On Thursday 8 June, the European Commission published four different texts to protect European airlines and improve aviation traffic in the Union.
Protection of Union airlines confronting anti-competitive practices from third country airlines
As explained by EUROPE the day before publication of the European Commission proposals (see EUROPE 11802), the main thrust of this “aviation package” is the draft revision of regulation 868/2004 on the protection of EU airlines against subsidies for and unfair tariff practices by third country operators. Although the above-mentioned regulation has been in force since 2004, its provisions make it difficult to award compensation for damages caused by anti-competitive practices by third country operators that have a negative impact on their Union counterparts. Regulation 868/2004 has therefore never been used yet
As previously explained by EUROPE, the European Commission is therefore proposing to revise the definition of the suspect practices. Therefore, with regard to the “unfair tariff practices” contained in regulation 868/2004, the proposal seeks to make “practices affecting competition” illegal.
Although the new regulation has been adopted, the Commission is expected to begin proceedings if it considers that a state, company or airline association considers that there has been prima facie evidence that a third country airline is breaching an international obligation or has been involved in practices affecting competition that cause or can cause damages to an EU operator.
At the end of a procedure and possible investigation, the Commission would be able to impose financial penalties or other sanctions, such as a suspension of concessions or rights of the incriminated third country company. Currently, the rules in force only allow for the possibility to introduce taxes.
Right to own and control airlines. In addition to the draft revision of regulation 868/2004, on Thursday 8 June the European Commission also published interpretive guidelines of regulation 1008/2008 and the use of aviation services in the European Union. These guidelines also include an interpretation by the Commission of the rules on the ownership and control of European Union airlines.
Under the terms of article 4 of regulation 1008/2008, an EU airline must be “more than 50% owned and controlled by member states and/or nationals from member states” in order to grant a license to operate and provide aviation services in Union territory. Although the College of Commissioners does not currently want to amend this provision, the guidelines published seek to clarify to what extent investors, particularly from outside the Union, can acquire parts or control of EU airlines. This would be in a context where foreign investments prove necessary for a company to develop and grow.
The Commission also indicated that it was currently assessing the provisions in force which may in the future require a revision.
Public service obligations in the aviation sector. Following on from the ownership and control of airline companies, the Commission also presented interpretive guidelines of the public service obligations in the aviation sector. These obligations also relate to regulation 1008/2008 on the use of aviation services in the Union.
Therefore, under the terms of article 16 of the above-mentioned regulation, a member state can, subject to certain conditions, “impose a public service obligation on regular airline services between an airport based in the Community (in the Union) and an airport serving a peripheral or developing zone based on its territory or on a low traffic connection to an airport based on its territory”. In practice, this translates into the airlines using, in exchange for possible compensation, airline connections that are not necessarily used on the exclusive basis of commercial interests. According to the Commission, connectivity is vital for the economy of the European regions and this is why there is no question of abrogating this provision. The Commission, however, indicates that using this provision does not currently allow for connectivity and competition objectives to be respected.
Interpretive guidelines therefore provide clarification regarding the definition of “low traffic connections”, emergency procedures, interaction between public service obligations and rules on public procurement and application of Union rules on state aid.
Although no decision has so far been taken, the Commission has indicated that it is currently examining the provisions on public service obligations, which could also lead to a revision of the said obligations.
Continuation of public service in aviation. On Thursday 8 June, the European Commission also published its most recent text on the continuation of a public service in the aviation domain and therefore the procedures implemented in the event of strikes. The College of Commissioners points out in its services’ working paper that the continuation of aviation traffic must be guaranteed to the benefit of business and consumers.
Although the Commission provides assurances that it does not want to regulate or restrict the right to strike by aviation transport staff, it is, however, calling on the member states and stakeholders concerned to work together in order to ensure continuity of traffic by drawing on the practices put in place in other Union states. This could take the shape of a strengthened social dialogue, swift notification of strikes by the unions or maintaining services during peak traffic hours.
This is just a working paper and the measure suggested are simply guidelines and are not binding. (Original version in French by Lucas Tripoteau)