Air Transport Policy
Has been slow to develop towards a level that meets the competition policy requirements of the European Communities (EC).
The airline industry has been dominated by an international cartel, the International Air Transport Association (IATA), and by a series of intergovernmental agreements. The emphasis of these was upon the mutual protection by governments of state-owned airlines, their pricing arrangements, and access to scheduled routes.
The result was an absence of competition, and some of the highest air fares in the world, in terms of cost per kilometer. Before 1986, European Commission initiatives were restricted to technical matters relating to, for example, cooperation on accident procedures and noise emissions. Challenges to the government-supported IATA structure were largely left to small, independent airlines.
In April 1986 the Court of Justice ruled in the Nouvelles Frontières case that EC competition policy also applied to air transport. The European Commission immediately threatened legal action against 10 European airlines unless they substantially modified their price-fixing arrangements. Simultaneously, it sought to persuade the Member States to opt for more liberal policies. In April 1987 the airlines indicated that they would comply with the Commission’s demands. Subsequently, progress was positive, but slow. A number of Commission proposals relating to discount fares, competition on established routes, the rights of prospective new competitors, and the establishment of new scheduled routes were implemented in January 1988.
These measures also gave the Commission substantial investigatory powers. In anticipation of the introduction of the internal market, and partly because many state-owned airlines were substantial money-losers, governments began to accept a greater degree of private ownership and capital, and also to urge the consolidation of their national companies as a way of warding off foreign competition in a more competitive market. Matters were complicated by the fact that the major carriers, to meet the conditions of the internal market and world developments in air transport, began to seek closer and more formal collaboration, which in turn threatened the survival of smaller, independent airlines. However, airline agreements and co-operative arrangements are subject to Commission approval and the EC’s merger policy.
The acceptance of liberalization also varied from one country to another. The United Kingdom and the Netherlands led the movement for change, while France and some of the Mediterranean states were more resistant. Full liberalization of the market did not occur until 1997, when restrictions on European airlines within the European Union (EU) were removed, with the result that airlines were able to operate domestic air services in EU countries other than their own.
In 2000 the Commission proposed the creation of a European Aviation Safety Agency, which would be an independent organization within the EC. It has also tried to initiate policies in order to create ‘Single Skies’ within the EU, replacing each state’s airspace with a single European zone, which would mean the creation of a unified supervisory structure for air traffic control. In March 2003 the European Commission, in a communication to the European Council and the European Parliament, expressed its first reactions to the potential consequences of the US-led war in Iraq on energy and the air transport industry.
This formed part of the Task Force established by the Directorate-General (DG) for Energy and Transport in December 2002, which is briefed to provide information on the dangers to both the security of energy supplies and the transport infrastructure in the EU and the candidate countries.
The Task Force forwards this information to the DG RELEX’s Crisis Room and to the DG Environment’s (see Environment) Alert Centre. With reference to air transport policy, this communication maintained that civil aviation was likely to be affected by the war in three ways: the closure of air space in the region of the conflict; more congested air space; and finally, and most importantly, a reduction in demand for flights.
This last consequence was expected adversely to affect operational costs and, indeed, very quickly resulted in demands for the provision of help to the air transport sector through some form of financial assistance, such as the relaxation of the rules on state aid to airlines for a limited period only, as occurred immediately after the terrorist attacks in the USA on 11 September 2001.
MOBILITY AND TRANSPORT
What do we want to achieve?
A strategically important sector that makes a vital contribution to the EU's overall economy and employment, aviation supports 5.1 million jobs and contributes €365 billion, or 2.4% to European GDP.
Despite the current economic crisis, global air transport over the long term is expected to grow by around 5% annually until 2030. As traffic increases so do concerns about safety. The common EU aviation policy aims at making Europe the safest air space in the world.In order to fully exploit the economic potential of the sector, the European Commission constantly works on several important aspects for our skies.
The aviation market was gradually liberalised through three successive packages of measures adopted at EU level which covered air carrier licensing, market access and fares. So, decades of restrictions that had limited air transport markets in Europe and prevented cross-border investment by European airlines have been removed.
The gradual development of a more coordinated EU external aviation policy over the past decade has been the logical consequence of the creation of the EU internal market and associated common rules. This has generated significant economic benefits. But the Commission has now come with fresh ideas to move forward.
Single European Sky
Something needs to be done about the heavy airspace congestion causing lengthy delays on many European flights, and the strain on airport capacity due to the projected increase in traffic. This is the aim of the ambitious initiative for a Single European Sky (SES), launched in 2004. A second package of measures, known as SES II, followed in 2009 and had a greater emphasis on environment and cost efficiency. We are now looking at whether further measures are necessary.
The technology required for the future Single Sky is provided through the air traffic management research programme SESAR, which aims to modernise infrastructure and raise efficiency by optimising capacity - and so enable the SES to become a reality.
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