14 March 1997       Doc. 7778



on European air transport policies ─

civil aviation in transition

(Rapporteur: Mr Knut BILLING,

Sweden, European Democratic Group)



      European air transport is in a state of flux, with rapid deregulation promising even stiffer competition in Europe and beyond. The European Civil Aviation Conference (ECAC), for which the Assembly serves as a parliamentary forum, is expanding both its membership into central and eastern Europe and its mission in order to cope with these challenges.

      The report examines the situation and makes numerous recommendations, including in environmental protection, air security and safety. It in particular calls for a ban on aircraft or air carriers which do not respect agreed air safety standards.

I. Draft resolution

1.       The Assembly welcomes the continuing enlargement of the European Civil Aviation Conference, which now comprises 35 European countries. Such widening, which the Assembly hopes will soon include all of Europe, enables ECAC to pursue its task of harmonising, and eventually integrating, civil aviation management across the continent. The Assembly will continue to give ECAC its full support in this process in its capacity of the Conference's parliamentary forum, working closely also with other interested organisations.

2.       Civil aviation in Europe is undergoing rapid and profound transformation. Some airlines have become more efficient and profitable, while others still operate at a loss and depend on public subsidies, which may prevent fair competition. Mergers and acquisitions, but above all alliances, occur more and more frequently. Deregulation within the European Union - European Economic Area is proceeding apace, with important consequences for civil aviation outside the region. Congestion in the air can be held at bay through technological improvements, but at and around airports it is becoming a major bottleneck.

3.       The Assembly welcomes the considerable deregulation of air transport which has already taken place or is under way among the member states of the European Union and the European Economic Area, and which is greatly benefitting consumers. It expects it in future to be neither discriminatory nor causing division as against non-participating countries, whether European or non-European. The Assembly also recognises the extensive efforts at increased efficiency undertaken by several European airlines and welcomes the tendency toward greater cooperation among them, to the extent that it does not hamper healthy competition.

4.       The Assembly invites the member states of the Council of Europe and of ECAC:

i.       to make full use of ECAC in the quest to enable Europe's civil aviation industry to face intensified global competition, while keeping it consumer-oriented, economically healthy, environmentally sound and conducive to the continent's overall economic development and growing together. ECAC should pay particular attention to the increasingly important areas of freight, charter and executive aviation.

ii.       to give the highest priority to the continued integration of the countries in central and eastern Europe into a "common European aviation area", and in particular to permit ECAC to monitor closely air transport negotiations between the countries of the European Union and those of the European Economic Area on the one hand, and central and east European countries on the other, with the aim to achieve as liberal a pan-European civil aviation agreement as possible;

iii.       to involve ECAC in similar fashion in negotiations with the United States and Canada, and with the countries of East and South-East Asia, for future multilateral, regulatory regimes with these two regions on condition of reciprocity - régimes that may follow the numerous "open skies" agreements already concluded between the United States and individual European countries;

iv.       to facilitate Europe's rapid adaptation to, and adoption of, new technological breakthroughs, in particular "ticket-less" passenger handling and satellite-guided navigation such as the planned European Global Navigation Overlay System;

v.       to speed up the industry's adaptation to the expected doubling of passenger travel and air cargo by the year 2005, not least by enhancing airport capacity and ensuring better integration with other modes of transport and substitution, where possible, by high-speed trains; and by encouraging better links among smaller, regional airports as a supplement to the "hub-and-spoke" system with its often excessive reliance on big airports;

vi.       to proceed vigorously in ensuring a ban of aircraft or air carriers which do not meet agreed air safety standards from the airspace of ECAC member countries.

5.       Furthermore, the Assembly calls on ECAC;

i.       to pursue its goal of harmonising and integrating European air traffic control systems to enhance traffic capacity while safeguarding air safety;

ii.       to take immediate steps in close liaison with Eurocontrol, to implement the institutional strategy adopted by ECAC ministers at their meeting on 14 February 1997;

iii.       to study the desired future contribution of Europe's sizeable charter industry to overall civil aviation, especially against the background of current deregulation;

iv.       to work in favour of the break-up of monopolies in ground handling at certain airports, in view of the fact that excessive prices charged hurt consumer interests and distort competition;

v.       to study ways of ensuring environmentally friendly and rapid transport to airports, especially those permitting check-in on direct trains, thus enhancing airport efficiency;

vi.       to pursue its efforts to reduce pollution and noise, in close cooperation with the European Union and building on the considerable work done by other organisations, including the International Civil Aviation Organisation (ICAO), airline associations and aircraft manufacturers, in this area. In particular, ECAC should build on its comprehensive Environmental Policy Statement and work in favour of a worldwide move toward less polluting and less noisy aircraft;

vii.       to increase its work in the field of aviation security and achieve 100% screening of checked baggage as a priority;

viii.       in co-operation with ICAO and the European Union to intensify its work in the field of aviation safety, particularly as regards safety oversight;

ix.       to build on the foundations established by its associate body, the Joint Aviation Authorities, in creating an appropriate institutional structure for a European Safety Authority.

