5 Aviation
| (27734)
11829/06
COM(06) 396
+ ADDs 1-2
| Draft Regulation on common rules for the operation of air transport services in the Community (recast)
|
| Legal base | Article 80(2) EC; co-decision; QMV
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| Document originated | 18 July 2006
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| Deposited in Parliament | 28 July 2006
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| Department | Transport |
| Basis of consideration | EM of 31 August 2006
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| Previous Committee Report | None
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| To be discussed in Council | Not known
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| Committee's assessment | Politically important
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| Committee's decision | Not cleared, further information requested
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Background
5.1 Three Regulations, Regulation (EEC) No 2407/92, Regulation
(EEC) No 2408/92 and Regulation (EEC) No 2409/92, collectively
known as the Third Aviation Package, set out common rules for
the transformation of air transport services in the Community
in order to liberalise the market.
The document
5.2 This draft Regulation would recast, that is consolidate and
revise, the three 1992 Regulations into one Regulation. The proposal
follows a public consultation and an assessment by the Commission
(and annexed to the proposal) of the impact of no change to the
existing regime or a revision and simplification of the regime,
with a series of measures to address the problems identified.
The revision cuts across many areas in aviation, including safety
and licensing, consumer protection and route development. Its
key elements are:
- operating licences — before being granted an
operating licence carriers would be required to demonstrate a
greater level of financial robustness than at present in order
to protect against airline failures. There would also be tighter
restrictions on the leasing of aircraft and crews ("wet leasing")
from third countries, which would only be allowed for a shorter
period and when certain safety guarantees had been given. This
would have a significant impact on the current operating practices
of some UK carriers;
- public service obligations (PSOs) and traffic
distribution rules (TDRs) — for
PSOs the conditions under which socially-necessary but uncommercial
air services, for instance to remote islands, may be subsidised
are limited in order to minimise distortions to the single market.
TDRs are intended to be used for operational purposes to ensure
an appropriate division of traffic between a number of airports
serving the same city. A number of Member States have been accused
of abusing the PSO procedures to prevent the legitimate commercial
operations of low-cost carriers (including EasyJet). Similarly,
there is some evidence that TDRs have been used to discriminate
against some carriers in some Member States. The draft Regulation
would tighten the rules on PSOs and TDRs; and
- consumer issues —
the draft Regulation addresses two issues about which consumer
groups (including the UK Air Users' Council) have concerns. First,
airlines would be required to quote prices inclusive of all taxes,
fees and charges, particularly on websites. Present practice varies
and direct comparison between airlines is difficult. Secondly,
differential pricing based on country of residence, which can
currently lead to different prices being quoted for the same flight
depending on the country in which the booking is made, would be
stopped. Additionally powers of Member States to regulate air
fares would be abolished.
The Government's view
5.3 The Parliamentary Under-Secretary of State, Department
of Transport (Gillian Merron) says that the Government agrees
the need to review the operation of the regulatory regime set
out in the Third Aviation Package and supports the general aims
of further improving the operation of the internal market, ensuring
the consistent application and streamlining of the existing rules
and improving transparency for consumers. She continues that the
general thrust of the draft Regulation is in line with the Government's
policy of supporting the development of a fully-liberalised Community
aviation market, though the operational effect of some of the
proposals (particularly on leasing of aircraft) may be of concern
to the aviation industry.
5.4 However, the Minister comments that the Government
does have some concerns. It will examine the implications for
the air transport industry and to identify the key issues with
them before taking a judgement on whether the benefits outweigh
the disadvantages. Meanwhile she makes some specific points:
- the Government is concerned
that proposed extension from two to three years of the period
covered by start-up carriers' business plans will have little
effect on the incidence of airline failures —indeed this
could result in less realistic business plans and thus be a less
stringent requirement than exists at present;
- the Government is concerned that the proposed
tighter controls on the leasing of aircraft in order to address
the need to maintain high and consistent levels of aviation safety
may, in their current form, have significant financial implications
for carriers whose fleets contain a high proportion of leased
aircraft. The Department will work closely with the industry to
develop a fuller understanding of these implications;
- the proposals in relation to PSOs are generally
welcome, although the Government will need to seek clarification
of certain definitions, such as that of a "regional airport",
and to ensure that the proposals will actually address misuse
of the PSO mechanism;
- as some UK airlines have been disadvantaged by
TDRs elsewhere in Europe the Government welcomes in principle
the proposed new powers for the Commission to approve TDRs and
designate airport systems, which should lead to better enforcement
of this mechanism across the Community;
- the Government wishes to consider carefully the
impact of the provisions on pricing, which seek to address concerns
over a lack of consistency in the publication of taxes, fees and
charges applicable to air fares, the impact on UK airlines and
to ensure that any new regime is workable, proportionate and delivers
real consumer benefits; and
- the Government welcomes the proposal to abolish
powers for Member States to regulate air fares and regards such
powers as unnecessary in the liberalised market which has been
created by the Third Aviation Package.
5.5 The Minister says that the Government is undertaking
a full consultation with interested parties to assess in detail
the impact and policy implications of these measures. This will
involve preparation of a Regulatory Impact Assessment.
Conclusion
5.6 Although the basic framework for the common
market in air transport services would remain this draft Regulation
would introduce important modifications. Before considering the
matter further we should like to see the outcome of the Government's
consultations and a Regulatory Impact Assessment. Meanwhile the
document is not cleared.
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