RESTRICTEDWORLD TRADE
ORGANIZATIONS/C/W/182
30 November 2000
(00-5161)
Council for Trade in Services
TYPOLOGY OF THE BILATERAL AIR SERVICES AGREEMENTS
CONTAINING LEASING PROVISIONS
Note by the Secretariat
At the 28-29 September meeting of the Council for Trade in Services devoted to the review
mandated under paragraph 5 of the Air Transport Annex, the Secretariat was requested to prepare,
with the help of ICAO, a typology of bilateral air services agreements containing leasing provisionsaccording to the three categories described in paragraph 168 of document S/C/W/163, that is to say:
- Agreements requiring simple notification of the lease to the competent authorities;- agreements authorizing the lease from a third party only on the condition that this
third party does not derive any economic benefit from the bilateral agreement;
- agreements demanding, in addition to the preceding conditions, "appropriate
authority" (i.e the underlying traffic rights) and reciprocity from the state of the
lessor.
Annex 1 contains the list of the agreements classified according to these categories.Annex 2 contains an excerpt of the ICAO leasing study (EC2/82, LE4/55-99/54, dated
14 May 1999) describing in more detail how bilateral agreements deal with leasing.
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ANNEX 1
LIST OF BILATERAL AIR SERVICES AGREEMENTS CONTAINING LEASING
PROVISIONS CLASSIFIED BY TYPE OF PROVISIONS
Total number of agreements registered with ICAO containing leasing provisions:  36
of which:
a) Simple notification provision:  11
Vanuatu - New Zealand – 14 July 1989
Western Samoa - Cook Islands – 23 June 1993Fiji - Vanuatu – 24 March 1993
Tonga - Western Samoa – 21 April 1978
Brunei - Vietnam – 28 November 1991
Salomon Island - New Zealand – 30 May 1990
New Zealand - Samoa – 23 June 1978United States - Saudi Arabia – 02 October 1993
Honduras - Panama – 15 October 1987
Panama - Netherlands – 24 September 1987
Panama - Dominican Republic – 27 January 1984
b) Provision conditioning authorization by the absence of economic advantage:  18
Nepal - Singapore – 15 June 1984
Singapore - Brunei – 24 May 1997
Cambodia - Singapore – 04 November 1996Cambodia - Myanmar – 17 October 1996
Cambodia - Vietnam – 19 April 1996
Uzbekistan - Vietnam – 14 July 1995
Myanmar – Vietnam – 13 October 1995
Indonesia - Singapore – 29 September 1994
Sri Lanka - Singapore – 29 August 1985
Mongolia - Singapore – 18 May 1993Vietnam - Singapore – 20 April 1992
Hungary - Singapore – 9 March 1990
Mexico - Singapore – 21 June 1990
Bahrain - Singapore – 12 December 1991
Maldives - Singapore – 12 August 1983Brunei - Bahrain – 27 June 1990
Sri Lanka - United Kingdom - 05 August 1949
Laos – Singapore – 24 April 1995
c) Provision requiring underlying traffic rights :  4
United States - Czech Republic – 10 September 1996
United States - Singapore – 08 April 1997
New Zealand - Singa pore – 27 November 1997
United States - Finland – 29 March 1949S/C/W/182
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d) Agreements having only a reference to leasing but no specific Article:  3
South Africa - Brazil – 26 November 1996
Russian Federation - Australia – 11 July 1994
Dominican Republic - Jamaica – 15 May 1984S/C/W/182
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ANNEX 2
EXCERPT FROM THE ICAO LEASING STUDY ON THE TYPOLOGY OF
BILATERAL AGREEMENTS
"4.11 The bilateral agreements that contain leasing provisions4 deal with the practice in basically
three ways:
a) by requiring prior notification of any designated airline’s intention to lease, on a
continuing basis, any aircraft not owned by it or by the designated airlines of theContracting Parties;
b) either implicitly allowing or requiring only notification for leases involving
non-airline entities while conditioning the approval of an airline lease so that no
economic benefit accrues to the lessor airline;  or
c) applying the provision only to leases involving airlines and prescribing specific
criteria for their approval.
In the approach in a) above, designated airlines are free to lease, charter, hire or otherwise use or
operate aircraft owned by other designated airlines, but all financial and operating leases as well as all
those involving third country airlines are subject to a 60-day prior notification requirement.Presumably each Party will approve/disapprove such leases on the basis of its national criteria. The
phrase “on a continuing basis” implies that short-term, sub-charters might not fall under this
provision, but could be handled on the basis of each State’s policy for such cases. An example of this
type of provision is contained in the bilateral agreement between New Zealand and Samoa (ICAO
No. 3478).
4.12 The leasing clause for b) above, in addition to requiring that the arrangement shall not be
equivalent to giving a lessor airline operator of another country access to traffic rights not otherwise
available to that airline, also requires an air ca rrier lease to meet two conditions to ensure that no
economic benefit from the route in question accrues to the lessor air carrier. The first conditionprohibits payment linked in any way to traffic carried, thus calling for fixed lease payments not
related to the traffic carried (for example, one based on an hourly/daily rate). The second condition is
aimed at preventing the lessor airline from enha ncing its own operations by prohibiting any linkage
which would result in through services on the lessor airline’s route or routes. For example, using a
wet-leased aircraft for what would be a fifth freedom service by the lessor airline which connectedwith, and therefore would feed passengers/cargo to, a fourth freedom service of the lessor airline,
would not be permitted.
4.13 Bilateral agreements which have the clause in b) above in common take a different approach
to leases by non-airline entities. The first approach implicitly allows such leases, subject to priornotification and approval, by stating that a designated airline is not otherwise prohibited from using
leased aircraft provided that any lease arrangemen t entered into satisfies the conditions for airline
leases, which by their nature financial and operating leases would do. This type of clause appears, for
example, in the bilateral agreement between Myanmar and Vietnam (ICAO No. 4014). The second
approach is to require notification rather than approval for leases involving non-airline entities. An
                                                     
4 The text of the four examples of bilateral leasin g clauses described in this section are included in
Appendix B.S/C/W/182
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example of this approach is contained in the bilateral agreement between Singapore and Indonesia
(ICAO No. 3950).
4.14 The approach described in c) is similar to that of a) in that it focuses on leasing arrangements
involving airlines, but broader in that it allows le asing arrangements with an airline or airlines of
either party and of a third country which meet certain criteria. In the case of leases with an airline or
airlines of the Parties to the bilateral there are two criteria:  1) that all airlines in such arrangements
have the appropriate authority; and 2) that they meet the requirements normally applied to such
arrangements. In the case of leases involving an airlin e or airlines of a third country, in addition to the
two foregoing conditions, there is a reciprocity requirement, specifically that the third country
authorizes or allows comparable arrangements between the airlines of the other Party and other
airlines on services to, from and via such third country. The bilateral agreement between El Salvadorand the United States (not yet registered with ICAO) contains an example of this type of clause."
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