6.       The Assembly calls on France further to develop access by airlines, domestic or foreign, to Strasbourg, thereby allowing that city to realise its full potential as a "European capital".

7.       Finally, the Assembly calls on the governments of those European countries which have not yet done so to join ECAC and Eurocontrol.

II. Explanatory Memorandum

by Mr. Billing


I.       Introduction       5

II.       Civil aviation's current situation       6

      a. An industry in transformation       6

      b. Charter and low cost leisure traffic        7

      c. Congestion on the ground       7

      d. Overcoming the problem of crowded skies       9

      e. Aircraft manufacturing       10

III.       Deregulation in air transport       10

      a. General       10

      b. Deregulation within the European Community       11

      c. Where is deregulation today?       12

      d. Deregulation in the wider Europe       14

      e. The attitude of airlines       15

IV.       The environment       17

      a. Pollution       17

      b. Noise       17

      c. An environmental tax on aviation?        17

V.       Security and air safety       18

VI.       The future prospects of civil aviation       19

      a. General       19

      b. A future of growing congestion       20

      c. The coming navigation technology breakthrough       21

VII.       Concluding remarks       21

I.       Introduction

1.       The present report has as its purpose to review the main developments in European air transport in the last three years, in particular since the 16th Triennial Session of the European Civil Aviation Conference (ECAC), held in Strasbourg in June 1994. It also aims to point to the future, and to recommend policy actions within the ECAC and Council of Europe area.

2.       The Rapporteur wishes to thank ECAC President Mr Val Eggers and the ECAC Secretariat for the valuable information they provided. His gratitude also goes to Mr Pierre Jeanniot, Director General of IATA, and his staff in Geneva headquarters in Geneva, whom the Rapporteur visited both in 1995 and late 1996 together with a delegation of the Committee on Economic Affairs and Development. Furthermore, both IACA (International Air Carrier Association) and the European Commission have provided valuable information on various topics dealt with in the report. In November 1994 a Committee delegation visited Airbus Industrie in Toulouse, including the hangars for the manufacturing of aircraft. Finally, in November 1996 a Committee delegation visited Eurocontrol outside Brussels to acquaint itself with the latest developments in practical, day-to-day - or, better, minute-to-minute - air traffic management.

3.        ECAC, it will be remembered, owes its existence to an initiative of the Parliamentary Assembly of the Council of Europe over 40 years ago. Our Assembly since that time serves as ECAC's parliamentary forum. ECAC today has 33 member States2, i.e. one more than at the time when the Assembly's last report on European air transport policies was drawn up (Resolution 1033 (1994), Doc. 7041; Rapporteur: Mr. Flückiger). The memberships of ECAC and the Council of Europe are therefore roughly the same, and the Organisation is faced, as is the Council of Europe, with the task of defining how far Europe should be considered to stretch geographically when considering fresh applications for membership.

4.       ECAC represents the civil aviation administrations of its member States. It is not a regulator as such, but rather a co-ordinating body with substantial expertise and influence, whose work has helped shape the development of post-war European air transport.

5.       Like the Council of Europe itself, ECAC has seen its membership spread into central and eastern Europe. The expansion of ECAC poses fresh challenges and in a way alters the mission of the organisation. ECAC's traditional role in mapping out the regulatory framework within which European civil aviation operated has also changed, with the European Union now exercising its competencies in many fields that were once the exclusive domain of ECAC. ECAC preserves one unique characteristic — there may be several European organisations dealing with aspects of aviation, but ECAC is the one with the widest geographic membership and this, coupled with its ability to tackle any subject matter, leaves it with an important role to play also in the future.

II.       Civil aviation's current situation

      a. An industry in transformation

6.       European civil aviation is undergoing rapid and profound transformation. Airlines have only just embarked on what promises to be a long and far-reaching process of in particular alliances, but also eventually of mergers and acquisitions. Airports are searching for ways to fight congestion. The aircraft manufacturing industry faces a future difficult to forecast.

7.       Air transport policies needless to say cover much more than just the airline industry. Decisions on technical standards, safety or air control involve all parts of civil aviation - airlines, airports and air traffic control, as well as aircraft manufacturers.

8.       For example, airport charges represent between 4% and 6 % of the operating costs of scheduled European airlines (compared with less than 2 % in the United States). Since they differ considerably among countries and among airports, they affect competition. Furthermore, without adequate airport capacity there will be less demand for new aircraft. Finally, civil aviation is an important factor in any nation in terms of employment, economic growth and trade.

