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

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

2. One of the EU’s 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

3. 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.

5. 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

6. Ownership and Control rules • The EU’s 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

7. 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

8. 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

9. 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.

10. 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.

11. 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