Air Transport Liberalisation: Building the European market and its global effects

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Air Transport LiberalisationBuilding the
European market and its global effects
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One of the EUs success stories

• The EU air transport market is a visible success
  - EU citizens are experiencing the benefits
  directly
• More routes flown
• More competition
• More people travelling
• Lower fares - in economy class

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But no big bang Liberalisation in Europe was
measured and careful

• More than simple removal of market access
  barriers
• A strong commitment to safety
• Careful transition over some years
• Period of restructuring for air carriers
• Protection of essential, but thin public service
  routes
• A level playing field and competition rules

4
Process still continuing

• Liberalisation complete in 1997
• But integration process continues with new rules
  and the regional market itself continues to grow
• 15 EU Member States
• 3 more members via European Economic Area
• EU-Swiss agreement
• 10 new Member States on the way
• More states likely to become associated.
• 30 plus countries within a few years.

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But still some effects missing

• Little change in structure of industry
• Flag carriers still divided along national lines
• No real development of multinational airlines in
  EU
• Successful companies limited in their
  opportunities for expansion
• Capital does not flow completely freely
• Scope for international competition limited

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Ownership and Control rules

• The EUs internal market is limited by the
  ownership and control rules used in international
  aviation
• Like all participants in international aviation,
  our partners have the ultimate say over internal
  investment policy
• Contrast with other sectors of the economy

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Time to complete the process

• EU citizens have a right to establish companies
  throughout the Community
• EU citizens and their companies have a right to
  non discrimination
• The EU now wants to give its air transport
  industry its freedoms and rights

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The EU must now seek change

• Issue is legal not just a political aspiration
• It must work with partners on new approaches
• The EU must seek more flexible designation
  clauses that recognise the existence of Community
  air carriers
• It must seek market access for more European
  carriers in bilateral agreements with other
  states
• If EU airlines want to use their rights under the
  Treaty, we will have to seek to secure those
  rights

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Many would benefit from change The benefits would
not just accrue to the EU

• Air carriers in other countries have greater
  difficulties to access capital than EU carriers
• There are lots of unused traffic rights and
  under-served markets world-wide
• Limitations on ownership and control keep small
  carriers small - a more flexible approach would
  let many countries build stronger air transport
  industries with outside help.

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What about the dangers?

• The key issue is preserving safety standards
• The EU has been careful to develop safety in
  parallel with liberalisation, so that we can be
  sure that standards are respected by everyone.
• It must be clear who oversees safety and
  standards must not be relaxed.
• But safety also should not become an excuse to
  preserve the status quo.

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EU hopes for ATConf/5

• Recognise the need to start unblocking investment
  in the industry and give airlines new
  opportunities
• Endorse flexibility towards the application of
  existing agreements
• Endorse flexibility towards revising agreements
• The Community of interest developed by ICAO
  should be recognised and applied
• This is all ICAO and Chicago compatible