ࡱ> q` R bjbjqPqP.::fs&(8 <(2MT T "v v v v v v ELGLGLGLGLGLGL$PhhR`kLy)v v y)y)kLv v L,,,y)xv v EL,y)EL,,'CSEv H 켙*CELM02MC\R+R0SESER%H v ",$4D%5v v v kLkLI,Xv v v 2My)y)y)y)((((((((( Legislation Framework of Civil Aviation in the EU Chen Wei General Administration of Civil Aviation of China Legislation framework and legislative procedure of the EU Legislation framework Policy and Legislation of the EU comprises treaty, regulation, directive, decision and recommendations and opinions. As the foundation of EU legislation ,TEC(the Treaty establishing the European Community) general covers affairs of the European Communities that known as the first pillar of the EU and TEUthe Treaty on European Union focus on the common foreign and security (the second pillar) and cooperation in justice and home affairs (the third pillar). According to the TEC, Regulation shall have general application and shall be binding in its entirety and directly applicable in all Member States; Directive shall be binding, as to the result to be achieved and shall leave to the national authorities the choice of form and methods; Decision shall be binding in its entirety upon those to whom it is addressed; Recommendations and Opinions shall have no binding force. Legislative procedure The institutions of the EU The European Council, the Council of the European Union, the European Parliament, the European Commission, the Court of Justice and the Court of Auditors are the main institutions of the EU. Among them, the Council of the European Union, the European Parliament and the European Commission direct involve in creation of Community policy and legislation. Since the three institutions have different competence and structure respectively i.e. the Commission on behalf of Community interest, the Council on behalf of national interests and the Parliament on behalf of citizens interests, this arrangement ensure the community decision-making is the most broadly democracy although sometime less efficient. Legislative procedure Today there are three main procedures for the generation of community law, the Co-decision procedure, the Consultation procedure and the Agreement procedure. With constant reform and progress, the competence in legislative of the EP has being strengthened, so the co-decision procedure is used in more and more areas. The co-decision procedure embraces three readings phases while the consultation procedure and the agreement procedure are all only one reading phase. In general, the Council and the EP all have the final decisive competence in the co-decision procedure. The Council has exclusive decision power in the consultation procedure while the EP owns the final decisive competence or has the veto in the agreement procedure. Besides, the Treaty also provides the Council should act by unanimity, qualified majority or simple majority on the proposal from the Commission according to the legislation on the different areas. But in practice the Council seeks consensus as far as possible. The role of the Commission in legislation-making The Commission comprises college of commissioners that composed of one national of each of the Member States and 36 Directorates-general services. The authority of civil aviation of the EU is Directorate-general for energy and transport (DGTREN). Today the directorate F (Air transport) with 69 staff is composed by four units (Air transport policy, economic regulation & relations; Air traffic management & airports; Environment & air safety; Bilateral air transport agreements). Besides, Aviation & maritime security unit of directorate J is responsible for air security and Internal market & competition unit of directorate A is responsible for sate aid affairs of civil aviation while Competition DG has exclusive competence of the other competition affairs. As the main institution dedicates to promote integration of the EU, the commission broad involves in the legislation making. Firstly, the Commission has the exclusive right of initiative of legislation and it may modify or even withdraw its proposal as long as the Council has no acted. In all cases, the Council may only overrule the Commission by unanimity. Secondly, the Commission also has the power to create laws. Some articles of the Treaty direct endue the Commission could make legislation for some areas, e.g. the article 86 provides in the case of public undertakings and undertakings to which Member States grant special or exclusive rightsthe Commission shall ensure the application of the provisions of this Article and shall, where necessary, address appropriate directives or decisions to Member States. The Council also grants the Commission relevant power to implement the legislation made by the Council, so the Commission has legislative of acting implementation rules by way of Comitology. Comitology already becomes the regular work of the Commission. According to the Council Decision of 28 June 1999 laying down the procedure for the exercise of implementing powers conferred on the Commission. The four procedures in comitology are Advisory, Management, Regulatory and Safeguard. The legislative framework in civil aviation The establishment and adjusting of the legislative framework in civil aviation of the EU follows three principles. The first is to promote integration of civil aviation market of the EU in line with establishment of Community market. The second is to transfer the industry from regulation to liberalization. The Third is to strengthen air safety supervision and pay attention to sustained development. The legislative framework in civil aviation comprises market management, air safety, air security, air traffic management, environment and external relation areas. 