PUBLIC POLICY ADVOCACY OF EUROPEAN AIRLINES AT EU LEVEL

The Association of European Airlines (AEA) brings together over 30 major airlines representing the voice of the European full service airline sector. AEA’s members include: Adria Airways (Slovenia), Aegean Airlines (Greece), Air France (France), Air Malta (Malta), Air Serbia (Serbia), airBaltic (Latvia), airBerlin (Germany), Alitalia (Italy), Austrian Airlines (Austria), British Airways (United Kingdom), Brussels Airlines (Belgium), Cargolux Airlines International (Luxembourg), Croatia Airlines (Croatia), CSA Czech Airlines (Czech Republic), European Airtransport Leipzig (Germany), Finnair (Finland), Iberia (Spain and Canary Islands), Icelandair (Iceland), KLM Royal Dutch Airlines (Netherlands), Lot Polish Airlines (Poland), Lufthansa (Germany), Luxair (Luxembourg), Olympic Air (Greece), SAS (Sweden), Swiss (Switzerland), TAP Portugal (Portugal), TAROM (Romania), TNT Airways (Belgium), Turkish Airlines (Turkey), Ukraine International Airlines (Ukraine), Virgin Atlantic Airways (United Kingdom).

AEA works in partnership with the institutions of the EU and other stakeholders in the value chain to ensure sustainable growth of the European airline industry in a global context.

PRIORITY/POLICY ISSUES

Promoting aviation's crucial role in Europe's future

Aviation is a key pillar of Europe’s competitiveness. Airlines carry about 40% – by value – of the Europe’s exports and imports and transport 366m passengers per year in and out of Europe. They provide access to global markets for European business, secure 4.2 million jobs in Europe, and promote tourism across the globe, whilst AEA member airlines alone employ 390,000 people.

AEA members aim at ensuring that aviation priority projects are at the heart of the political agenda by promoting constant dialogue with all EU stakeholders. AEA intesifies the dialogue with members of the European Parliament, of the European Commission and of the Council of the Ministers. Several additional agencies such as EASA, SESAR and EUROCONTROL have been established to monitor and implement key provisions of the regulatory framework.

1. AIR TRAFFIC MANAGEMENT

Air Traffic Management (ATM) has a huge impact on the air transportation sector, including both direct costs (e.g. charges) and indirect costs incurred through lack of efficiency. Air transport will grow further in the future and in order to accommodate this development the current fragmentation and inefficiencies of the European airspace and infrastructure need to be overcome. The Single European Sky (SES) initiative aims to reduce the fragmentation of European airspace and to increase capacity, but it has so far failed to achieve the establishment of an integrated European ATM system.

AEA coordinates closely with key stakeholders to promote the development of an efficient, harmonised and interoperable ATM system and to accelerate the implementation of European’s flagship SES programme.

Eurocontrol : After more than 50 years of activity, it is appropriate to review Eurocontrol’s role in the context of the Single European Sky (SES) and the EU common aviation market. In particular, Eurocontrol’s activities must be adapted to ensure a clear separation between service provision and regulation. If it is to become more cost-efficient, Eurocontrol cannot remain immune to market pressures. This requires a sound business plan for the Eurocontrol Agency, with clear objectives and continuous measurement of achievements and of the resources needed, while operating in a customer-oriented way.

AEA is therefore pushing for a Eurocontrol vision and strategy focused on a more market-based approach taking into consideration the need for the accelerated implementation of an effective and efficient SES.

SES : The completion of the Single European Sky (SES) initiative is essential to ensure the competitiveness, sustainability and growth of the EU economy. Yet almost a decade after the SES legislation first entered into force, the industry continues to be hampered by the fragmentation of European airspace and infrastructure, which results in billions of Euros per annum in additional costs, flight delays, and unnecessary carbon emissions. However, the implementation of SES is facing a deadlock, largely due to the lack of political will. The SES is far too important a pan-European project, with too widespread benefits, for it to be allowed to fail. The new Commission should continue to push for the establishment of an SES, building on the SES II+ proposal. AEA will continue to advocate for SES as a catalyst for jobs and growth which is crucial for Europe as it struggles to revive its economy and to support its role in the highly competitive context of global aviation.

