Memorandum by Manchester Airports Group
PLC (EU 16)
EUROPEAN UNION COMPETENCE AND TRANSPORT
1. INTRODUCTION
1.1 This is the response of The Manchester
Airports Group Plc (MAG) to the House of Commons Transport Committee's
inquiry on EU Competence and Transport, announced in the press
notice of 10 November 2003.
1.2 MAG owns and operates four airports:
Manchester, East Midlands, Bournemouth and Humberside and is jointly
owned by the 10 Local Authorities of Greater Manchester. MAG is
the UK's second largest airport operator and in 2003 its airports
handled some 24 million passengers, 80% of whom travelled via
Manchester itself.
1.3 MAG welcomes the opportunity to participate
in the Committee's inquiry, since it addresses an area of EU activity
that is currently having a potentially detrimental effect on its
ability to develop its business.
1.4 The remainder of this document is structured
as follows. Section 2 deals briefly with the extent of the European
Commission's overall competence in relation to aviation at present
and sets out MAG's views on how this should develop in the future.
Section 3 examines the specific issue of EU-US aviation negotiations,
while Section 4 covers the EU's position with regard to aviation
relations between Member States and third countries. It is in
this area that MAG has serious concerns about the Commission's
recent actions and its intentions with regard to gaining competence
for air services negotiations in the future. Finally, Section
5 contains a brief outline of MAG's views on EU competence as
it relates to emissions trading and aviation.
2. EU COMPETENCE
IN THE
FIELD OF
AVIAITON
2.1 As the Committee is aware, the EU already
has wide-ranging powers in relation to transport generally and
aviation in particular. MAG believes that, with few exceptions,
the legislation brought forward by the Commission in the field
of aviation has been enormously beneficial to both consumers and
the industry alike. For example, the three "packages"
of measures that liberalised air transport in the EU just over
10 years ago have been very successful, and the Directive on the
liberalisation of ground handling services has also brought significant
benefits.
2.2 Nevertheless, the Commission has shown
a tendency to be over zealous in its attempts to introduce additional
legislation and there is a risk that the regulatory burden on
the industry, far from being reduced, is becoming greater. There
are many examples where the Commission has introduced (or intends
to introduce) new legislation or revise existing rules, where
MAG believes the functioning of the market is sufficient to ensure
the optimum outcome for consumers. One example is the recent increase
in the amounts of denied boarding compensation that airlines must
pay to passengers when delayed; the levels have been set so high
that they often exceed the fares for the flights covered by the
rules, which is clearly illogical. MAG would make the general
observation that, whilst revisions to legislation to take account
of major changes in an industry are to be welcomed, the constant
tinkering with legislation that the Commission undertakes is unhelpful
and can impose unnecessary costs on the industry and its consumers.
2.3 EU competence is, however, crucial in
order to enable the consistent application of rules across the
European Union in a number of key areas that transcend national
boundaries. In addition to implementing those Directives and Regulations
that relate to the functioning of the single market for aviation,
EU-wide policies and legislation that deal with environmental
issues including aircraft emissions and noise are extremely important
to ensure that businesses in all Member States are on an equal
footing. The Committee requested views on the level of detail
such legislation requires and MAG would comment that, where such
legislation is concerned, it is desirable to set out detailed
rules, so the EU Regulations are the most appropriate mechanism
to employ. However, for most market-related legislation, MAG would
prefer the Commission to take a less detailed approach, using
Directives to set out principles governing such areas.
2.4 MAG does not, therefore, advocate any
reduction in the Commission's powers in this area (which would
in any case be unrealistic). However, with the exception of emissions
trading it is reluctant to see EU competence being extended significantly
beyond its current limits, particularly in respect of the negotiation
of air services agreements. This is covered in detail in the following
two Sections.
3. EU COMPETENCE
AND EU-US AVIATION
NEGOTIATIONS
3.1 The Committee sought views on the situation
vis-a"-vis the negotiation of the EU-US Open Aviation
Area (OAA), which is currently underway. MAG considers that, whilst
this presents the European Commission with a major challenge—particularly
in terms of balancing the interests of all 15 (soon to be 25)
Member States—it is entirely appropriate for Europe to negotiate
with the US as a bloc.
3.2 The can be no doubt that liberalisation
of air services between Europe and the US will be of great benefit
both to the UK aviation industry and to the wider British economy.
It follows that world-wide liberalisation of aviation must be
the ultimate objective of UK air services policy, though whether
it is appropriate for the EU to gain competence for this process
is open to question. This is examined in detail in Section 4.
4. EU COMPETENCE
AND AVIATION
RELATIONS WITH
THIRD COUNTRIES
4.1 This Section addresses Member States'
aviation arrangements with countries outside the EU, other than
the US. This is a matter of great concern to the Manchester Airports
Group, since the Commission's recent intervention in negotiations
between the UK and certain of its bilateral partners has resulted
in the failure of air services talks and—in one case—failure
to implement a revised air services agreement (ASA) even where
an agreement to increase capacity was reached.
4.2 Before examining detailed examples,
however, it is important to first look at the prevailing legislative
situation. Following the judgments of the European Court of Justice
on 5 November 2002, a key finding of which was that the "nationality"
provisions of ASAs infringe the EC Treaty, the Commission published
a draft Regulation covering Member States' negotiation and implementation
of ASAs with third countries. This laid down a procedure that
aimed to enable Member States to continue to update air services
agreements, and implicitly recognised that the Commission had
neither the resources nor the mandate to negotiate "hard"
rights (such as traffic rights) with countries other than the
US.
