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20.3.5.  Air transport in the EU

    For air transport, in the same way as for maritime transport, the Court of Justice interpretation of Article 84 of the EEC Treaty [Case 167-73, see section 20.3], heralded the application of the Treaty's general rules, notably those relating to competition and right of establishment. This was no simple matter for the air transport sector for, unlike shipping companies, the major airlines were state-owned and had a near monopoly at national level. Each State, anxious to fly the national airline colours around the world and exploit certain advantages arising for example from its geographical situation or special relationship with certain parts of the world, jealously guarded its airline or airlines. This had practical consequences on flight routes and fares.

    At the time of the Court ruling, air services between the Member States were regulated by bilateral agreements. These official agreements were often supplemented by confidential memoranda exchanged between aviation authorities which interpreted, filled in or even modified the provisions of the agreements and which occasionally depended upon commercial arrangements between airlines. Fares for scheduled air services were by and large negotiated by airlines on a multilateral basis, but in the final analysis were set by the states. Usually, the states took on board the international fares and carriage conditions set in the framework of the International Air Transport Association (IATA). The IATA gave the airline operating a scheduled service the option of filing a set of fares with it. But since each of these fares had to be approved by at least two governments, innovative fares were not possible at a national level. The states were in favour of consultation on fares and did not wish for any far-reaching competition. Covered by the governmental decisions, which they were simply implementing, the airlines escaped Articles 85 and 86 of the EEC Treaty [Articles 81 and 82 TEC] and disposed of a captive market. The need for a common air transport policy and also the difficulties, which it was up against, were manifest.

    In this context, it was natural that the first Council measures did not tackle the crux of the problem, namely the lack of competition. Instead, the Council set up in 1979 a consultation procedure for relations between Member States and third countries in the field of air transport and on action relating to such matters within international organisations, such as the International Civil Aviation Organisation (ICAO), the European Civil Aviation Conference (ECAC) and Eurocontrol [Decision 80/50].

    At the same time, the Member States engaged themselves to check that civil subsonic aircraft registered on their territory had a noise limitation certificate, a measure of interest both from an ecological viewpoint and from that of the harmonisation of structures in the Member States [Regulation 216/2008, last amended by Regulation 2016/4]. After trying several measures, without succeeding to stop the deterioration in the noise level around its airports [see section 16.3.6], the European Community/Union adopted the "balanced approach" to noise management, recommended by resolution A33/7 of the ICAO [Regulation 598/2014]. This approach requires careful assessment of all different options to mitigate noise, including reduction of aeroplane noise at source, land-use planning and management measures, noise abatement operational procedures and operating restrictions, without prejudice to relevant legal obligations, existing agreements, current laws and established policies.

    The liberalisation of air transport in the European Community/Union was achieved progressively, between 1987 and 1992, with three packages of Regulations. The ''third air transport package'', constituted by Regulations 2407/92, 2408/92 and 2409/92, harmonised the licensing of air carriers and achieved free access for European air carriers to intra-European air routes and free price setting. Since the liberalisation of air transport in the European Union (1997) the industry has expanded as never before, which has contributed to economic growth and job creation. The number of routes has increased by more than 60% and now more cities are served, particularly in remote areas. The emergence of new competitors has brought price reductions on many routes, allowing more Europeans to travel by air. In order to bolster this success, a new Regulation consolidated in one text the three regulations of the third aviation package [Regulation 1008/2008].

    Given the growing importance of air carriers with operational bases in several Member States and the need to ensure the efficient supervision of these air carriers, the same Member State is henceforth responsible for the oversight of the air operator certificate and of the operating licence. "Operating licence" means an authorisation granted by the competent licensing authority to an undertaking, permitting it to provide air services as stated in the operating licence. The granting and validity of an operating licence shall at any time be dependent upon the possession of a valid air operator certificate (AOC) specifying the activities covered by the operating licence. While the AOC certifies the technical capacity of an undertaking to safely provide air services, the operating licence confers the right to provide commercial air services. European air carriers can combine air services and enter into code share arrangements with any air carrier on air services to, from or via any airport in their territory from or to any point(s) in third countries.

    An air undertaking that has been granted an operating licence by a Member State, in accordance with the technical and financial conditions set in Regulation 1008/2008, is considered as a European air carrier and is entitled to provide air services throughout the European Union, in and between all the Member States. Member States cannot subject the operation of intra-European air services by a European air carrier to any permit or authorisation. They should not require European air carriers to provide any documents or information which they have already supplied to the competent licensing authority. However, a Member State may impose a public service obligation in respect of scheduled air services between an airport in the EU and an airport serving a peripheral or development region in its territory or on a thin route to any airport on its territory, to the extent necessary to ensure on that route the minimum provision of scheduled air services satisfying fixed standards of continuity, regularity, pricing or minimum capacity, which air carriers would not assume if they were solely considering their commercial interest.