SESAR: The technology required for the future Single Sky is provided through the air traffic management research programme SESAR, which aims to modernise infrastructure and increase efficiency by optimising capacity - and so enable the SES to become a reality.

In AEA’s view, SESAR will only be successful if it is performance-driven and based on users’ needs. As SESAR is a long-term initiative, it requires enormous investment and must be based on a clear business case combined with sufficient public funding. For a future SESAR mandate, AEA urges the Commission to consider the lessons learned from the Data Link Service debacle and to guarantee synchronized deployment of ground and airborne equipment.

2. COMPETITION

Ensure conditions for fair competition: a level playing field

European airlines participate in a global marketplace alongside competitors from around the world, some with distinct business models, some with very different regulatory regimes. Their ability to maintain the quality of services by which they are defined could be threatened by competitive distortions. Equally, within Europe, there is competition between airline business models and between airlines and other modes of transport; competition which is by no means fair and free of distortion.

AEA calls upon European governments to effectively dissuade non-EU governments from pursuing discriminatory policies which distort competition amongst international airlines.

• By avoiding burdensome - administrative or financial - regulation that puts European airlines at a competitive disadvantage with their international counterparts;
• By working with third countries to harmonise rules and operating standards in the areas of security, environmental regulations, border controls, state aid rules, taxes and charging regimes;
• By securing a level playing field between the airline business models. No frills airlines serving local markets are driving distortive infrastructural requirements and raising the issue of public funding and state subsidies of regional airports;
• By ensuring fair competition with other modes of transport. State aid rules should be evenly applied;
• By providing public sector funding or security provisions that protect the wider public, not only air passengers;
• By eliminating barriers to competition through e.g. implementing the Single European Sky;
• By ensuring that European airlines’ interests are represented when negotiating new air traffic agreements with third countries;
• By eliminating "restrictive foreign ownership and control" laws, while at the same time ensuring that reciprocity in market access and regulatory convergence is safeguarded;
• By seeking implementation and convergence of competition policy with that of other nations when further liberalizing market access.

3. ENGINEERING & MAINTENANCE

AEA addresses issues related to design, certification and airworthiness in its Engineering & Maintenance Sub-Committee. The aim is to optimise engineering and maintenance measures to improve safety and productivity.

EASA: AEA supports the highest standards of safety. However, engineering and maintenance safety rules must strike a fair balance between the need to optimise safety and the need to avoid unduly burdening Maintenance, Repair and Overhaul shops (MROs) with extensive obligations and related implementation costs.

AEA is pro-actively involved in EASA’s work through the EASA Advisory Board, EASA Safety Standards Consultative Committee (SSCC), Rule-Making Tasks and specific Committees to ensure that the interests of the airlines are taken into account. AEA also contributes to the ongoing process of revising the EASA Basic Regulation.

MRO/OEM: In recent years Original Equipment Manufacturers (OEMs), in particular in the field of engines and components, have become increasingly aggressive in order to capture a bigger part of the Maintenance, Repair and Overhaul (MRO) market. Engine and Component OEMs are more and more in direct competition with airline and independent MROs which rely on the same OEMs for access to technical documentation, spare parts and test equipment. In the longer term there is a risk that the MRO market will be dominated by OEM monopolies, restricting the airlines’ choice of provider. This would lead to increased costs for all airlines and for consumers.

Action must be taken by the Commission to safeguard competition within the aircraft MRO market so that airline MROs, independent MROs and OEM MROs can compete on a level playing field. The Commission must also ensure that the EU internal market functions efficiently, for the benefit of both consumers and aircraft operators.

REACH: The new EU Regulation (No 1907/2006) on the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) entered into force in 2007 with the purpose of managing all chemicals manufactured, imported or used in Europe. Under REACH, the so-called Substances of Very High Concern (SVHC) cannot be placed on the market or used without prior authorization after a certain sunset date. These substances are often used by the aviation industry to fulfill stringent safety requirements. There are many unknowns related to the REACH authorization procedure for SVHC and even if authorizations are granted there is no guarantee that there will be continued supply within the EU. Not only would this lead to substantial income and job losses, but the work would continue to be done anyway, at facilities outside the EU.

