7/19/06

A Truly Seamless Market for Aviation in Europe

So the very nice M. Jacques Barrot has finally published his plans for a single European Air travel market. Good for him.

Those of us who are free market junkies will applaud this move towards removing the last vestige of an archaic system. But don’t think there wont be certain countries who will fight this (Think Greece and Italy)

Cheers

Timothy

European Commission unveils proposal to harmonize air transport in EU

Wednesday July 19, 2006

The European Commission yesterday released its "Proposed Regulation of the European Parliament and the Council on Common Rules for Air Services in the European Union," which among other things will require airlines to include all extra charges and taxes in advertised airfares, including those published on carrier websites, beginning in December 2007.

The proposal also bans price discrimination on the basis of residence or nationality, forbidding airlines from charging differing fares simultaneously on country-specific versions of their websites. It requires approval from EU member states and the European Parliament to become law.

"The liberalization of air transport is a European success story. Citizens enjoy more travel opportunities and lower fares than ever before. We want to consolidate this success by removing all restrictions to the free provision of air services and ensuring fair competition between airlines," EC VP-Transport Jacques Barrot said.

The proposal also includes a provision to obligate EU members to suspend or revoke the operating license of an airline that does not fulfill all EU regulations or else cede that right to the EC. It harmonizes financial conditions EU carriers must fulfill and the monitoring of those conditions by member states. It also relaxes rules governing the leasing of aircraft registered in the EU but makes leasing aircraft registered in other countries more difficult, especially wet-leasing, "to take account of safety and social considerations."

The proposal increases the maximum concession period on a public service obligation route operated by one airline from three to four years, or five years for "ultra peripheral regions." The EC said the extension will attract more carriers to calls for tender and reduce administrative burdens. Following recent disputes in Italy and France, the EC said it "wants to avoid abuse of the PSO system." The Proposed Regulation "explicitly states the necessity of respecting the proportionality between the obligations imposed and the economic development goals pursued [and] confers the right to the [EC] to request a detailed economic report from the member state concerned justifying the need for the PSO."

Regarding air services agreements with third parties and "for the sake of consistency between the internal market and these external aspects," the EC proposed it take responsibility for negotiating intra-Community traffic rights with non-EU nations and that remaining restrictions on existing bilateral agreements between EU members be lifted, allowing "the free codesharing on routes to third countries and the free price setting on routes to third countries with an intermediate stop in another member state."

The EC said the proposal would "ensure a consistent application of EU legislation in all member states, thereby creating equal conditions for all airlines."

by Brian Straus

Timothy J O'Neil-Dunne
Managing Partner - T2Impact Ltd
Global Travel eBusiness
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