A trade war between USA and Europe over the Open Skies agreement must not be triggered because all European and US airlines will be penalized for the benefit of airlines from third countries, writes Emmanuel Jahan. But that is what may happen if no action is taken to guarantee fair competition, particularly at the social and fiscal levels in Europe and the USA.
Emmanuel Jahan is the chair of the European sectoral committee of social dialogue for civil aviation.
On the European side, some parties would like to open up a front with USA about an airline which is not from the EU28, and which uses air crews officially based in a third country, but is actually working from the EU, for long-haul flights to USA.
Indeed, a company very close to a letter box company has been set up in a Member state to take benefits from the Open Skies agreement, with low social charges.
Flags of convenience : millions of European jobs at stake
The purpose of this personal opinion, is clearly not to fight against new competitors in air transport, whatever the business model, but to require a fair competition, particularly at the social and fiscal levels.
The Open Skies agreement (2008), between Member States, the European Commission, the European Community and the USA, was modified in 2010 to include a social clause (art 17 bis) that requires decent labour standards. Why not respect this clause?
All the signatories of this ATA must comply with this provision, but instead of being a guarantee for fair competition, some European parties circumvent law for long-haul flights!
The main association of European airlines sent a letter in February 2014 to the US Department Of Transportation (DOT) to express its concern about a potential non-application of this social clause (25 European airlines out of 30 have supported this position).
The US administration has followed this recommendation by dismissing a request for an exemption to take benefit of an Air Operator Certificate for this airline which is not in line with US (and European !) public interest and fair competition.
The flags of convenience in civil aviation will cut millions of jobs (directs and indirects) in Europe and in USA. The example of the marine fleet should remind us of the risks associated with such social dumping. The majority of the social partners have acted to preserve fair competition and working conditions, but the danger could come from a maverick from our continent.
Employment is at the center of our concerns. According to a report from the DG Move (April 2012 – Steer Davies Gleave), there was a decrease in direct and indirect jobs related to airlines’ employment from 1998 to 2010 (studied period) despite the arrival of European low cost air carriers and traffic growth of more than 5% per year.
Thus, this is not the use of crews officially registered outside Europe that will create jobs in Europe.
Comply with European law
For the last 10 years, several regulations have se tup standards in civil aviation particularly those that lay down only one “home base” (airport) assigned in Europe to each air crew member and also the applicable law for social security.
The Court of Justice of the European Union has also defined the concept of “establishment” which involves real economic activity proportional to the structures of the company.
Why not respect the conclusions of this case law instead of using letter box companies (lawful SMEs, but with activity disproportionate compared to the structure of the undertaking) ?
There was no real dialogue between all parties, and we must now sit around a table to discuss these issues and find answers in line with European law, and which do not call into question the very existence European airlines.
We must firstly focus on solving our problems at European level. Globalisation does not intimidate European airlines, but the rules must be similar. This must be true for airlines from third countries with state owners and very low airport charges.
A trade war between USA and Europe is not our future! Compliance with European law is our guarantee for fair competition, and if needed, the current regulations could be adapted to foster European airlines’ activity and a level playing field at the social and fiscal levels.