The aviation industry is committed to the objectives set out in the REACH legislation, but in its current form REACH will create an unacceptable burden for the aviation industry and jeopardize European competitiveness. AEA therefore calls upon EU decision-makers to adjust the REACH implementation process in order to guarantee the economic viability of European MRO.

4. INFRASTRUCTURE

Air transport is a growth sector. Since liberalization in 1992, the number of flights in European airspace has almost doubled. This means that airport movements – arrivals and departures – have also doubled. The largest airports were extremely busy then; they are even busier now, with many operating very close to their physical capacity limits.

At the same time, the ever-increasing cost of infrastructure in Europe demonstrates the monopolistic nature of airports and therefore the need for an effective regulatory framework. Because infrastructure costs account for a significant proportion of airlines’ operating costs, bringing them down would increase the competitiveness of airlines, to the ultimate benefit of the European consumer.

Capacity crunch: AEA is actively promoting enlightened national policies which take a holistic approach, taking into account the contribution that major airports make to the community and the economy, and the opportunity cost of failing to respond to demand, coupled with a falling market share. The EU’s Capacity Observatory gives Member States the opportunity to identify best practice and to benchmark themselves against the leading performers. It is only with a cohesive air transport policy that the looming capacity crisis can be averted. National governments should identify capacity challenges and define strategies to resolve them. In this context, there is a clear need for leadership at European level to coordinate these national strategies on capacity and to provide financial support as appropriate.

Airport charges: In May 2014, the European Commission published its report on the implementation of the Airport Charges Directive. The Commission rightly acknowledged some of the weaknesses in the current Directive, the problems associated with its transposition into national law and, ultimately, its implementation at local level. However, AEA is deeply disappointed that the EC report did not propose enough concrete steps to address these failings. Airlines need cost-efficient airport charges that are set in a transparent way, based on a meaningful consultation between airports and airlines, and that are subject to truly independent regulatory oversight. If this cannot be achieved under the current framework, improved legislation is necessary

Ground handling: The European aviation industry needs a level playing field with lower costs and higher service levels and a more liberalized value chain. In this context, AEA has long called for the further opening of the ground handling market in order to enhance the efficiency and overall quality of ground handling services at European airports.

Slots: The capacity crisis cannot be managed or alleviated through changes to the established airport Slot Allocation System. Slot allocation does not create capacity, it merely manages it. At congested airports there is extreme pressure on incumbent airlines to utilize their slots as intensively and efficiently as possible – bearing in mind that a slot held by a network carrier at its hub market is a component in a multitude of city-pair markets while a slot held by a point-to-point carrier applies to just one market. The current slot allocation system strikes a balance between planning stability for incumbent carriers and opportunities for new entrants.

5. SAFETY & OPERATIONS

Air transport is one of the safest modes of transport and all AEA members are committed to safety. AEA’s activities focus on enhancing the existing high level of safety.

The Technical and Operations Committee (TOC) provides a high-level platform to address topical issues related to safety and operations, which are further elaborated in dedicated Task Forces.

Air Operations: Air Operations are regulated by Implementing Rules and associated Acceptable Means of Compliance (AMC), Guidance Material (GM) and Certification Specifications (CS). EU Regulation No 965/2012 on Air Operations was published in the Official Journal of the European Union on 25 October 2012 and entered into force on 28 October 2012. Member States have the opportunity to postpone the applicability of these rules by up to 2 years until October 2014.

AEA monitors the transition of individual States from EU-OPS to the Regulation on Air Operations and is actively involved in the implementation process.

EASA: A common endeavour is needed at the European level to keep air transport safe and sustainable. The European Aviation Safety Agency (EASA) develops common safety and environmental rules, monitors the implementation of standards and provides the necessary technical expertise.

AEA’s activities aim at promoting the highest level of safety. However, safety and operation rules must strike a fair balance between the need to maximise safety and the avoidance of extensive obligations and related implementation costs.

AEA is pro-actively involved in EASA’s work through the EASA Advisory Board, SSCC, Rule-Making Tasks and specific Committees to ensure that interest of the airlines are properly taken into account. AEA also contributes to the ongoing process of revising the EASA Basic Regulation.

