Commission moves to simplify complaints, compensation against non-EU airlines

Under the new regulation, a complaint can be filed with the European Commission by an EU-based carrier, a group of carriers or a member state. [Eric Prado/Flickr]

The European Commission adopted a package of regulations on Thursday (8 June) which will provide EU airlines with a simpler, more efficient way to file complaints concerning state subsidies and other unfair competition measures against third countries and their operators.

The new regulations come at a time when the Commission is negotiating air transport
agreements with a number of non-EU countries, including China, Turkey, United Arab Emirates, Kuwait and Qatar.

Some European flag carriers, notably Lufthansa and Air France KLM, have accused the Gulf
airlines of receiving unfair state subsidies and demanded that the executive address their concerns in the negotiations. Emirates and Etihad have denied the subsidy allegations.

The European Commission has also sought to play down the issue, referring to it as “alleged
subsidies” and a Commission official told reporters that the EU’s executive had “never
received a formal complaint”.

However, the Commission official acknowledged that the current complaint procedure was demanding, impractical and not fit for the purpose.

“This is not a not a protectionist tool,” the official said of the new regulations and added
it was “aimed at safeguarding fair competition”.

“In the EU, every airline is treated the same. Outside the EU, it has not always been the
case, the WTO rules do not apply”.

Commission mulls new measures against aviation subsidies from third countries

The issue of subsidies and “unfair pricing” in the aviation sector will be an “important” part of the upcoming talks with Qatar, the United Arab Emirates and Turkey, according to the latest draft of the aviation package seen by EURACTIV.

Under the new regulation, a complaint can be filed with the European Commission by an EU-based carrier, a group of carriers or a member state. If the complaint is justified, the Commission can propose financial or operational compensatory measures.

However, the proposed measures cannot violate each member state’s bilateral agreements with a non-EU country, which continue to take precedence. The final approval of the compensatory measure must come from the member state concerned via comitology, a committee of national experts meeting behind closed doors.

The regulation, which has yet to be reviewed by the European Parliament and the member
states, also contains measures to miminise the impact of industrial action on air traffic,
by encouraging more dialogue, early notification and protection of peak air traffic periods.

Strikes caused the cancellation of more than 243,000 flights and affected 27 million
passengers between 2005 and 2016, according to Commission data.

The package also provides guidelines on ownership and control of EU airlines. It confirms
current requirements that an EU airline must be at least 50% owned by EU member
states or citizens, but provides detailed guidance on the four main criteria for assessing
effective control: corporate governance of the airline, shareholders’ rights, financial
links and commercial cooperation of the non-EU investor.

EU plans measures to even competition with non-EU airlines

The European Commission is considering new measures to tackle what it sees as unfair competition from non-EU airlines as part of a package of proposals unveiled on Monday (7 November) designed to boost the competitiveness of Europe’s aviation sector.

Background

Aviation is seen as a considerable driver of growth and jobs. European aviation, which
controls 26 percent of the global market, employs 9.3 million people and contributes 510
billion EUR to Europe's Gross Domestic Product every year.

Since the creation of the EU's Single Aviation Market in 1992, the number of daily flights
has increased to 23,000 recorded last year from around 10,000 in 1992.