    To protect consumers, Regulation 1008/2008 bans price discrimination on the basis of the place of residence or the nationality of the customer or the place of establishment of the travel agent. In practical terms, this means that for the same product – i.e. the same seat on the same flight booked at the same moment – there should be no price differences based on the place of residence or the nationality of the passenger. Price transparency is improved by clarifying that the final price must include all applicable fares, charges, taxes and fees, so as to avoid misleading advertising. To guarantee the safety of travellers and social protection of the personnel, the regulation introduces clear and stringent rules on the leasing of aircraft registered in third countries, especially in case of wet-leasing, i.e. including personnel, insurance and maintenance services.

    The EU encourages better information for air passengers, greater protection for passengers' rights, improved service and simplified handling of disputes [Council resolution]. A Regulation drawing up common rules for the compensation of passengers refused the right to board due to over-booking [Regulation 261/2004] is of particular importance to the ordinary citizen. It stipulates that should a passenger be refused the right to board, he has the right to choose between full reimbursement of the price of the ticket for the part of the journey, which he was unable to carry out, or rescheduling on a later date of his choice. Regardless of the choice made by the passenger, the air carrier must pay, immediately after the boarding refusal, compensation that varies in line with the distance of the flight and the rescheduling delay. The carrier must moreover offer passengers refused the right to board meals, hotel accommodation if necessary and the cost of a telephone call and/or telefax message to the place of destination.

    In order to respond to increasing concerns over the health and welfare of passengers during flights, the common rules aim, among other things, to develop aircraft designs which better protect the safety and health of passengers. An independent European body, the European Aviation Safety Agency assists the Commission in the preparation of the necessary legislation and the Member States and the industry in its implementation [Regulation 216/2008, last amended by Regulation 2016/4]. It is able to issue certification specifications and certificates as required. It is allowed to develop its expertise in all aspects of civil aviation safety and environmental protection.

    The establishment of common rules in the field of civil aviation aims at guaranteeing European citizens high safety and environmental protection standards and at facilitating activity in the aeronautics industry in Europe [Regulation 216/2008, last amended by Regulation 2016/4]. Aeronautical products are henceforth subject to certification to verify that they meet essential airworthiness and environmental protection requirements relating to civil aviation, notably to the design, production, maintenance and operation of aeronautical products, parts and appliances. Appropriate essential requirements cover operations of aircraft and flight crew licensing [Regulation 1178/2011, last amended by Regulation 2016/539]. They apply to third-country aircraft and other areas in the field of civil aviation safety. In addition, a European blacklist contains airlines that are banned throughout the European Union and a series of measures aimed at better informing air passengers about the identity of the airline they are travelling with [Regulation 2111/2005 and Regulation 474/2006, last amended by Regulation 2017/830]. The EU cooperates with the United States of America in the regulation of civil aviation safety [Decision 2011/719 and Agreement].

    As part of the third liberalisation package for air transport, the Council has established a code of conduct guaranteeing the transparent, efficient and non-discriminatory allocation of slots for civil aviation at European airports [Regulation 95/93]. The code, which was amended in 2002 to help air carriers adjust to the sharp fall in demand following the terrorist attacks of 11 September 2001 in the USA, is based on the "use it or lose it" principle. It lays down conditions of access for new entrants to the market, for free exchange of slots and for safeguard mechanisms where there is a clear imbalance between air carriers. In the same context, a Directive on access to the groundhandling market at European airports is designed to enable European airlines to benefit from real choice of providers of groundhandling services so as to better manage their operating costs and adjust their own services to users’ needs [Directive 96/67]. Statistical returns in respect of the carriage of passengers, freight and mail by air provide the statistical basis for developing a European aviation policy [Regulation 437/2003].

    The Commission, acting in close and regular contact with the relevant authorities in the Member States, can take measures to ensure the application of the competition rules of Articles 81 and 82 of the EC Treaty to transactions between airlines which have an impact on routes between the EU and third countries [Regulation 487/2009]. It can approve certain categories of agreements and concerted practices in the air transport sector, notably those concerning joint planning and coordination of schedules, joint operations, consultations on passenger and cargo tariffs on scheduled air services and slot allocation at airports [Regulation 1617/93]. These exemptions pursue two aims: encourage airlines to cooperate with a view to improving the service on offer to passengers, particularly in the exploitation of new or low density lines, while remaining competitive from the viewpoint of fares and service quality. In addition there exists a block exemption for agreements subject to the code of conduct for computerised reservation systems (CRS), the purpose of which is to ensure that there is fair competition between air carriers and that users are well informed [Regulation 80/2009]. In order to protect European airlines, which are subject to the competition rules, from the unfair practices of subsidised third-country airlines, a regulation enables the Commission to open an investigation following a complaint from industry or on its own initiative and, if necessary, to take redressive measures in the form of duties levied on third-country carriers receiving State aid or on State-controlled airlines, in proportion to the damage suffered by the European carriers [Regulation 868/2004].

