11 December 2015

‘Birds born in a cage think flying is an illness’ - An Aviation Strategy for Europe

‘Birds born in a cage think flying is an illness’ - An Aviation Strategy for Europe
Aviation in Europe is caught at a crossroads – the Commission tells us that it is a motor of economic growth, employing almost 2 million people and worth at least €110 billion to the economy. However, the feeling still remains that it is uncompetitive, underfunded and, according to some, a threat to the environment and social standards.


It is to help address these perceived issues that the European Commission has launched its Aviation Strategy, the framework for European aviation policy over the next 4 years. The intention of the Strategy is to create a more competitive aviation sector and establish a level playing field between EU and non-EU players which will allow the European aviation sector to reinforce its global leadership position.


The strategy sets out to deliver on three goals:
  • creating an international level playing field,
  • promoting efficiencies in the air and on the ground
  • finding a less burdensome way of maintaining the EU’s high safety and security standards.
 
The Aviation strategy must be seen as a product of its time. The current Commission under the Presidency of Jean-Claude Juncker was appointed with the ambition of kick-starting European growth. In order to do this, Juncker has adopted a new approach to regulating and the role of the executive, proposing that the Commission would only table legislation where strictly necessary and would attempt to do more for less, unlocking private finance to boost public spending. These principles are clearly evident in the Aviation package, which has been launched with proposals to unlock investment and to use the legislation that exists more efficiently, rather than proposing a raft of new legislation: the strategy mentions only 2 legislative proposals.
 
A level playing field


The primary aim of the aviation strategy is to create a level playing field between all operators, mainly in relation to suspected unfair competition from 3rd country airlines. It also includes measures to try and create a more level playing field for social and environmental standards. This follows high profile complaints from EU legacy carriers, supported by their national governments, regarding state subsidies received by Gulf airlines.


Thanks to the high profile nature of the dispute between the EU and Gulf carriers – although it should be mentioned that the Gulf carriers themselves are not explicitly mentioned in the document - it is unsurprising that international aviation relations have taken centre-stage in the Aviation Strategy. The central pillar of the aviation strategy is the conclusion of a series of ambitious international agreements which largely seek to offer the incentives for increased access to the EU market (even to the extent of increased ability to invest in EU airlines – through interpretive guidelines which will act as a ‘clarification’ of the ownership rules for EU airlines) in exchange for the exportation of EU standards (state aid, competition, safety levels). These international agreements will be supported with a new system of redress for EU operators who face unfair practices from third countries and third country operators.


These agreements present an opportunity for EU operators and manufacturers to increase their competitiveness vis-à-vis 3rd countries, however they also represent the opportunity for non-EU operators to increase their entry into the EU market.   
 
Promoting efficiencies in the air and on the ground


A second priority area of the aviation strategy is to tackle the so-called limits to growth in the air and on the ground. The aim is to clear up constraints to capacity and efficiency.


First, the completion of the Single European Sky (SES) is again being reiterated as a way to rationalize and increase capacity. The Commission is calling for the Council (as a body and as individual Member States) to conclude negotiations, but the proposal lacks any mechanism or incentive to resolve the issues that are clocking the proposal in Council. Both airlines and airports share the concerns over the lack of progress with regard to SES.


The Commission also wants to tackle the airport capacity constraints. Whilst actions to tackle capacity concerns rest however mainly with the EU Member States, the Commission does urge the Council and Parliament to swiftly adopt the revised Slot Regulation that redefines the rules on the allocation of airport slots. This does, however, seem like a short term fix if anything and further action may be required in order to ensure that capacity meets demand.  


The key issue for airports and airlines alike however is set to be the assessment of the Airport Charges Directive to decide whether it is in need of review.  With airports and airlines lining up on opposing sides in the matter of charges, the assessment of whether the Directive will be reviewed will be a key area for industry engagement with the Commission.
 
Towards a performance and risk based approach


In addition to encouraging investment in EU airlines the Commission seeks to rebalance the competitiveness of the EU manufacturing sector against competition from the far-East. The aviation strategy foresees moving to a performance-based safety and security approach and away from the prescriptive model currently used. In practice this will mean maintaining the current high level of safety standards, whilst reducing the administrative burden that comes with compliance to a prescriptive ruleset. The EU aviation manufacturing industry is expected to be the main beneficiary of this change of mind-set, and will have an interest in the debate around the revised Basic Aviation Safety Regulation and the application of industry best-practice standards within the European Aviation Safety Agency (EASA).
 
Another key facet of the aviation strategy is to continue the Commission’s push to make the EU the world leader in the international commercial drone market. The approach taken by the EASA, and endorsed by the Commission in its strategy, to move towards a risk-based approach to safety will allow it to “unleash the full potential of drones,” through a legal framework which will improve safety, give greater clarity and legal certainty for operators. As these rules will define the application of commercial drones in Europe, their formulation by EASA will take on a high level of significance for both drone manufacturers and likely users of commercial drone technology, such as e-Commerce or delivery companies.
 
More influence on business activities then initially expected 
 
Although the Aviation Strategy does not propose many new legislative initiatives, the measures it does propose, many of them non-legislative or deregulatory, will affect the business activities of all players along the aviation value chain. Particularly, the conclusion of a series of ambitious international aviation agreements (which starts in 2016), the possible review of the Airport Charges Directive (as of 2016) and the new approach to safety (revision of the Basic Aviation Safety Regulation, proposed by the Commission together with the Aviation Strategy) which will have implications for manufacturing and also e-commerce (and potentially much wider) are likely to be hotly debated and subject to competing interests from the different actors affected.


On 10 December EU Transport Ministers held a first exchange of views on the aviation strategy.  The European Parliament will also have its first say on the strategy in early 2016. The different alignments of Member States and the view of different groups in the Parliament will have an impact on the development of the proposals outlined in the Aviation Strategy. For this reason it will be important to pay attention to, and even actively engage, with all institutional players in order to stay on top of EU aviation policy.

Related contacts :

Alain Berger
Executive Strategy Director

email: alain.berger@hkstrategies.com