1 directorate-general energy and transport / air transport directorate euromed transport eu external...
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1Directorate-General Energy and Transport / Air Transport Directorate
Euromed Transport EU External Aviation Policy
Towards a Common Aviation Area
EUROMED AVIATION PROJECTAIR TRANSPORT SEMINAR
Amman (Jordan), 17–18 October 2007
2Directorate-General Energy and Transport / Air Transport Directorate
The EU Single Market
27 Member States 450 Million Inhabitants (and consumers) One Single Market (in fact wider than EU27)
Freedom of establishment & provision of services The “Four Basic Freedoms”: Freedom of
movement of goods, services, capital and persons No barriers to trade (technical harmonisation and
common standards)
EU law has primacy over national law
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From National Markets to a Common Market
Pre-1987: protected and fragmented national markets To fly between two major cities: little alternative but to fly
with one of the two national “flag carriers” (duopoly); Three successive packages of liberalisation
measures adopted 1987-1992 have gradually completely transformed this landscape;
Most extensive example in the world of regional liberalisation, by far. Regarded as successful;
Liberalisation and market integration based on three main Regulations: Air carrier licensing (Regulation 2407/92) Market access (Regulation 2408/92) Fares (Regulation 2409/92).
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From National Markets to a Single EU Aviation Market
Pre-1987: protected and fragmented national markets
Post-1992: Liberalisation and market integration Results:
Non-discriminatory air carrier licensing across Europe (from national to Community carriers with equal rights)
Market access: no capacity restrictions – cargo came first
Full cabotage since 1 April 1997 Free air fare setting Any Community carrier can now operate on any route
within the EU – and they do! Comprehensive body of Community legislation in
relation to all key aspects of aviation
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Liberalisation within a Modern Regulatory Framework
Common requirements for licensingApplication of competition rulesStrict control of state aidHigh safety standardsHigh security standardsConsumer protection – Passenger RightsCommon rules for slot allocation High standards on noise emissionsSingle European Sky
Open Markets need coherent regulatory standards:
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What Have We Achieved?
Tripling of air travel 1980-2000. Doubling expected by 2020
25% more airlines since 1990 Emergence of low-cost carriers
1% of capacity in 1996. +20% in 2004
More competition between air carriers Lower fares – price response of traditional carriers to LCC Massive productivity gains More routes with more than two competitors (+150% 1992-2004)
More intra-EU routes (+100% 1992-2004) Since 1998 more intra-Community traffic than domestic
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Single European Sky becoming a reality EASA taking up increasing responsibilities EU-wide black list of unsafe air carriers Airport capacity and costs of use (infrastructure charging)
Broad consultation in 2005; Communication with possible measures to be presented in 2nd half of 2006
Revision of EU single market regulatory framework Simplification of Third package, slot regulation, ground handling
The possible inclusion of aviation in the EU’s emissions trading system is being discussed
Security Passenger’s rights – consumer protection EU External Aviation Policy
Other Key Topical EU Aviation Developments
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The External Dimension of the Single EU Aviation Market
The single European aviation market also covers Norway, Switzerland and Iceland (EFTA members).
European Common Aviation Area (ECAA - Balkans) + Morocco.
Since the “open skies” judgements of the European Court of Justice in November 2002 it has been recognised that the EU has exclusive competences in external aviation.
This reflects the development of the internal single market and the comprehensive body of EU legislation in aviation.
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“Open Skies” Judgements of the European Court of Justice
The European Court of Justice found on 5 November 2002 that the bilateral air services
agreements between eight EU Member States and the USA were not in conformity with EC law.
The nationality clauses in all
agreements infringe the right of
establishment (Art. 43 EC Treaty) as they are discriminating on
grounds of nationality.
The agreements infringe the exclusive external competence of the EU.
In areas where EC legislation affects third
countries, only the EU can enter into international
commitments.