Flight Crew Licensing: Commission Regulation (EU) No 1178/2011 on Flight Crew Licensing and Medical Requirements was published in the Official Journal of the European Union on 25 November 2011 and consists of four Annexes. These cover Part FCL, conditions for the conversion of existing national licences and ratings for aeroplanes and helicopters, conditions for the acceptance of licences issued by or on behalf of third countries, and Part MED. The regulation became applicable as of 8 April 2012. In this context, Member States could apply for derogation, for a limited period of time, from certain provisions laid down in the regulation.

During the implementation phase, AEA will continue to monitor implementation issues and will be actively involved in finding practical solutions.

Flight and Duty Time Limitation: The final EASA Flight and Duty Time Limitation (FTL) rules for pilots and cabin crew were published in the EU Official Journal of 29 January 2014 (Regulation No 83/2014). They will apply as from 18th February 2016.

AEA actively contributed to the development of the new rules to ensure that they are focused on safety rather than the social issues promoted by the trade unions. AEA is an active member of the EASA FTL Rulemaking Group. During the implementation phase, the AEA will continue to monitor implementation issues with the support of the AEA FTL Expert Group. AEA will also be involved in the EASA Panel of Experts which will need to consider a few deviations from the EASA soft-law for specific operations.

6. CARGO

The air cargo industry is a key element in today’s speed driven global economy, accounting for an estimated 35% of the value of goods exchanged worldwide, against 1 or 2 % of the tonnage. Collectively, AEA member airlines carry 6 million tons of cargo annually, which represents around 10% of their commercial revenues. Air cargo is both part of, and distinct from, the core business of network passenger airlines.

AEA recognises the importance of air freight to the economy and consumers and is pushing for a smooth functioning of the air cargo sector which entails proper infrastructure, a level playing field for the cargo industry and seamless Customs and Security legislation, in collaboration with third countries.

Cargo Security: In the aftermath of the 2010 Yemen incident and with the overall aim of strengthening air cargo security while avoiding unnecessary distortion to the international supply chain, customs and civil aviation authorities around the world have started pilot projects which use advanced data risk assessments to assist in the identification of shipments that represent a security threat. In parallel, the European Commission has introduced a new cargo security legislation which requires that supply chains at third country airports from where cargo is flown into the EU must be validated by Independent Validators and certified by EU Member States in order to gain a special ACC3 status (Air Carrier flying Cargo from a 3rd country into the EU).

Customs: The AEA has consistently supported the Commission in its task to develop a Union's Customs Code. International freight transport is by its very nature a paperwork-intensive activity. The adoption of a Union's Customs Code creates an opportunity to simplify EU customs procedures and to establish a new pan-European e-customs environment that will boost Europe's global competitiveness. Following the publication of the modernised European Union Customs Code (UCC) in the EU Official Journal in October 2012, the EU Commission has now turned its attention to the implementing provisions which should enter into force on 1st June 2016. Industry stakeholders are encouraged to contribute to the revision cycles of the new UCC. Therefore, AEA and IATA are working closely together to provide comments on the proposed implementing provisions.

7. ENVIRONMENT

Airlines take their responsibility to reduce their impact on the environment very seriously. With regard to aircraft noise, AEA member airlines are committed to mitigating their noise footprint and therefore continue to invest in fleet renewal. As a result of technological improvements, aircraft produced today are 75% quieter than they were 50 years ago. In addition, operational measures and enhancements in the areas of infrastructure and air traffic management further contribute to mitigating aircraft noise.

Air transport is also an emitter of carbon dioxide (one tonne of kerosene generates 3.15 tonnes of CO2), but alternative fuels to kerosene are not yet available on a commercial scale. However, contrary to common perceptions, aviation’s contribution to global warming is small, at about 2% of total man-made CO2. This is by no means cause for complacency however, and for many years now AEA and its members have been committed to a robust emissions containment policy which decouples growth from emissions and translates into the concept of “Carbon Neutral Growth 2020” (CNG 2020), as part of ambitious industry goals, and the four-pillar strategy:

The four-pillar strategy

• Improved technology, including the deployment of sustainable low-carbon fuels;
• More efficient aircraft operations;
• Infrastructure improvements, including modernized air traffic management systems;
• Market-based measures, to fill the remaining emissions gap.