    In the field of air safety, a cooperation and mutual assistance procedure governs the investigation of civil aviation accidents and incidents [Regulation 996/2010, last amended by Regulation 376/2014]. It aims to ensure that relevant information is reported, collected, stored, protected and disseminated on any operational interruption, defect, fault or other irregular circumstance that has or may have influenced flight safety and that has not resulted in an accident or serious incident. A Directive limits the operation in the EU of aircraft from developing countries not complying with the requirements of the Convention on International Civil Aviation [Directive 2006/93, see section 16.3.6]. The common rules in the field of civil aviation require Member States to ground aircraft found or suspected to be dangerous [Regulation 216/2008, last amended by Regulation 2016/4]. The issuing of a European air traffic controller licence aims to increase safety standards and to improve the operation of the European air traffic control system [Directive 2006/23].

    Certain measures concern both air safety and market organisation. This is the case of the harmonisation of the technical requirements and administrative procedures in the field of civil aviation [Regulation 3922/91]. A Regulation determines the air-carrier liability in the event of death, wounding or any other bodily injuries suffered by a passenger and provides for rapid payment of a lump sum to the victims or entitled persons in the case of an accident [Regulation 2027/97]. Following the terrorist attacks of 11 September 2001 in the USA, the EU adopted common rules in the field of civil aviation security, in order to prevent acts of unlawful interference against civil aviation [Regulation 300/2008, last amended by Regulation 2015/2426]. Each Member State is required to adopt a national civil aviation security programme and to appoint an authority with specific and exclusive powers to coordinate and manage its implementation. National civil aviation security programmes should take appropriate account of the Regulation laying down detailed measures for the implementation of common basic standards for safeguarding civil aviation against acts of unlawful interference that jeopardise the security of civil aviation [Regulation 185/2010, last amended by Regulation 2015/187].

    A package of common rules on the use of airspace throughout the European Union, called the "single European sky" package, aims at improving and reinforcing safety, and at restructuring airspace on the basis of traffic flow rather than according to national boundaries, at encouraging cross-border air navigation service provision and at establishing a framework for the modernisation of systems. The "single European sky" package contains a framework regulation and three implementing regulations. The "framework regulation" establishes a harmonised regulatory framework for the creation of the single European sky initiative, aiming at enhancing safety standards and overall efficiency for general air traffic in Europe, optimising capacity meeting the requirements of all airspace users and minimising delays [Regulation 549/2004]. The "services regulation" aims at establishing common requirements to guarantee the safe and efficient provision of air navigation services in a seamless and interoperable manner throughout the EU [Regulation 550/2004]. The "airspace regulation" establishes common procedures for design, planning and management ensuring the efficient and safe performance of air traffic management [Regulation 551/2004]. Another Regulation lays down detailed rules for the implementation of air traffic management (ATM) network functions in order to allow optimum use of airspace in the single European sky and ensure that airspace users can operate preferred trajectories, while allowing maximum access to airspaces and air navigation services [Regulation 677/2011, last amended by Regulation 970/2014]. The "interoperability regulation" concerns: interoperability between the different systems, constituents and associated procedures of the European air traffic management network (EATMN); and the introduction of new agreed and validated concepts in air traffic management operation and technology [Regulation 552/2004].

    The measures of the "single European sky" package concern an integrated, harmonised management of European airspace, which implies the supply of services by flexible and efficient providers guided by demand from airspace users and therefore they entail a less rigid interpretation by States of national sovereignty over their airspace. Development of these measures requires, in addition to greater involvement of industry and the social partners, recourse to the technical expertise of the European Organisation for the Safety of Air Navigation (Eurocontrol), the independent organisation responsible for coordinating the Member States' air traffic management systems, in order to combat congestion and better manage crises situations in the European airspace. The accession by the European Community/Union to Eurocontrol, aiming at ensuring enhanced cooperation between the two institutions and improving the regulatory framework for air traffic management, forms part of the overall strategy to build up a single sky over the single market [Decision 2014/305 and Decision 2013/36 and Agreement].

