Bilaterals
Bagso
I'm afraid that I don't pretend to be an expert on bilaterals. But you are right that MAG's written submission to Davies (in relation to making best use of existing airport capacity in the UK regions) proposed removing the right of UK airlines to object to route applications, if they didn't intend to operate the route themselves.
The Davies report responded to this as follows:
"5.92 Current Government policy – as articulated in the 2013 Aviation Policy Framework – is liberal, supporting the granting of air services agreements at less congested airports. However, some have suggested Government should further relax its policy in this area, by reducing or removing the requirement for overseas airlines to demonstrate that they are not dependent upon state aid, or by removing the ability of competing airlines to object to applications.
5.93 The Commission sought legal advice on whether this would be possible. On the basis of this advice, the Commission has concluded that current Government policy represents the furthest point in the direction of liberalisation to which the Government might plausibly travel.
5.94 The Government is free to grant traffic rights despite objections (including where it determines that objections are driven only by commercial self-interest). However it would likely be inconsistent with the modern approach to ignore legitimate concerns regarding anti-competitive state aids. A UK based carrier without Government support would have a legitimate right to object to fifth freedoms being granted at its home base to an overseas carrier supported by direct Government subsidy, preferential loans or tax exemptions."
So Davies basically said that the Government has gone as far as it reasonably could, in relaxing the restrictions at regional airports. Personally I thought this was a bit weak, but there you are.