2.1 Market management 2.1.1 The package of liberalization The EU has established the community air transport market and introduced liberalization through three successive stages in 1987, 1990 and 1992 respectively. The third package comprises three council regulations that are No.2407/92 of 23 July 1992 on Licensing of air carriers No.2408/92 of 23 July 1992 on access for Community air carriers to intra-Community air routes and No.2409/92 of 23 July 1992 on fares and rates for air services0With the full cabotage to all community carriers from 1 April 1997, the community aviation market finally formed. The third package completely removed the barriers of the market access and granted community air carriers autonomic right of setting fares and rates according to the market situation. 2.1.2 The legislation in airports sector The Council regulation on slot allocation in community airports published in 1993 and revised in 2004. The regulation established the slot coordinator and coordination committee mechanism in congestion airports that helped efficient use the slots. And now the Commission still finds way to further improve the slot utilization that new direction may introduce market mechanism into slot allocation e.g. higher posted prices and secondary trading of slots. In ground handling market, the main legislation includes Council Directive 96/67 on access to the groundhandling market at Community airports and a number of Commission decisions on exception requirements from the Member States according to the article 9 of the Directive. There are no specific policies and regulations on state aid rule to Community airports. The basic legislations of state aid are Article 87 and Article 88 of the Treaty. The Commission has published a statement of its policy in the aviation sector (Application of Articles [87] and [88] of the EC Treaty and Article 61 of the EEA Agreement to State aids in the aviation sector)). The Guidelines relate predominantly to the provision of State aids to air carriers rather than airport operators but they are expressed to cover any activities accessory to air transport, direct or indirect subsidisation of which could benefit airlines such as flight schools, duty free shops, airport facilities, franchises, airport charges, within the limits defined in the Guidelines. In February 2004, the Commission judged in agreement of the Brussels south Charleroi airport and the airline Ryanair, Belgium has unlawfully provided aid for the benefit of the airline Ryanair in violation of Article 88(3) of the Treaty. The case caused a broad argument in the industry. Because it just involved how to support the small airports to develop and how to realize the development model of the low cost airlines who always use the small airports to operate and usually through the favorable charges agreements with the airports. To solve these problems and to provide a stable policy environment for small airports and LCCs, the Commission is drawing up the relevant guideline now (Community guidelines on financing of airports and start-up aid to airlines departing from regional airports). As the Commissions view, reasonable charging system should be one of the ways to solve the airports capacity problem in the Community airports but there are no specific regulations on charge of airports in the EU level today. European Commission launched in 1990 and in 1997 proposals establishing common principles for setting airport charges but were withdrawn because of lack of interest from Member States. But in the 2001 White Paper, the Community still claimed to draw up the proposal on charges principle of using airport infrastructure. And possibility of new formal proposal on airport charges maybe through in the context of a horizontal approach to infrastructure charging for all modes of transport. 2.1.3 CRSs management In response to competitive problems caused by the computerized reservation systems, the European Community (EC) in 1989 adopted a CRS Code of Conduct. The short-term objective was to prohibit directly the use of market power by airline-owned CRSs to restrict competition. The longer-term objective was to dissipate CRS market power itself. Toward those ends, the most import principles included unbiased display, non-discriminatory air carrier access, refraining from imposing certain highly restrictive contract terms on travel agents etc. Subsequent amendments in 1993 and 1999 to the Code imposed obligations on parent carriers (airlines that either owned or marketed a CRS) and travel agents. CRS regulations in Europe proved successful in eliminating the most targeted exercises of market power and helped to form the fair competitive market. But today airlines already dont keep the capital relation with CRSs and more and more airlines sell their tickets directly on internet. Against the background, the Commission launched a new debate on how to revise the Code or just to abolish it. 2.1.4 Fair competition The legislation on fair competition in the EU could be divided to two levels. The first level is the relevant articles in the Treaty, includes Article 81 (prohibition of restrictive agreement), Article 82 (prohibition of abuse of a domination position), Article 86 (public undertakings and undertakings granted special or exclusive rights) and Article 87-89 (aids granted by States). The second level is the Council regulations and Guidelines to implement competition Articles of the Treaty e.g. Council regulation 139/2004 on the control of concentrations between undertakings, Council Regulation 1/2003 on the implementation of the rules on competition laid down in Article 81 and 82 of the Treaty, Commission guidelines on the assessment of horizontal agreements and of vertical agreements, Horizontal guidelines on merger control etc.). These two levels legislation direct apply to civil aviation. Besides, the second level competition legislation also include some Council and Commission regulations applied to implement exception rules provided in the relevant Articles of the Treaty. For example, the Council regulation 3976/87 on the application of Article 81(3) of the Treaty to certain categories of agreements and concerted practices in the air sector and its subsequent amendments in 1990, 1992 and 2004. According to the Council regulation 411/2004 repealing Regulation 3975/87 and amending Regulations 3976/87 and 1/2003, in connection with air transport between the Community and third countries, the EU expanded applicable scope of the competition legislation to air transport between the Community and third countries. 