Dossiers

Market-based measures (MBMs)

Inclusion of Aviation into the EU ETS: The aviation ETS was originally designed to apply to all flights within, into and out of the EU. However, this scope led to trade disputes at international level. Against this background, the EU facilitated progress at ICAO level to eventually achieve a global MBM by curtailing the scope of aviation ETS to cover intra-European flights only. In parallel, in autumn 2013 ICAO States decided to develop a global MBM for international aviation, for approval in 2016 and implementation in 2020. Nevertheless, the aviation ETS still has a negative impact on airlines operating on European routes. Depending on the outcome of the 2016 ICAO Assembly, the aviation ETS will be reassessed.

Global MBM: AEA airlines are fully committed to a global market-based measure for international aviation under ICAO, to be developed by 2016 and implemented from 2020. A global MBM will complement emissions reductions resulting from investment in new technology, efficient infrastructure and operational improvements while avoiding a patchwork of different measures and possible trade disputes. AEA supports the current proposal to introduce an offsetting scheme to attain CNG 2020. In this context, it is clear that the EU ETS cannot serve as a blueprint for the global scheme, as the views and circumstances of other parts of the world need to be taken into account.

Biofuels: AEA supports research, development and deployment of sustainable aviation fuels that meet environmental, societal and economic sustainability criteria. In this context, AEA calls upon legislators to adopt common standards and specifications, including sustainability criteria, for alternative aviation fuels in collaboration with international partners; to increase financial support to R&D and to the deployment of sustainable aviation fuels; and to set positive incentives, without distortive effects, both for the airline industry and for other modes of transport.

Noise: Operating restrictions (such as night flight bans and curfews) should only be introduced as a last resort as they increase congestion at airports and limit connectivity. The “balanced approach” developed by the International Civil Aviation Organisation provides the most adequate method to address noise at and around airports in an environmentally responsive and economically responsible way. AEA strongly urges Member States to implement the “balanced approach” and consider all available measures to address noise. Member States should also facilitate measures on land-use planning, land-use management and research into technologies to reduce noise at source and in flight, as well as research aimed at improving the understanding of the impacts of noise.

8. EXTERNAL RELATIONS

European network carriers provide strong added value for Europe in terms of connectivity. Cross-border flights are normally governed by bilateral agreements concluded between the two countries concerned known as Air Service Agreements (ASAs) which regulate the routes which can be flown, the airlines which may fly them, frequencies, capacities and even prices. The European Commission is engaged in a process of redefining the bilateral landscape involving EU Member States and third countries.

Aviation competes as a service industry in a global market, therefore sustainable competitiveness depends on fair conditions of competitions. It is essential that EU carriers can compete on an open, fair and undistorted basis.

The European regulators have a vital role to play through the elaboration of new approaches that should be put in place simultaneously within the EU, where they have full capacity to enforce pro-industry policies, and in the rest of the world, where they should promote, bilaterally and/or multilaterally, a new regulatory framework based on fair competition in open markets.

Passenger Name Record (PNR): Due to the increasing number of PNR data requests from third countries, European airlines operating out of Europe have been put in the difficult position of being forced to refuse to transmit PNR data to these authorities in order to comply with either national or EU legislation on data protection. In several instances the refusal has resulted in threats of sanctions, either financial or operational, which could jeopardise the competitiveness of EU carriers.

The European airline industry strongly supports the Commission’s initiative to develop a specific EU instrument. In the short term, such an instrument would resolve the current diplomatic deadlock with several countries. In the longer term, and in parallel to developing a European instrument, the European Union should initiate a multilateral approach in order to conclude an international agreement

9. PASSENGERS

Consumers of goods and services have a right to expect to get what they pay for and to be protected against unscrupulous traders and questionable business practices. In this respect, air transport should be no different from other commercial activities. Passengers – and airlines – deserve a better and clearer legislative package than the existing one. As the regulatory process continues over the coming months (and years?), legislators are urged to bear in mind the need for “smart regulation”, tailored to the realities of scheduled airline operations – including extraordinary events as yet unforeseen – that avoids unintended consequences and safeguards the competitive position of European airlines as well as the rights of European consumers.