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June 2003 Council agreement on: US negotiating mandate to the COM “Horizontal” mandate to the COM Regulation on the negotiation and implementation of
air service agreements between EU Member States and third countries (formally adopted as Regulation 847/2004 in April 2004)
June 2005 Council agreement on: Road-map on external aviation policy
External Aviation Relations – Political Decisions
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I. Bringing existing bilateral agreements into line with Community law
II. Conclusion of ambitious comprehensive agreements with key partners (US, China, Russia, India, Australia, New Zealand, Chile)
III. The creation of a “Common Aviation Area” with neighbouring countries
Three Key Pillars of EU External Aviation Policy
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Pillar I: Progress on the Legal Issue
93 non-EU states have accepted Community designation
564 Bilateral ASAs have been brought into conformity with Community law
29 Horizontal Agreements covering 461 Bilateral ASAs (since September 2004)
Negotiations/talks on-going with many countries
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Southern and Eastern neighbouring countries Morocco (Euro-Mediterranean agreement)
EU-Morocco Agreement signed in December 2006 Pre-accession context: Western Balkans (ECAA)
ECAA Agreement signed in June 2006 Next: Ukraine, Jordan, Lebanon, Israel Particular case of Russia (Siberian overflight)
Why a common aviation area? Economic and aviation policy reasons
Pillar II:Common Aviation Area by 2010
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A Wider Common Aviation Area
The EU today:• 27 Member States• 490 Million Inhabitants • One Single Market
Potential of a Common Aviation
Area by 2010:
48 States900 Mio Inhabitants
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The EC-Morocco AgreementThe EC-Morocco Agreement
• First Euro-MediterraneanFirst Euro-Mediterranean Aviation Aviation AgreementAgreement
• CCreatreateses a common area for aviation a common area for aviation
through through high-level regulatory high-level regulatory convergence and through market convergence and through market openingopening
• Covers EC, its 25 Member States and Covers EC, its 25 Member States and MoroccoMorocco
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Negotiating processNegotiating process
• Mandate to Commission in Dec. 2004Mandate to Commission in Dec. 2004• First of four roundsFirst of four rounds of negotiations in Feb. of negotiations in Feb.
20052005• Horizontal agreement initialled in May 2005Horizontal agreement initialled in May 2005• Global agreement initialled in Dec. 2005Global agreement initialled in Dec. 2005• Signature of „global” and horizontal Signature of „global” and horizontal
agreements on 12 December 2006agreements on 12 December 2006
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Basic principlesBasic principles
• OpenOpen market access market access
• High High technical technical standards of the standards of the EU EU internalinternal air transport maair transport market rket will be will be implemented by Morocco implemented by Morocco
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Basic principles (cont.)Basic principles (cont.)
• TheThe core core EUEU aviation aviation legislationlegislation is the is the basis of the agreementbasis of the agreement
• Transitional phasesTransitional phases
• Technical assistance to MoroccoTechnical assistance to Morocco
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Market accessMarket access
• Phase 1: Phase 1: • Process of regulatory convergence starts• Full liberalisation of 3rd and 4th freedoms
• Phase 2: Phase 2: • Regulatory convergence achieved• Intra-Community 5th freedom for Moroccan
carriers; 5th freedom for EC carriers beyond Morocco
• Cargo unlimited
• Pax to Neighbourhood countries
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SStructure of the Agreementtructure of the Agreement
• Main Main ttextext• Annex I: Annex I: agreed services and routesagreed services and routes• Annex II: ASAs between EC Member States Annex II: ASAs between EC Member States
and Moroccoand Morocco• Annex III: competent authoritiesAnnex III: competent authorities• Annex IV: transitional measuresAnnex IV: transitional measures• Annex V: List of other statesAnnex V: List of other states• Annex VI: Rules applicable to civil aviationAnnex VI: Rules applicable to civil aviation
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Structure: Main Structure: Main ttextext
• DefinitionsDefinitions• Traffic rights, authorisationTraffic rights, authorisation• InvestmentInvestment• Competition, state aidCompetition, state aid• Traditional soft right provisions (offices, Traditional soft right provisions (offices,
charges etc.)charges etc.)• Free pricingFree pricing• Regulatory cooperation: safety, security, Regulatory cooperation: safety, security,
ATM, environment, Consumer protection, ATM, environment, Consumer protection, CRSs, Social aspects CRSs, Social aspects → Annex VI→ Annex VI
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Structure: Main Structure: Main ttext (contd.)ext (contd.)
• InterpretationInterpretation
• EnforcementEnforcement
• Joint CommitteeJoint Committee
• Dispute Dispute ssettlementettlement
• Safeguard measuresSafeguard measures
• Extension of the agreement („Euro-Extension of the agreement („Euro-Med clause”)Med clause”)
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Structure: Main Structure: Main ttext (contd.)ext (contd.)