2.1.5 Consumer protection On 17 February 2005, Regulation No 261/2004 on establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay entered into force. The new Regulation will apply to all type of flights (scheduled, charter and domestic) and will apply for flight within the Union as well as from outside the EU to a destination with the EU. It provided better protection of air passengers e.g. it considerable increase in the amounts of financial compensation and air carriers should provide immediate assistance in case of long delays and cancellation including offer meals and refreshments, hotel accommodation besides the compensation. The regulation also asked Member States establish national enforcement bodies. It should be noticed, although a lot of positive opinions appraised to the enforcement of the new regulation, airlines had different voices. Especially the low cost carriers considered the new regulation will handicap the development of LCCs for its same and over-high compensation standards that ignored the operation character of them. And in a study on the future of air transport in the EU that the Commission financed shows Consumer protection legislation on delays, cancellation and denied boarding will prove unworkable in its current form in the next 10-15 years that concluded by way of Delphi survey. Besides above mentioned legislation, there are still some regulation should be known including Regulation 785/2004 on insurance requirements for air carriers and aircraft operators and REGULATION No 437/2003 on statistical returns in respect of the carriage of passengers, freight and mail by air. The objective of Regulation 785 is to establish minimum insurance requirements for air carriers and aircraft operators in respect of passengers, baggage, cargo and third parties. It shall apply to all air carriers and to all aircraft operators flying within, into, out of, or over the territory of a Member State to which the Treaty applies. Sanctions for infringement of Regulation 785 may include the withdrawal of the operating licence (with regard to Community air carriers), With regard to non-Community air carriers and to aircraft operators using aircraft registered outside the Community, the sanctions may include refusal of the right to land on the territory of a Member State. According to Regulation 437, Each Member State shall collect all data set out in the regulation for all Community airports in its territory with traffic in excess of 150 000 passenger units annually and transfer the data to the Commission. 2.2 Air safety and air security 2.2.1 Air safety Regulation 1592/2002 (Regulation 1592/2002 of the European Parliament and of the Council on common rules in the fields of civil aviation and establishing a European Aviation Safety Agency) claimed to establish a European Aviation Safety Agency (EASA) in the institutional system of the EU. Different with JAA ( the Joint Aviation Authorities , EASA is an independent European Community body with a legal personality and autonomy in legal, administrative and financial matters. Its objective is to establish and maintain a high uniform level of civil aviation safety in Europe. In line with the establishment of EASA, a new regulatory framework of air safety was formed. The European Parliament and the Council define the Scope of Powers transferred to the Community and they adopt the basic regulation including essential requirements specifying the objectives to be met. The European Commission adopts implementing rules binding standards for implementing the essential requirements e.g. Regulation (EC) 1702/2003 on airworthiness and environmental certification, Regulation (EC) 2042/2003 on continuing airworthiness. The Agency adopts standards for implementing the essential requirements. On the air accidents prevention and investigation, the legislation of the EU includes Council directive 94/56 establishing the fundamental principles governing the investigation of civil aviation accidents and incidents, Council Regulation 2027/97 on air carrier liability in the event of accidents and Directive 2003/42 of the European Parliament and of the Council on occurrence reporting in civil aviation. Besides, Directive 2004/36 established harmonized rules and procedures for ramp inspection of third-country aircraft landing at airports located in the Member States and the information exchange mechanism between the Member States. 2.2.2 Air security Following the events of 9/11, the Council given the Commission a mandate to develop EU legislation on aviation security. In 2002, the regulation on establishing common rules in the fields of civil aviation security was promulgated. The regulation created a series of common standards on air security of airports and the Commission gained the mandate to monitor the application by Member States of requirements established by the regulation. And then, Commission regulation 622/2003 lays down the necessary measures for the implementation and technical adaptation of common basic standards regarding aviation security to be incorporated into national civil aviation security programmes. According to the Regulation 622/2003, the Commission Regulation 1217/2003 and 1486/2003 was published and respective provided the common specifications for national civil aviation security quality control programmes and procedure for conducting Commission inspections. 