even when these supplies are to be used on a part of the journey performed overthe territory of the Party in which they are taken on board; and

d.     promotional and advertising materials introduced into orsupplied in the territory of one Party and taken on board, within reasonablelimits, for use on outbound aircraft of an airline of the other Party engagedin international air transportation, even when these stores are to be used on apart of the journey performed over the territory of the Party in which they aretaken on board.

3. Equipment and supplies referred to in paragraphs 1 and 2 of thisArticle may be required to be kept under the supervision or control of theappropriate authorities.

4. The exemptions provided by this Article shall also be available wherethe designated airlines of one Party have contracted with another airline,which similarly enjoys such exemptions from the other Party, for the loan ortransfer in the territory of the other Party of the items specified inparagraphs 1 and 2 of this Article.

Article 10

User Charges

1. User charges that may be imposed by thecompetent charging authorities or bodies of each Party on the airlines of theother Party shall be just, reasonable, not unjustly discriminatory, andequitably apportioned among categories of users. In any event, any such usercharges shall be assessed on the airlines of the other Party on terms not lessfavorable than the most favorable terms available to any other airline at thetime the charges are assessed.

2. User charges imposed on the airlines of the other Party may reflect,but shall not exceed, the full cost to the competent charging authorities orbodies of providing the appropriate airport, airport environmental, airnavigation, and aviation security facilities and services at the airport orwithin the airport system. Such charges may include a reasonable return onassets, after depreciation. Facilities and services for which charges are madeshall be provided on an efficient and economic basis.

3. Each Party shall encourage consultations between thecompetent charging authorities or bodies in its territory and the airlinesusing the services and facilities, and shall encourage the competent chargingauthorities or bodies and the airlines to exchange such information as may benecessary to permit an accurate review of the reasonableness of the charges inaccordance with the principles of paragraphs 1 and 2 of this Article. EachParty shall encourage the competent charging authorities to provide users withreasonable notice of any proposal for changes in user charges to enable usersto express their views before changes are made.

4. Neither Party shall be held, in dispute resolution procedures pursuantto Article 14, to be in breach of a provision of this Article, unless (a) itfails to undertake a review of the charge or practice that is the subject ofcomplaint by the other Party within a reasonable amount of time; or (b)following such a review it fails to take all steps within its power to remedyany charge or practice that is inconsistent with this Article.

Article 11

Fair Competition

1. Each Party shall allow a fair and equalopportunity for the designated airlines of both Parties to compete in providingthe international air transportation governed by this Agreement.

2. Each Party shall allow each designated airline to determine thefrequency and capacity of the international air transportation it offers basedupon commercial considerations in the marketplace. Consistent with this right,neither Party shall unilaterally limit the volume of traffic, frequency orregularity of service, or the aircraft type or types operated by the designatedairlines of the other Party, except as may be required for customs, technical,operational, or environmental reasons under uniform conditions consistent withArticle 15 of the Convention.

3. Neither Party shall impose on the other Party's designated airlines afirst-refusal requirement, uplift ratio, no-objection fee, or any otherrequirement with respect to capacity, frequency or traffic that would beinconsistent with the purposes of this Agreement.

4. Neither Party shall require the filing of schedules, programs forcharter flights, or operational plans by airlines of the other Party forapproval, except as may be required on a non-discriminatory basis to enforcethe uniform conditions foreseen by paragraph 2 of this Article or as may bespecifically authorized in an Annex to this Agreement. If a Party requiresfilings for information purposes, it shall minimize the administrative burdensof filing requirements and procedures on air transportation intermediaries andon designated airlines of the other Party.

Article 12

Pricing

1. Each Party shall allow prices for airtransportation to be established by each designated airline based uponcommercial considerations in the marketplace. Intervention by the Parties shallbe limited to:

a.     prevention of unreasonably discriminatory prices orpractices;

b.     protection of consumers from prices that are unreasonablyhigh or restrictive due to the abuse of a dominant position; and

c.     protection of airlines from prices that are artificiallylow due to direct or indirect governmental subsidy or support.

2. Prices for international air transportation betweenthe territories of the Parties shall not be required to be filed.Notwithstanding the foregoing, the designated airlines of the Parties shallcontinue to provide immediate access, on request, to information on historical,existing, and proposed prices to the aeronautical authorities of the Parties ina manner and format acceptable to those aeronautical authorities.