4.3 In doing so, most observers believed
that the Commission had freed Member States to conclude new or
revised air services agreements with their bilateral partners,
provided they made a proper attempt to persuade the country concerned
to accept the designation of all community carriers, not just
those from the Member State concerned. In theory this would avoid
the situation referred to in MAG's oral evidence to the Committee
on 19 March 2003, where it stated: "What we are concerned
about is the paralysis that may set in, in negotiating Air Services
Agreements . . ." It went on to give two examples—China
and South Africa—where the EU nationality clause was proposed
and rejected, resulting in failure to agree a new ASA.
4.4 Unfortunately, MAG's recent discussions
with the parties directly involved with the negotiation of Britain's
ASAs, including officials at the Department for Transport, indicate
that the draft Regulation has failed to deal with this problem,
to the detriment of the UK and the UK regions in particular. One
example where this has potentially adverse effects for Manchester
Airport is the UK—Hong Kong ASA. This was renegotiated during
2003 to permit a rise in frequency between the two territories
that would enable Cathay Pacific Airways to increase services
to the UK (including adding flights to Manchester) but, while
a signed agreement exists, it cannot be implemented because the
Commission has not approved it.[26]
The problem appears to stem from the fact that the Commission
has so far failed to set up the machinery necessary to enable
the approval of new or revised ASAs negotiated by Member States,
ie a committee with the authority to review and approve them.
This is ostensibly because the Regulation is only a "draft"
Regulation and therefore cannot be implemented. Nevertheless,
the Transport Committee may be interested to note that it is MAG's
understanding from discussions with the UK DfT that the Commission
has cited the draft Regulation in forcing Austria to renegotiate
it's recently concluded ASA with Australia. Such inconsistencies
in the Commission's approach do nothing to reassure MAG that EU
competence in this area is desirable.
4.5 There are several forthcoming air services
negotiations where Manchester, and possibly other airports in
the UK including Birmingham and the Scottish airports (as well
as those in London) could lose out on new opportunities to develop
more direct international services unless this situation is resolved.
These include talks with India (scheduled for January 2004) where
the UK will offer to liberalise access to the UK regions, and
China (in February 2004),[27]
where an increase in capacity and the range of cities that can
be served will be on the table.
4.6 Given the continuing problems described
here, and given that the European Commission has neither sufficient
resources nor the expertise to undertake air services negotiations
with third countries on behalf of 25 Member States, MAG believes
that accepting EU competence for negotiations with third (non-EU)
countries other than the largest aviation powers such as the US
is inappropriate.
5. EU COMPETENCE
AND EMISSIONS
TRADING
5.1 As stated in Section 2, MAG considers
that it is correct that the EU should have competence for environmental
legislation, especially where this deals with matters that cannot
be effectively dealt with at a national level. This is the case
where gaseous emissions from aircraft implicated in climate change
are concerned.
5.2 The European Emissions Trading Scheme
already in operation provides an appropriate vehicle for the introduction
of emissions trading for aviation as a means for reducing carbon
dioxide emissions in Europe. MAG believes that the UK government
should be supported in its commitment, set out in the recently
published Aviation White Paper, to bring intra-EU aviation into
this scheme as soon as practically possible.
6. CONCLUSIONS
6.1 MAG believes that EU competence for
the negotiation of ASAs as a bloc with major aviation powers is
appropriate. Once an agreement has been reached with the US, and
on the assumption that the outcome is acceptable to the UK, the
extension of EU competence to other large countries should be
considered. In this regard, MAG supports the recommendation contained
in the report published by the House of Lords Select Committee
on the European Union on 8 April 2003, which notes that extending
full liberalisation to the US, Japan and Russia would effectively
open up 80% of the world aviation market.
6.2 MAG does not, however, support the widening
of EU competence to cover Member States' bilateral aviation relations
with other third countries, since the Commission simply does not
have—and is unlikely ever to secure—the necessary
resources to deal with separate bilaterals for each of the (from
mid-2004) 25 Member States. A more practical solution would be
to permit Member States to undertake their own air services negotiations
within the framework provided by the draft Regulation on the negotiation
and implementation of air service agreements between Member States
and third countries. The draft regulation needs to be implemented
and the necessary machinery to enable it to function as intended
must be put in place as soon as possible, in order to resolve
the problems outlined in Section 4, which are harming the interests
of UK aviation and the ability UK regional airports to develop
new international services in particular.
6.3 Finally, MAG believes that EU competence
for all other aviation matters which go beyond national boundaries
should be retained and, where appropriate—such as in bringing
aviation into the European Emissions Trading Scheme—extended,
in line with UK Government policy.
19 January 2004
26 The Committee will no doubt wish to seek more detailed
evidence from those in Government who are directly involved in
the negotiation of air services agreements. Back
27
The Committee may be interested to note that four European countries-Germany,
France, Finland and the Netherlands-have recently implemented
new ASAs with China, without including the EC's nationality clause.
However, as far as the UK-Hong Kong ASA is concerned, the Commission
took a close interest in the negotiations and intervened directly
by writing to the Government of Hong Kong to state that any agreement
would be unlawful unless approved by the Commission. As the Committee
is aware, this approval has not been forthcoming for the reasons
described earlier. Back
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