Select Committee on European Legislation Seventh Report


AIR TRANSPORT LIBERALISATION

12.   We consider that the following raises questions of political importance. We make no recommendation for its further consideration, but suggest that it would be relevant to a debate covering civil aviation policies:--

Department of Transport

(17641) 11405/96 COM(96)514	Commission Communication on the impact of the Third Package of air transport liberalisation measures.
Legal base:	--

Background
12.1  This is a report by the Commission on the effect of the Third Package of air transport liberalisation measures which came into force on 1 January 1993, though with certain exceptions on to access to intra-Community routes, which remain in force until 1 April 1997.

  The Commission's findings

12.2  Although the Commission makes it clear that at this stage a full analysis of the effects of the Third Package is difficult to make, it says that the single aviation market has not occurred with a "Big Bang", but in a progressive way and without major upsets.
12.3  The Communication says that the number of routes operated has increased from 490 to 520. Although some 64 per cent of routes are still in the hands of a single operator, many of those have low levels of traffic and are of little interest to alternative operators.
12.4  There has been a significant increase in the creation of new airlines, but there has been no decrease in fares on routes where competition has not been fully realised.
12.5  The Commission identifies, however, a number of what it describes as "grey areas". On air fares, the Communication points to excessive restrictions on some promotional fares and the excessive cost of certain fully flexible fares. It also points to the adverse effects on liberalisation of capacity restrictions caused by terminal and runway capacity and air traffic management problems.
12.6  The Communication also highlights the effect of infrastructure costs, including air traffic control, airport fees and ground handling charges. These are all areas where the Commission has taken or will be taking initiatives.
12.7  The Commission is critical of the effect of bilateral agreements between Member States and third countries which contain provisions which, it says, are incompatible with the internal market and the cause of loss of competitive pressure. The Commission says that these alliances merit examination under the competition rules. The Commission is also concerned about the possible use of public service obligations, by which we suppose is meant support for operations which are said to provide an essential public service, as a disguised means of restricting the market.
12.8  The Commission also intends to bring forward proposals to tackle safety and environmental concerns arising from aviation.

  The Government's views

12.9  The Government's views are contained in an Explanatory Memorandum, dated 6 December, submitted by the Parliamentary Under-Secretary of State at the Department of Transport (Viscount Goschen). He says:
"The implications of the Commission's promised measures can only be assessed when specific proposals are issued, and the Government will consider these carefully as and when they are presented to Member States. The United Kingdom is, however, broadly content with the thrust of the Commission's conclusions on the benefits of the single market in aviation since its inception. The Third Package provided a more open and competitive market and excellent opportunities for innovative air carriers to exercise their commercial expertise. The remaining restrictions on access to domestic routes will disappear on 1 April 1997, which should provide a further fillip to the liberalisation process.
"The Government does not support the Commission's statements in the field of external relations, and continues to believe that the merits of Community action should be assessed on a case by case basis, and be agreed only where Community-level negotiations are likely to bring added value to the process.
"As far as state aid is concerned, the Government would want the Commission to take a tough line in practice, particularly with regard to the 'one time last time' principle, and the monitoring of conditions attached to state aid approvals."

  Conclusion

12.10  This is an interesting Communication which raises matters of political importance and it would be relevant to any debate relating to civil aviation policies. But we see no need to recommend a debate on the document itself.

---

Prepared 19th December 1996