Brussels, 27/09/2012 (Agence Europe) - When it comes to aviation, the European Union is losing its advance over the Asian and Pacific markets, but refuses to recognise it is beaten. On Thursday 27 September, the European Commission put forward a communication for reacting in time, suggesting a package of proposals aimed to boost the international competitiveness of the EU's aviation industry. First of all, there must be an end to unfair practices, including with regard to companies in the Gulf, implementation of an EU-US agreement on the liberalisation of capital must be speeded up, and new partnerships with key countries such as China, India and Russia must be signed. European Transport Commissioner Siim Kallas totally dismisses the fear that the refusal by third countries (including the US and China) to exchange emission credits (ETS) may counter ambitions regarding European external aviation policy.
Rapid response. The EU's dominant position in the aviation sector is threatened by the rise in power of the Asia-Pacific region. Within the next 20 years, half of all global air traffic growth will be the result of flights to and from that region of the world. Although European carriers still held one third of the market shares globally in 2003, at the current rate at which things are going this could fall to one fifth by 2025. “Faced with the dramatic changes in global aviation, Europe must respond and adapt rapidly or be left behind”, explained Kallas. A European source explained that the European hubs must not be shifted to the Gulf countries, for example, as this would reduce the continent's connectivity.
Bilateral agreements. The Commission's communication entitled “New Horizons for EU Aviation” foresees the conclusion of a series of bilateral agreements with some 15 partner countries, including Russia, China, India, the countries of South East Asia and the Gulf countries, and the finalisation of agreements with neighbouring countries such as Turkey, Tunisia, Egypt and Ukraine. The European market would open up to these countries, and vice versa, allowing new outlets with benefits estimated at €12 billion annually. Priority given to negotiating briefs will be unveiled early next year. It is mainly a matter of making up for lost time as, as the same European source said, some negotiations should have been initiated seven years ago.
Fair competition clause. A more open market must be fully competitive, or “fair and open”, as the Commission stresses. It so happens that Regulation EC 868/2004 intended to protect European interests against unfair practices has caused too many problems. The Commission explains that it has proven practically impossible to establish the existence of unfair tariff practices in international aviation. The Commission plans to set in place a new instrument that is more effective and dissuasive. Also, fair competition clauses will accompany the bilateral agreements between member states and third countries. Sources explain that companies in the Gulf countries, such as Emirates Airline, Etihad Airways and Qatar Airways, have in the past refused to include such clauses, which points to the fact that “something could be worrying them” (our translation). Lufthansa has said that companies of the United Arab Emirates benefit from wide access to the German market, without necessarily allowing the same access to their market.
Liberalisation of ownership. The package of proposals also provides for removal of the restrictions with regard to ownership and control as they are deemed archaic, given that the companies must be held or controlled by a national of their own country. This prevents European carriers from calling on other investors or on capital markets. Like the previous point, this should be discussed at an international level with the International Civil Aviation Organisation (ICAO). The Commission plans to put pressure on the United States in order to liberalise ownership (currently, a foreigner cannot hold more than 25% of shares with voting rights, compared to 49% in Europe). This already appeared in an earlier agreement but has not yet been implemented. Kallas takes the view that it would also be possible to have powerful alliances between European and American companies.
Positive reactions. MEP Mathieu Grosch (EPP, Belgium) believes this is an excellent Commission proposal. He says that “very often, the EU shows much greater willingness to open markets and regulate market competition than, for example, the United States, which is acting increasingly protectionistically”. Grosch states that “an international air transport agreement will in the future no longer be one-way traffic, but must have a genuine bilateral nature”. The Airports Council International Europe (ACI-Europe) also hailed the Commission's announcement. Director General Olivier Jankovec said that “ensuring a fair level playing field is paramount to protecting the hub positioning of Europe. But we also need to be realistic and strike the right balance between fair competition and market access. In other words, this cannot be an excuse for systematically blocking negotiations and holding back the ripple effect of wider liberalisation benefits”. (MD/transl.jl)