Explanatory Memorandum to COM(2006)396 - Common rules for the operation of air transport services in the EC (recast) - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2006)396 - Common rules for the operation of air transport services in the EC (recast). |
|---|---|
| source | COM(2006)396  |
| date | 18-07-2006 |
Grounds for and objectives of the proposal The framework of liberalisation set by the regulations (EEC) No 2407/92, 2408/92 and 2409/92 - the 'third package' of the internal aviation market - has favoured the transformation of air transport services into more efficient and affordable services. But the experience of the last decade has shown that some measures of the third package are either poorly applied or need to be clarified or revised. Divergent application and interpretation of the three regulations in the Member States and the need for clarification require a revision of the regulations in order to ensure the establishment of a true level playing field for all EU airlines. The revision of the third package aims to increase market efficiency, to enhance the safety of air services and to improve passenger protection.
General context On 23 July 1992 the final stage in the liberalisation of air transport in the Community was reached with the adoption of the three Council Regulations - No 2407/92, 2408/92 and 2409/92 - known as the 'third package'. This followed up the 'first package', adopted in December 1987, and the 'second package' of June 1990. More than ten years after the entry into force the third package has largely played its role, allowing the unprecedented expansion of air transport in Europe. Old monopolies have been swept away, intra-Community cabotage has been introduced, and competition in all markets has intensified to the benefit of consumers. Despite this success, most of the Community's airlines continue to suffer from overcapacity and from the excessive fragmentation of the market. The inconsistent application of the third package across the Member States and the lingering restrictions on intra-Community air services translate into the following effects: o Absence of a level-playing field: market efficiency is affected by competition distortions (e.g. varying application with regard to the requirements of the operating licence; discrimination between EU carriers on the basis of nationality; discriminatory treatment concerning routes to third countries; etc.); o Inconsistent application of rules governing the leasing of aircraft from third countries with crew, with consequent distortions of competition and social implications; o Passengers not reaping the full benefits of the internal market because of the lack of price transparency or discriminatory practices on the basis of the place of residence.
Existing provisions in the area of the proposal The proposal aims at revising and consolidating the regulations (EEC) No 2407/92, 2408/92 and 2409/92.
Consistency with the other policies and objectives of the Union The proposal reinforces the internal market by promoting market consolidation and thereby creating a more competitive environment with European air carriers capable of taking on their international competitors. It contributes to the objectives of the Lisbon strategy for increasing Europe's competitiveness. Special attention has been devoted to the simplification and the consolidation of the content of the regulations (EEC) No 2407/92, 2408/92 and 2409/92. This is done in accordance with the Commission's commitment to simplify the content of the acquis, to up-date it and to reduce its volume. Some of the proposed changes may have an environmental impact. It must be recalled that the environmental impact is already being addressed by distinct Commission initiatives in the framework of the Sustainable Development Strategy and the European Climate Change Programme (see also “reducing the Climate Change Impact of Aviation”, Communication from the Commission to the Council, the European Parliament and Social Committee and the Committee of the Regions, COM(2005)459 of 27 September 2005).
Consultation of interested parties
Consultation methods, main sectors targeted and general profile of respondents The preparation of this proposal has been preceded by a public consultation in order to gather as many comments and suggestions as possible from the individuals and bodies concerned. The Commission received 56 contributions from national authorities, international organisations, air carriers and their representative bodies, airports and organisations representing air transport workers or air transport users. On 26 February 2004 a consultation meeting with stakeholders was held in Brussels. Delegations from 11 Member States and from 11 organisations representing airlines, airports, tourism operators and the air sector's employees and workers were present.
Summary of responses and how they have been taken into account The majority of the respondents are satisfied with the current regulations, but agree to the need for a few adjustments and an effort to harmonise which could be made by adding more detail in the texts or drafting guidelines. There is support for the modernisation and simplification of the texts and the suppression of provisions that were needed in 1992 but that are outdated today. As regards Regulation (EEC) No 2407/92, there is a need for more detail for tightening the monitoring of air carriers' financial viability and for stricter requirements for the leasing of aircraft. As regards Regulation (EEC) No 2408/92, most respondents stress that relations with third countries must be the subject of specific agreements and regulations. There is broad agreement on the need to simplify the procedure for fulfilling public service obligations, but a significant number of the air carriers stress the risk of distortion of competition that could arise from the excessive use of public service obligations. Most respondents were in favour of clarifying the rules concerning traffic distribution between airports and the fixing of objective criteria. As regards Regulation (EEC) No 2409/92, air carriers are opposed to anything that might jeopardise the freedom to set fares, as presently enshrined in the competition law and safeguard rules of Regulation 2409/92. However, some national and regional authorities and user organisations appear to be willing to act to ensure greater transparency and genuine accessibility for all Europeans to the air fares offered in the Union. All the comments expressed during the consultation process have been carefully examined in the preparation of the proposed revision. The results from the consultation have been fed into the impact assessment. The latter was supported by a contract with an external consultant that was carried out between December 2004 and October 2005.
An open consultation was conducted over the internet from 17/03/2003 to 30/09/2003. The Commission received 56 response(s). The results are available on europa.eu.int/comm/transport/air/rules
There was no need for external expertise.