• Relationship with other agreementsRelationship with other agreements
• AmendmentAmendment
• TerminationTermination
• ICAO registrationICAO registration
• Entry into forceEntry into force
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ConclusionsConclusions
• The world’s largest single air transport The world’s largest single air transport market further extendedmarket further extended
• The same high technical standards to be The same high technical standards to be applied (safety, security, ATM) with EU applied (safety, security, ATM) with EU technical assistancetechnical assistance
• Part of „Common Aviation Area” to be Part of „Common Aviation Area” to be established by 2010established by 2010
• First Euro-Mediterranean Aviation First Euro-Mediterranean Aviation AgreementAgreement
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The European Common The European Common Aviation Area Aviation Area
AgreementAgreement
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The European Common The European Common Aviation Area AgreementAviation Area Agreement
• Multilateral Aviation AgreementMultilateral Aviation Agreement
• Creates a common area for aviationCreates a common area for aviation
through the application of the same through the application of the same legislation and through extending the legislation and through extending the EU internal air transport marketEU internal air transport market
• Covers 3Covers 377 parties with more than 500 parties with more than 500 million peoplemillion people
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Multilateral AgreementMultilateral Agreement
Contracting Parties:Contracting Parties:- The European Community and its
Member States
- Norway, Iceland
- The Western Balkans parties: Albania, Bosnia and Herzegovina, Croatia, the former Yugoslav Republic of Macedonia, Montenegro, Serbia, UNMIK-Kosovo
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Creating a common area for Creating a common area for aviationaviation
Open market access and high Open market access and high technical standards of the EU internal technical standards of the EU internal air transport market are extended to air transport market are extended to the Western Balkans partthe Western Balkans partiesies in in preparation to their eventual preparation to their eventual accessionaccession to the EU to the EU
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Application of the same Application of the same legislationlegislation
• The EU aviation legislation is the The EU aviation legislation is the basis of the agreementbasis of the agreement
• The EU aviation legislation becomes The EU aviation legislation becomes applicable throughout the European applicable throughout the European Common Aviation AreaCommon Aviation Area i.e. the i.e. the Western Balkans parties will also Western Balkans parties will also implement itimplement it
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ECAA – Benefits for allECAA – Benefits for all
• Pre-accession instrument in a key Pre-accession instrument in a key sectorsector
Prepare for accession by early adaptation
• Application of high standardsApplication of high standardsEU standards become applicable in all Western
Balkans parties, and these standards will be implemented in the same way
• Economic interestsEconomic interestsFor both the EU and the Western Balkans parties
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ECAA - Structure of the ECAA - Structure of the AgreementAgreement
• Main text: objectives, principles, Main text: objectives, principles, functioning, future developments etc.functioning, future developments etc.
• Annex I: list of EU aviation legislation Annex I: list of EU aviation legislation which becomes applicablewhich becomes applicable
• Protocols: one Protocols: one for each Western for each Western Balkans partyBalkans party, setting out transitional , setting out transitional measuresmeasures and allowing for and allowing for implementation at own speedimplementation at own speed
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Structure: ProtocolsStructure: Protocols
• Transition: yes, derogation: noTransition: yes, derogation: no• Gradual opening of markets subject to Gradual opening of markets subject to
implementation of EU legislation implementation of EU legislation through two through two transitional transitional phasesphases• Liberalisation of 3rd and 4th freedom rights
upon application of the agreement until the implementation of key EU aviation legislation (first transitional phase)
• Liberalisation of 5th freedom right during the second transitional phase
• Full liberalisation including cabotage after the implementation of the whole EU aviation legislation (transition is over)
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ECAA implementationECAA implementation
• Agreement applied Agreement applied atat administrative level by all administrative level by all PartPartiesies since its signature in June 2006 since its signature in June 2006
• Ratification completed by Albania, Ratification completed by Albania, the former the former Yugoslav Republic of Macedonia, UNMIK Yugoslav Republic of Macedonia, UNMIK and and several EU Mseveral EU Member Statesember States
• First First annual ECAA annual ECAA Joint Committee meetingJoint Committee meeting: : Brussels,Brussels, 12 December 2006 12 December 2006
• ECAA ECAA Joint Committee Special meeting on safety Joint Committee Special meeting on safety and securityand security: Brussels,: Brussels,19 March 200719 March 2007
• Next annual ECAA Next annual ECAA Joint Committee meetingJoint Committee meeting: : Dubrovnik,19 October 2007Dubrovnik,19 October 2007
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ConclusionsConclusions
Liberalization and regional integration of air transport Liberalization and regional integration of air transport promises large economic gains for the Neighbouring promises large economic gains for the Neighbouring countriescountries
The reform agenda of the CAA is ambitious and will The reform agenda of the CAA is ambitious and will successfully integrate the region into the EU Single successfully integrate the region into the EU Single Market for air transport.Market for air transport.