2.3 Air traffic management Judging by growth trends will keep stable and traffic expected to more than double in the next 20 years (even four or five-fold in some countries), the Commission think the air traffic should be one of the bottleneck of the further development of the industry. Especially the current airspace set by national boundaries, not operational needs, and ATC is still operated like 20 years ago. Against this background, the Commission proposed to create the Single European Sky in the White Paper. In 2004, Single Sky Package was adopted that comprises four regulations. The context of the Package includes establishing a new institutional organisation for decision-making as well as new working methods, provision of air navigation services, organisation and use of the airspace, interoperability of the European ATM network etc. And today the specific implementation rules based on the Package are drawing up. At the same time, the EU launched the relevant technological and operational complement plan (SESAME) to the Single Sky Legislation. SESAME is one programme for Europe, shared and committed to by all actors (industry, users and providers, military, staff,) . To maximize the function of the new air traffic control system, the EU think SESAME also should to be shared by the world and now is working and discussing with third countries including China. 2.4 External relation The open skies case in 2002 confirmed the competence of the Community in international air transport. According to the judgment of the Court on the open skies case, that the bilateral air services agreements between eight EU Member States and the USA were not in conformity with EC law. The nationality clauses in all agreements infringe the right of establishment (Article 43 of the Treaty) as they are discriminating on grounds of nationality. Moreover, the agreements infringe the exclusive external competence of the EU. In areas where EC legislation affects third countries, only the EU can enter into international commitments. Although the Court only identified three specific areas of Community exclusive competence in the case: airport slots, computer reservation systems and intra-Community fares and rates. The acquis has expanded considerably in these years and more and more areas were included in the Community exclusive external competence: safety issues, groundhandling, restrictions on aircraft for environmental reasons, denied boarding compensation, air carrier liability etc.) And even in instances where Member States sought to take action to reflect Community law directly in their bilateral agreements, they also had failed in their obligations, because they no longer have competence to make agreements of any sort on these issues. That means the Community should act as key role in the external relation instead of the Member States. In the Com (2003)94 communication (on relations between the Community and third countries in the field of air transport), the Commission asked the Council to grant it a negotiation mandate with the USA and a negotiation mandate with all third countries (focus on the revision of clauses relating to the ownership and control of airline companies through so-called horizontal agreement). On 5 June 2003, the Council granted the Commission the above mentioned mandates. In 2004 April, the regulation on the negotiation and implementation of air service agreements between Member States and third countries was adopted. The regulation stipulated a Member State should notify the Commission of its intentions in writing in the air service agreement while it enter into negotiations with a third country and it can conclude the agreement only after gaining the authorization from the Commission. According to the Commission communication Com (2005)79 (Developing the agenda for the Communitys external aviation policy), the EU external policy could be concluded in three aspects: Firstly, continuing to revise existing bilateral agreements into line with Community law by way of Member States negotiate with third countries or the Commission under horizontal mandate to negotiate with third countries. Secondly, to gradual adopt ambitious agreements between the Community and third countries. The EU will pay attention to some important countries that includes the United States, Russia and China etc. The last, to create a common aviation area with neighbouring countries based on the European Common Aviation Area (ECAA) Agreement and all of the countries in ECAA would share the same market operation rules from an economic point of view to air traffic, security and air safety. 3An EU approach and lessons learned 3.1 Liberalization is the effective way to accelerate the development of civil aviation Liberalization made civil aviation of the EU a dynamic sector. On the one hand, civil aviation kept sustained growth over the past years. Between 1992 and 2003, the number of airlines increased by 25% and today there are more than 130 airlines and about 4500 aircrafts provide air service in the EU. The number of intra-Community routes increased by more than 40% and the number of airports increased to more than 450. It is estimated out of 600 million air passengers departing from the community airports in 2003 (two third were transported within the single market). For passenger air traffic, the EU became the second world market just after North America. On the other hand, whole of the European economy benefited from the development of civil aviation. Air carriers account for about 1.5% of the European GDP. In terms of direct or indirect employment, the airlines provided 3 million jobs. And with the expansion of the air transport network and the falling air fares resulting from competition, more of the citizens