3. Neither Party shall take unilateral action to preventthe inauguration or continuation of a price proposed to be charged or chargedby (i) an airline of either Party for international air transportation betweenthe territories of the Parties, or (ii) an airline of one Party forinternational air transportation between the territory of the other Party andany other country, including in both cases transportation on an interline orintraline basis. If either Party believes that any such price is inconsistentwith the considerations set forth in paragraph 1 of this Article, it shallrequest consultations and notify the other Party of the reasons for itsdissatisfaction as soon as possible. These consultations shall be held notlater than 30 days after receipt of the request, and the Parties shallcooperate in securing information necessary for reasoned resolution of theissue. If the Parties reach agreement with respect to a price for which anotice of dissatisfaction has been given, each Party shall use its best effortsto put that agreement into effect. Without such mutual agreement, the priceshall go into effect or continue in effect.

Article 13

Consultations

Either Party may, at any time, requestconsultations relating to this Agreement. Such consultations shall begin at theearliest possible date, but not later than 60 days from the date the otherParty receives the request unless otherwise agreed.

Article l4

Settlement of Disputes

1. Any dispute arising under this Agreement,except those that may arise under paragraph 3 of Article 12 (Pricing), that isnot resolved by a first round of formal consultations may be referred byagreement of the Parties for decision to some person or body. If the Parties donot so agree, the dispute shall, at the request of either Party, be submittedto arbitration in accordance with the procedures set forth below.

2. Arbitration shall be by a tribunal of three arbitrators to beconstituted as follows:

a.     Within 30 days after the receipt of a request forarbitration, each Party shall name one arbitrator. Within 60 days after thesetwo arbitrators have been named, they shall by agreement appoint a thirdarbitrator, who shall act as President of the arbitral tribunal;

b.     If either Party fails to name an arbitrator, or if thethird arbitrator is not appointed in accordance with subparagraph a of thisparagraph, either Party may request the President of the Council of theInternational Civil Aviation Organization to appoint the necessary arbitratoror arbitrators within 30 days. If the President of the Council is of the samenationality as one of the Parties, the most senior Vice President who is notdisqualified on that ground shall make the appointment.

3. Except as otherwise agreed, the arbitral tribunal shall determine thelimits of its jurisdiction in accordance with this Agreement and shallestablish its own procedural rules. The tribunal, once formed, may recommendinterim relief measures pending its final determination. At the direction ofthe tribunal or at the request of either of the Parties, a conference todetermine the precise issues to be arbitrated and the specific procedures to befollowed shall be held not later than 15 days after the tribunal is fullyconstituted.

4. Except as otherwise agreed or as directed by the tribunal, each Partyshall submit a memorandum within 45 days of the time the tribunal is fullyconstituted. Replies shall be due 60 days later. The tribunal shall hold ahearing at the request of either Party or on its own initiative within 15 daysafter replies are due.

5. The tribunal shall attempt to render a written decision within 30 daysafter completion of the hearing or, if no hearing is held, after the date bothreplies are submitted. The decision of the majority of the tribunal shallprevail.

6. The Parties may submit requests for clarification of the decisionwithin 15 days after it is rendered and any clarification given shall be issuedwithin 15 days of such request.

7. Each Party shall, to the degree consistent with its national law, givefull effect to any decision or award of the arbitral tribunal.

8. The expenses of the arbitral tribunal, including the fees and expenses ofthe arbitrators, shall be shared equally by the Parties. Any expenses incurredby the President of the Council of the International Civil AviationOrganization in connection with the procedures of paragraph 2b of this Articleshall be considered to be part of the expenses of the arbitral tribunal.

Article l5

Termination

Either Party may, at any time, give notice in writing tothe other Party of its decision to terminate this Agreement. Such notice shallbe sent simultaneously to the International Civil Aviation Organization. ThisAgreement shall terminate at midnight (at the place of receipt of the notice tothe other Party) immediately before the first anniversary of the date ofreceipt of the notice by the other Party, unless the notice is withdrawn byagreement of the Parties before the end of this period.

Article 16

Registration with ICAO

This Agreement and all amendments theretoshall be registered with the International Civil Aviation Organization.

Article 17

Entry into Force

This Agreement and its Annexes shall enterinto force on the date of signature.

IN WITNESS WHEREOF the undersigned, being duly authorized by theirrespective Governments, have signed this Agreement.

DONE at _____________, this _______day of ________, 20__, in duplicate, inthe English and ___________ languages, each text being equally authentic.