Cross-border cooperation and consolidation will be Cross-border cooperation and consolidation will be essential. essential.
With the appropriate policies, most needed investments With the appropriate policies, most needed investments can be mobilized from the private sector (e.g. airport can be mobilized from the private sector (e.g. airport concessions, airline privatizations, cost-recovery in concessions, airline privatizations, cost-recovery in ATM).ATM).
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EU-US Agreement Further requested mandates:
China India Australia New Zealand Chile
Pillar III:Comprehensive Mandates
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The EU–US The EU–US AgreementAgreement
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Objective of the Council’s mandate of 5 June 2003: To create an open market for aviation between and within the EU and the US- Remove all market access restrictions- Open foreign investment on a reciprocal basis- Ensure effective competition- Guarantee high standards of safety, security,
environmental protection and passenger protection
- Bring bilateral agreements into conformity with EU law
- Staged approach with mechanism to ensure progression to second-stage
The US Mandate: Towards an Open Aviation Area
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Over the first 5 years:
More than 25 million additional passengers between EU and US
Up to 12 billion EUR consumer benefits
Creation of 80,000 new jobs on both sides of the Atlantic
Economic Benefits of the EU-US Air Transport Agreement
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MARKET ACCESS US accepts Community air carrier concept Unlimited 3rd/4th and 5th freedom rights 7th freedom rights: Unlimited all-cargo rights for EU
airlines, but no additional rights for US airlines; limited passenger rights for EU airlines (ECAA!), no rights for US airlines
Free pricing, except US carriers cannot price-lead on intra-EU routes
Unlimited code sharing Franchising and branding opportunities New opportunities for EU airlines to provide aircraft
with crew (wet-lease) to US airlines on international routes
Access for EU airlines to certain Fly America traffic EU airlines qualify for antitrust immunity
First-stage EU-US Air Transport Agreement
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OWNERSHIP AND CONTROL US airlines: Guarantees concerning permissible
percentage ownership by EU nationals, including possibility to exceed 50% of total equity
Guarantee of fair and expeditious consideration of transactions involving EU investment in US airlines
EU airlines: Right to limit US investments in EU airlines reciprocally to 25% voting equity
Acceptance by US of any EU airline owned or controlled by EU or ECAA citizens
3rd country airlines: Unilateral acceptance by US of EU ownership + control of any airline in the EEA, ECAA, and 18 African countries
Joint Committee role in matters concerning ownership and control
First-stage EU-US Air Transport Agreement
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REGULATORY CO-OPERATION
Security
Safety
Competition
Government subsidies
Environment
First-stage EU-US Air Transport Agreement
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Joint Committee
Arbitration Procedures
2nd Stage Negotiations
Institutional provisions
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Second Stage Negotiations
Commitment to open second-stage Commitment to open second-stage negotiations within 60 days of provisional negotiations within 60 days of provisional applicationapplication
Priority items for second-stage:Priority items for second-stage:Facilitating foreign investmentFurther liberalisationEnvironmental and infrastructure constraintsFurther access to Fly AmericaWet-leasing
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Timescale for Second Stage Negotiations
Mechanism to ensure progress to Mechanism to ensure progress to second-stage agreement within second-stage agreement within defined timescaledefined timescaleNegotiations start 60 days after
provisional application (May 2008)Review after 18 months (end of 2009)If no progress within 12 months (end of
2010), suspension of certain rightsEU-internal decision on internal
mechanism for suspension of rights
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Transport Council approved the agreement on 22 March 2007
Signature at EU-US Summit 30 April 2007
Agreement will be applied provisionally from Summer season 2008 (commencing on 30 March 2008)
Next Steps
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National ownership rules are out-dated National ownership rules are out-dated and inappropriate in a globalised and inappropriate in a globalised economyeconomy
Ultimate consequence is fragmentation Ultimate consequence is fragmentation of the world’s airline industryof the world’s airline industry
Hamper much-needed consolidation Hamper much-needed consolidation and development of the sectorand development of the sector
Why should air transport be treated as Why should air transport be treated as a special case differently from other a special case differently from other industries?industries?
Time to normalise the regulation of this Time to normalise the regulation of this industry: Going beyond “Open Skies”. industry: Going beyond “Open Skies”.
General ConclusionTime to Normalise the Aviation Industry