AEA supports the revision of the existing Regulation in order to establish a fair, clear and stable framework for air passenger rights for both airlines and passengers. Uniform enforcement and interpretation of the new regulation across European countries is therefore essential (e.g. extraordinary circumstances).

10. SECURITY

Security measures have increased enormously since 9/11 with the aim of ensuring a safe and secure journey for every passenger. At the same time, existing regulations have not always brought added value in terms of security; measures are not always pro-active or based on policy, and often do not take into account the situation on the ground. Given the projected increase in passenger flows, the aviation industry needs to change its security culture in order to keep pace with an evolving travel environment. Security is based on risk management and EU regulations require a proportionate and reasonable approach.

Better Security: In order to improve the effectiveness and efficiency of security measures and the passengers’ experience at airports, there is a need to change the focus from a “one size fits all” to a “risk based” security approach. Some airlines and airports are looking at ways to achieve ‘better security’ by trial  of different modes of passenger screening.

The AEA strongly supports initiatives that look at the possibilities for passenger differentiation at checkpoints. In view of Europe’s political background, AEA would like to emphasise that passenger differentiation could be done by other means than the collection of data alone.

Unpredictable and opaque use of different technologies adds security value, even if performed at lower frequency. Existing layers/controls should be interchanged by applying them in alternation in an unpredictable manner. This could be done via a technology solution but also by changing operational procedures.

In AEA’s view the ideal way forward would be to actively work on a risk-based mindset for passenger screening. Trials need to continue at airports to increase unpredictability, to make better use of existing technology and to test new technology.

Cyber Security: Airlines’ IT systems are already subject to security measures to protect the confidentiality, integrity, and availability of the information they contain. This is done in line with international standards on the security of network and information systems. However, new threats related to e-enabled aircraft are emerging. New aircraft could have up to 3500 software configurations, whereas more conventional aircraft have around 180. The potential threat relates to the software systems and the software update process.

Broad-ranging efforts are being undertaken across the industry to better define the cyber threat, with a number of different approaches and frameworks emerging. Cooperation amongst airlines, airports, service providers, systems providers, original equipment manufacturers, regulators and ICAO will be crucial to the success of any efforts to combat cyber threats.

AEA supports the concept of "security by design" to be developed in cooperation with systems providers and manufacturers, but emphasises that any regulation in this field should not be over prescriptive. Cyber security moves at a very fast pace, so any measures need to be highly adaptable to the environment. A common approach to the regulation of cyber security will be necessary. Sharing of intelligence and incident data across borders will also be vital in preparing for and combating cyber threats.

Liquids and Gels: On 19 March 2013 the new legislation on Liquids, Aerosols and Gels was finalised and published in agreement with the US, Canada and Australia (QUAD partnership). The new rules, which entered into force on 31st January 2014, constitute a first step towards a full lifting of the LAGs ban.

Under the new rules, all airports must screen duty-free LAGs obtained at any airport or on-board an aircraft that are packed in a STEB, as well as medicines and baby foods to be used during the flight.

As part of the agreed roadmap, and on the basis of experience gained from the implementation of this first phase and a risk assessment, the Commission did review the situation at the end of 2014 in order to determine, in close cooperation with all parties involved, how fast and under what conditions the second phase will be feasible.

It appears that the first phase has not led to a noticeable increase in passenger satisfaction levels. With regard to the second phase of LAGs screening AEA supports the roadmap agreed by all signatories, provided that any proposed measures are coordinated internationally with QUAD partners and do not have a negative effect on passenger experience and throughput.

EU PNR: Airlines have consistently been approached by numerous Member State authorities with various requests for access to airlines’ departure control systems or for the transfer of passenger data. Because of the lack of harmonised EU PNR directive, airlines are confronted with a plethora of different systems applied in the various Member States. This is certainly burdensome for the airlines, but it also impacts negatively on passengers; therefore AEA calls for improved coordination among Member States and the different actors of the value chain. The airlines would support the development of an EU PNR instrument, with the ultimate goal of concluding a multilateral agreement.