    The project to modernise air traffic management in Europe and to enhance safety (the SESAR project) is the technological element of the single European sky. It aims by 2020 to give the EU a high-performance air traffic control infrastructure which will enable the safe and environmentally friendly development of air transport, benefiting fully from the technological advances of programmes such as Galileo [Regulation 219/2007, last amended by Regulation 721/2014, see section 17.3.4].

    Taking into account the number of actors who will need to be involved in the process of the new air traffic management infrastructure and the financial resources and technical expertise needed, a Joint undertaking SESAR under Article 171 of the EC Treaty (new Article 187 TFEU) was set up in order to enable progress to be made in the development of technologies relating to air traffic control systems during the development phase and prepare the deployment phase. The European Community/Union and Eurocontrol are the founding members of the Joint Undertaking, but membership is open to other actors, including those from third countries that have concluded at least one agreement with the EC/EU in the field of air transport. The main task of the Joint Undertaking is to manage the research, development and validation activities of the Sesar project by combining public and private sector funding provided by its members and using external technical resources and in particular by using Eurocontrol's experience and expertise.

    In the context of the SESAR joint undertaking, the Pilot Common Project supporting the implementation of the European Air Traffic Management (ATM) Master Plan identifies the mandatory deployment of six functionalities: extended arrival management and performance based navigation in the high density terminal manoeuvring areas; airport integration and throughput; flexible airspace management and free route; network collaborative management; initial system wide information management; and initial trajectory information sharing [Regulation 550/2004, implemented by Regulation 716/2014].

    An agreement between the EC/EU and Balkan and European Economic Area partners aims at the creation of a European Common Aviation Area (ECAA), based on free market access, freedom of establishment, equal conditions of competition, and common rules including in the areas of safety, security, air traffic management, social and environment [Agreement and Decision 2006/682].

    On the international scene, the EC/EU concluded the 1999 Montreal Convention [Decision 2001/539], which lays down new rules on liability in respect of the international carriage by air of persons, baggage and cargo, which are expected to replace those of the Warsaw Convention of 1929. Both Conventions provide for the possibility of unlimited liability. In this context, a regulation on insurance requirements for air carriers and aircraft operators introduced minimum insurance requirements for all aircraft flying into and out of EU airports or overflying EU territory, applicable also to third-country carriers [Regulation 785/2004]. Member States must ensure that all civil subsonic jet aeroplanes operating from airports situated in their territory comply with the standards specified in the Convention on International Civil Aviation, second edition (1988) [Directive 2006/93].

    International aviation relations between the Member States of the European Union and third countries have traditionally been governed by bilateral air service agreements between individual Member States and third countries. Despite the completion of the internal market in the air transport sector, Member States have resisted the exercise of Union competence in foreign relations and have continued to negotiate agreements with third countries. The Commission brought infringement proceedings against seven Member States which had concluded what are known as "open skies" agreements with the United States, on the ground that the agreements infringed the Treaty rules on freedom of establishment and the Union's exclusive external competence. On the question of freedom of establishment, the Court agreed with the Commission that there was discrimination contrary to the freedom of establishment guaranteed by the Treaty, because the Member State concluding such an agreement reserved rights for its own airlines [Cases C-466/98, C-467/98, C-468/98, C-471/98, C-472/98, C-475/98 and C-476/98]. On the question of the infringement of the Union's exclusive external competence, the Court said that international commitments did affect the common rules where they fell within an area which was already largely covered by such rules, or where the EU had included in its internal legislative acts.

    Following the judgments of the Court of Justice, the European Parliament and the Council, adopted Regulation 847/2004, which establishes a procedure for notifying and authorising the bilateral negotiations conducted by Member States with a view to ensuring the introduction of standard clauses to make existing agreements compliant with EU law. On 30 March 2004, the Council approved the text of the "Declaration of competence" of the Community/Union and authorised the Presidency to deposit the declaration with the International Civil Aviation Organisation (ICAO) in Montreal, together with the instrument for ratification of the Montreal Convention for the Unification of Certain Rules for International Carriage by Air. Furthermore, the Commission was authorised to negotiate ''open skies'' agreements with third countries, including the United States.

    An Air Transport Agreement between the European Community/Union and its Member States, on the one hand, and the United States of America, on the other hand, was signed on April 30, 2007 [Agreement and Decision 2007/339, amended by Protocol and Agreement and Decision 2011/708]. The so-called ''Open Skies Agreement'' is applied since 30 March 2008. It replaces 21 bilateral agreements between EU Member States and the United States, with the goal of opening access to markets and maximising benefits for consumers, airlines, labour, and communities on both sides of the Atlantic. The Agreement removes all restrictions on routes, prices, or the number of weekly flights. All EU airlines are now able to operate direct flights to the US from anywhere in Europe and not just from their home country (and vice-versa for US airlines).

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