enjoyed the convenient service of air transport. The practice of the liberalization in the EU shows that air transport is a competitive sector. Where competitive is the nature character of a sector, the market mechanism should be select to accelerate it to develop. The more important phenomenon is that air industry of the EU developed on a healthy basis after introducing liberation. Full competition impulsed the improvement of operation efficiency of Community carriers. Today majority of air routes of the Community market have more than three airlines operating on competitive way and fares on these routes were on average between 10% and 25% cheaper than on monopoly routes. The main Community carriers experienced a productivity rise of 87% between 1990 and 2002. The other positive demonstration of market mechanism successful worked in air sector was the emergency of the low cost airlines in the EU that brought new energy for the industrys development. The capacity of LCC increased from 1% in 1996 to more than 20% in 2003. It should be noted, market mechanism could genuine work only when liberalization combined with fair competition environment establishment. Experience of the EU also showed this theory. The EU set the liberalization in the field of air transport under the fair competition legislation framework and the principle of non-discrimination and transparency already became one of initial principle of law-making in civil aviation. 3.2 Comprehensive legislative system is the guarantee of the development of civil aviation The fast development of EU air transport benefited from liberalization and market integration. But the support of the integration market forming and working is a comprehensive legislative system. From market access to fair competition, from air safety to air traffic, from environment to passenger protection, every area has relevant sub-legislative system composed by regulations, directives, decisions and guidelines in the EU. Every essential element of the industry (governments, airlines, airports, air traffic operators, CRSs and passengers) has definite right and obligation that granted by relevant legislation. The EU also paid attention to harmonize different legislation whether in vertical system or in horizontal level that avoided conflicts happened. Community carriers operate not only on the basis of common market access rights, but more generally on the basis of common standards. The comprehensive legislative provides a stable and predicted level playing field for all of bodies in civil aviation. 3.3 Applicability with practices is the guarantee of the effectiveness of legislation There are two notable characters of EU legislation. One is there are so many revisions of a legislation from the Treaty to a specific implementation rule. The other is a lot of legislation has a specific article that provides to evaluate the applicability of the legislation identity after a period. This evaluation mechanism assures the legislation applies to the continuous changed real practices and benefits the regulative function of legislation could be genuine perform. 3.4 The transparency legislative procedures assure legislation applied effectively In the EU, all of legislation (Regulation, Directive, Decision) have definite law-making procedure and who should be involved is very clear. Even the suitable vote mechanism (unanimity, qualified majority or simple majority) is also certain according to the articles of the Treaty. While in the process of a legislation, from the initial draft to formal proposal and formal reading phases, definite procedure assure stakeholders have sufficient opportunities to claim their positions and provide their opinions. This mechanism assures to absorb most extent opinions and assure the legislation could be implemented well when it enters to force. 3.5 Harmonizing market mechanism and government intervention The practice of liberalization in EU shows, there is no contradiction between market and government intervention. First of all, as a fundamental industry of economy, civil aviation should embrace multi-objectives of development including profit requirement of entities in the industry as well as satisfied air service demand of public. But the multi-objectives cannot be attained purely depend on market forces itself, it also need governments to offer solution to market failures. Even in the EU third package of liberalization regulations, they also include specific articles concerning public service obligation (PSO), the competence of State Members authorities and the Commission to interfere in air fares in special situations including excessive high or sustained downward that threaten to the welfare of consumer or damage the health of the industry. Moreover, the civil aviation sector is a significant component of the economy. The development of the industry has profound influence on society. 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Harmonizing market mechanism and government intervention benefit the development of civil aviation, because both competitive and utility characters are the connatural characters of the industry. As the experience of the EU in this field, state aid should be strictly limited in specific areas through distinction of the industry and set out strict conditions. Just as the Commissions approach to public financing of airlines, some factors were asked to include in the plan while accept state aid, including limited duration, capacity reduction, commercial principles and one-time, last-time rule etc. It should be noted, government intervention also need be provided clear in legislation regarding what, how, when can do by governments. (I would like to thank DG TREN for having hosted my internship and the EU-China Trade Project for having sponsored it.)     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