Impact assessment The revision of the third package does not intend to radically change the legal framework, but rather to make a series of adjustments in order to address the identified problems. Any options that move too far away from the existing legal framework – such as the creation of a Community licensing authority - have already been excluded through the consultation process. Therefore, we compared a no change option and a change option where the latter consists of a series of measures addressing directly each of the problems identified in the analysis of the third package: 1. The No change option leaves unaltered the present three regulations composing the third package of the internal aviation market. The previously mentioned problems arising from the inconsistent application of the third package regulations are expected to continue or even worsen if the legislation is left unchanged. 2. The change option includes a series of changes to the third package in order to ensure the homogenous and effective application of its rules. The impact assessment showed that these measures meet well the objectives, that their economic and social impact is positive, at a quite limited environmental cost.
The Commission carried out an impact assessment listed in the Work Programme, which accompanies the present proposal.
Contents
Summary of the proposed action The draft regulation will ensure an efficient and homogeneous application of Community legislation for the internal aviation market via stricter and more precise application criteria (e.g. for operating licences, leasing of aircraft, public service obligations and traffic distribution rules). It also reinforces the internal market by lifting still existing restrictions on the provision of air services stemming from old bilateral agreements between Member States and by conferring to the Community the right to negotiate intra-Community traffic rights with third countries. It enhances consumer rights by promoting price transparency and non-discrimination. The proposal simplifies and consolidates the legislation as it removes obsolescent parts of the third package and clarifies the text where needed. The three existing regulations of the third package will be consolidated into a single text.
Legal basis This draft regulation that repeals regulations (EEC) No 2407/92, 2408/92 and 2409/92 is based on article 80 i of the Treaty establishing the European Community.
Subsidiarity principle The subsidiarity principle applies insofar as the proposal does not fall under the exclusive competence of the Community.
The objectives of the proposal cannot be sufficiently achieved by the Member States for the following reason(s).
- The experience with the third package on the internal aviation market has shown that the legislation is not interpreted and applied in a uniform way across Member States. This situation hinders the existence of a true level-playing field between Community air carriers. Given the international nature of aviation, these problems cannot be resolved at Member State level.
- The non-homogenous application of the third package leads to competition distortions in the internal aviation market as air carriers from different Member States do not operate under the same conditions.
Community action will better achieve the objectives of the proposal for the following reason(s).
- More homogeneous application of the third package can best be achieved by clarifying and specifying its rules on a Community level.
- Some impediments to the free provision of air services need to be removed from the Community legislation.
- The identified problems can only be addressed at a Union level given their trans-national character.
The proposal therefore complies with the subsidiarity principle.
Proportionality principle The proposal complies with the proportionality principle for the following reason(s).
- The proposed revision of the third package leaves the scope for national decisions mostly unchanged but helps to ensure a homogeneous interpretation of the Community legislation. Only in precise cases, where the potential of market distortions arising from national decisions is highest, have the possibilities for Community intervention been enhanced.
- The administrative burden on national authorities may increase for some Member States in the area of the supervision of the operating licences as the proposal involves a more stringent supervision. However, in other areas of the proposal, the administrative burden should remain unchanged or decrease (e.g. public service obligations).
Proposed instruments: regulation.
Other means would not be adequate for the following reason(s). A regulation is the most appropriate instrument as: - the proposal concerns the revision of three existing regulations; - the objective is to ensure a more homogeneous application of Community legislation on the internal aviation market.
The proposal has no implication for the Community budget.
Simplification
The proposal provides for simplification of legislation.
In this proposal, obsolete measures have been removed and - where possible - the content, the presentation and the wording of the regulations have been revised in order to improve their understanding and to avoid ambiguous interpretations. In addition, given the now simplified structure of the regulations, they have been consolidated into one single text.
The proposal is included in the Commission's rolling programme for up-date and simplification of the acquis communautaire and its Work and Legislative Programme under the reference 2002/TREN/28.
Repeal of existing legislation The adoption of the proposal will lead to the repeal of existing legislation.
European Economic Area The proposed act concerns an EEA matter and should therefore extend to the European Economic Area.