FOR THE GOVERNMENT OF FOR THE GOVERNMENT OF
THE UNITED STATES OF AMERICA: [country]:

ANNEX I

Scheduled Air Transportation

Section 1

Routes

Airlines of each Party designated under thisAnnex shall, in accordance with the terms of their designation, be entitled toperform scheduled international air transportation between points on thefollowing routes:

A. Routes for the airline or airlines designated by the Government of theUnited States:

1.     From points behind the United States via the UnitedStates and intermediate points to a point or points in [country] and beyond.

2.     [ For all-cargo service or services, between [country]and any point or points.]

B. Routes for the airline or airlines designated by the Government of[country]:

1.     From points behind [country] via [country] andintermediate points to a point or points in the United States and beyond.

2.     [For all-cargo service or services, between the UnitedStates and any point or points.]

Section 2

Operational Flexibility

Each designated airline may, on any or allflights and at its option:

1. operate flights in either or both directions;

2. combine different flight numbers within one aircraft operation;

3. serve behind, intermediate, and beyond points and points in theterritories of the Parties on the routes in any combination and in any order;

4. omit stops at any point or points;

5. transfer traffic from any of its aircraft to any of its other aircraftat any point on the routes; and

6. serve points behind any point in its territory with or without changeof aircraft or flight number and may hold out and advertise such services tothe public as through services;

without directional or geographic limitation and without loss of any rightto carry traffic otherwise permissible under this Agreement; provided that,[with the exception of all-cargo services,] the service serves a point in theterritory of the Party designating the airline.

Section 3

Change of Gauge

On any segment or segments of the routesabove, any designated airline may perform international air transportationwithout any limitation as to change, at any point on the route, in type ornumber of aircraft operated; provided that, [with the exception of all-cargoservices,] in the outbound direction, the transportation beyond such point is acontinuation of the transportation from the territory of the Party that hasdesignated the airline and, in the inbound direction, the transportation to theterritory of the Party that has designated the airline is a continuation of thetransportation from beyond such point.

ANNEX II

Charter Air Transportation

Section 1

A. Airlines of each Party designated under this Annexshall, in accordance with the terms of their designation, have the right tocarry international charter traffic of passengers (and their accompanyingbaggage) and/or cargo (including, but not limited to, freight forwarder, split,and combination (passenger/cargo) charters):

1.     Between any point or points in the territory of the Partythat has designated the airline and any point or points in the territory of theother Party; and

2.     2. Between any point or points in the territory of theother Party and any point or points in a third country or countries, providedthat, [except with respect to cargo charters,] such service constitutes part ofa continuous operation, with or without a change of aircraft, that includesservice to the homeland for the purpose of carrying local traffic between thehomeland and the territory of the other Party.

B. In the performance of services covered by this Annex, airlines of eachParty designated under this Annex shall also have the right: (1) to makestopovers at any points whether within or outside of the territory of eitherParty; (2) to carry transit traffic through the other Party's territory; (3) tocombine on the same aircraft traffic originating in one Party's territory,traffic originating in the other Party's territory, and traffic originating inthird countries; and (4) to perform international air transportation withoutany limitation as to change, at any point on the route, in type or number ofaircraft operated; provided that, [except with respect to cargo charters,] inthe outbound direction, the transportation beyond such point is a continuationof the transportation from the territory of the Party that has designated theairline and in the inbound direction, the transportation to the territory ofthe Party that has designated the airline is a continuation of thetransportation from beyond such point.

C. Each Party shall extend favorable consideration to applications byairlines of the other Party to carry traffic not covered by this Annex on thebasis of comity and reciprocity.

Section 2

A. Any airline designated by either Partyperforming international charter air transportation originating in theterritory of either Party, whether on a one-way or round-trip basis, shall havethe option of complying with the charter laws, regulations, and rules either ofits homeland or of the other Party. If a Party applies different rules,regulations, terms, conditions, or limitations to one or more of its airlines,or to airlines of different countries, each designated airline shall be subjectto the least restrictive of such criteria.

B. However, nothing contained in the above paragraph shall limit therights of either Party to require airlines designated under this Annex byeither Party to adhere to requirements relating to the protection of passengerfunds and passenger cancellation and refund rights.

Section 3

Except with respect to the consumer protectionrules referred to in the preceding paragraph, neither Party shall require anairline designated under this Annex by the other Party, in respect of thecarriage of traffic from the territory of that other Party or of a thirdcountry on a one-way or round-trip basis, to submit more than a declaration ofconformity with the applicable laws, regulations and rules referred to undersection 2 of this Annex or of a waiver of these laws, regulations, or rulesgranted by the applicable aeronautical authorities.