Detailed explanation of the proposal 1. Reinforcement of the requirements for the granting and revoking of an operating licence The financial health of the airlines is being checked with different degrees of severity depending on the Member State that issued the licence. Therefore, a real level-playing field between airlines from different Member States is not always assured and consolidation of the market is slowed down. Furthermore, the continued operation of financially fragile air companies involves safety risks, in addition to the financial risks incurred by customers in the case of bankruptcy of an air carrier. The proposal requires Member States to reinforce the supervision of the operating licences and to suspend or revoke it when the requirements of the regulation are no longer met (articles 5 to 10). In order to avoid inaction of a Member State, the proposal confers the right to the Commission to revoke the operating licence (article 14). The proposal has been drafted such as to take allow for the possibility of a future extension of the competencies of the European Aviation Safety Agency (EASA) for safety oversight and/or licensing such as to ensure the most efficient and consistent supervision of the air carriers. 2. The proposal strengthens the requirements for the leasing of aircraft (article 13) Wet-leasing of aircraft from third countries provides EU airlines with important flexibility which thereby enhances the economic efficiency of the EU airline industry to the benefit of consumers. However, the application of the present provisions of regulation (EEC) No 2407/92 raise social and safety concerns. Rules and practice with regard to leasing (especially wet-leasing i.e. leasing of aircraft with crew) differ between Member States. The safety assessment of leased aircraft from third countries is not pursued with the same rigour in all Member States, creating concerns about safety levels. The sometimes regular recourse to wet-leasing from third countries spurs concern about potentially adverse social consequences. The proposal introduces stricter requirements in order to minimize the risk of adverse social consequences and to enhance safety. The proposal emphasizes that, in order to agree with leasing agreements, the competent licensing authority must confirm that safety standards equivalent to the Community safety requirements are met. Concerning the leasing of aircraft registered in third countries, they will only be allowed in exceptional circumstances for a maximum duration of six months and renewable only once in a second non-consecutive period of up to six months. 3. The proposal clarifies the rules applicable to public service obligations (PSO) (articles 16, 17 and 18) The rules applicable to public service obligations have been revised in order to lighten the administrative burden, to avoid excessive recourse to PSO and to attract more competitors in the tender procedures. The publication obligations have been modified by limiting the publication in the Official Journal of the European Union to a shortened notice. To avoid excessive recourse to PSO, the Commission may require in individual cases the production of an economic report explaining the context of the PSO and the assessment of their adequacy should be performed with particular care when they are intended to be imposed on routes that are already been served by rail services with a travel time of less than three hours. The tender procedures have been modified by extending the maximum concession period from three to four years (and five years in the case of ultra-peripheral regions).The tender procedure for the renewal of a concession must be launched at least six months in advance in order to allow a careful assessment of the continued necessity of the restricted access to the route. Furthermore, an urgency procedure has been introduced to cope with sudden interruptions of service on routes with a PSO. If the proposed regulation, once adopted, retains guarantees of transparency, non-discrimination and proportionality equivalent to those proposed by the Commission in its proposal concerning the determination and award of public service compensations, and in order to give operators legal certainty regarding compensation paid for the execution of PSOs awarded in accordance with this regulation, the Commission intends to adopt, at the latest at the time of the entry into force of the regulation, a binding act based on art. 86 i declaring compatible and exempting of notification compensation granted in conformity with the regulation insofar as this may constitute State aid. This act could take the form of an update of Commission decision of 28 November 2005 (OJ L312 of 29.11.2005) inserting a reference to this new regulation and extending its scope to any PSO compensation granted to airlines in conformity with this regulation. 4. The proposal removes inconsistencies between the internal aviation market and services to third countries (articles 15 and 22) Taking account of the opinions expressed during the consultation process, the proposal addresses relations with third countries only insofar as there is a direct link with provisions contained in the third package. To ensure coherence between the internal market and its external aspects, including those of the Single European Sky, access by airlines of third countries to the intra-Community market should be managed in a coherent manner through negotiations at Community level. Therefore, the European Communities will be responsible for negotiating intra-Community traffic rights with third countries. Remaining restrictions from existing bilateral agreements between Member States will be lifted, ensuring non-discrimination in respect of code sharing and pricing by Community air carriers on routes to third countries involving points in Member States other than their own. 5. The proposal clarifies the rules applicable to traffic distribution between airports (article 19) The present two-step procedure - first establishment of an airport system and then definition of the traffic distribution rules - is replaced by a one-step procedure where the concept of an 'airport system' is abandoned: Member States may introduce traffic distribution rules on airports serving the same city or conurbation, but the prior approval of the Commission is required (after consultation of the appropriate committee). It adds that the airports in question should be served by an adequate transport infrastructure and the airports and the city or conurbation they shall serve should be linked by frequent, reliable and efficient public transport services. The proposal states that the traffic distribution rules shall respect the principles of proportionality and transparency, and shall be based on objective criteria. This rule confirms that traffic distribution rules may not be abused in order to discriminate between air carriers. 6. The proposal promotes price transparency for passengers and fair price behaviour The publication of fares that exclude taxes, charges and even fuel surcharges has become a widespread practice that hampers price transparency. Insufficient price transparency leads to distortions of competition and therefore consumers face on average higher fares. The Commission also still observes cases of discrimination on the basis of the place of residence of the passenger. In the proposal, air fares have to include all applicable taxes, charges and fees and air carriers shall provide the general public with comprehensive information on their air fares and rates and the conditions attached (articles 2(18) and 24 i. Air fares shall be set without discrimination on the basis of place of residence or the nationality of the passenger within the Community (article 24 i. Furthermore, for the access to a carrier’s air fares, they may be no discrimination on the basis of the place of establishment of the travel agent. The experience with the application of the third package on air transport liberalisation has shown that there has not been any market failure that would justify maintaining in force specific provisions regulating air fares such as the safeguard measures provided in article 6 of regulation (EEC) No 2409/92. In this context, and in the light of the general competition rules, these sector-specific measures are removed from the regulation.
E-
- ê 2407/92 - 2408/92 - 2409/92 (adapted)