9.       Air transport and economic growth are highly interdependent. It is difficult to point to an industry which has enjoyed, as has air transport, such continued growth since the end of the Second World War. In fact, even though it suffered under the oil crises of 1974 and 1979, its first ever major setback did not come until 1991, along with the break in world economic growth in general.

10.       Air transport not only benefits from economic growth, it promotes it as well. Today's international commerce would be unthinkable without air transport, with a quarter of the value of the world's manufactured exports being transported this way. It is also a prerequisite for mass tourism, one of the major contributors to world economic growth. By way of illustration, a million and a half Europeans flew to Florida in 1993. 2.3 million people are directly or indirectly employed in air transport in Europe, with annual salaries of 5 billion dollars. Anything that ECAC can do on behalf of its member countries, including those in central and eastern Europe, in enhancing the efficiency of their civil aviation will therefore contribute to their economic growth and their integration into the world economy.

11.       IATA reports that the civil aviation industry is into its second year of profitable operations, following a series of loss-making years before that. The main reason behind the improvement has been determined cost-cutting by airlines. Interestingly enough the picture is one of growing disparity between airlines - often privatised - which have managed to cut costs and turn profitable, and those that have not and still depend on government subsidies.

12.       Some disconcerting trends nevertheless continue. Many European flag carriers suffer from overcapacity and overmanning. On average, the operating costs of EU carriers are 45 % higher and labour costs 35 % higher than in the United States. This is also due to the cartel-like structure of the European aviation industry.

13.       Furthermore, certain European state-owned airlines that find themselves in difficulties still manage to squeeze considerable subsidies from their governments (sometimes using the money to buy up competitors). The Table figuring in the Appendix to this report shows government capital injections into EU airlines between 1990 and 1995.

14.       While the European Commission is trying to put an end to this practice (and has even declared illegal certain recent subsidy plans, such as to Air France), its mandate extends only to direct subsidies. Airlines outside the European Union, including in central and eastern Europe are under no such control. In addition, the data they publish are still in certain cases insufficient to permit a complete examination of their situation.

15.       The past two years have seen an overall rise in the number of passengers, and a fall in fares. Certain airlines have abandoned their first class sections, keeping only economic and business class services. There are two major reasons for this. Firstly, the number of business flights decreased as a result of overall cost-cutting on the part of companies. Secondly, leisure travel increased due to reductions in working time in industrialised countries. This has favoured the charter industry, which forms the unscheduled part of civil aviation. National airlines are eager to capture a part of this market. The business jet sector is also likely to grow in the future as more top executives want to reach their destinations faster.

      b. Charter and low-cost leisure transport

16.       An estimated 85% of air traffic within Europe, and a similar proportion of long-haul services, are either charter or heavily discounted tickets with scheduled airlines. Charter - which in Europe accounts for about 50% of passengers and two-thirds of passenger miles travelled, almost entirely lacks a counterpart in the United States, leaving one to conclude that charters can above all operate in a less competitive regular air-carrier environment.

17.       But the distinction between scheduled and charter services is becoming increasingly blurred. Indeed, in the EU there is no longer any regulatory distinction between them at all. Charter carriers within the EU now coexist with scheduled carriers within IACA (International Air Carrier Association). IACA can rightly be called an association of carriers specialised in low-cost leisure traffic. The 39 European members of IATA (in the ECAC area) in 1995 carried 90 million passengers (scheduled and charter flights, intra- and extra-European destinations).

18.       Over the last decade, promotional fares have come down by an average 3 % per year, making air transport today a non-luxury consumption. Air transport is being enjoyed by an even greater part of the population, in some countries amounting to 80 %. Destinations which hardly existed a decade ago - such as the Maldives and the Dominican Republic - now attract the broad masses.

      c. Congestion on the ground

19.       Airport capacity constitutes one of the major bottlenecks in today's air transport picture. There are over 500 airports with scheduled services in ECAC member States. However, the top fifteen percent of these absorb 85 % of all scheduled traffic. 26 of the 29 largest airports in Europe will need more terminal capacity in the next few decades, and 25 of them will need more runway capacity if air transport increases at the predicted average 5.2 % per cent per year.

20.       This increase may seem minor, but if it comes true it will result in twice as many people flying in the year 2005 compared to now. Even today, airports in the ECAC area ensure 9 million landings and take-offs per year, involving some 600 million passengers. Airports without adequate access for public and private transport will lose out in this situation, causing even greater congestion at the better equipped ones (with, for instance, rapid transit, main line and underground connections). Of particular importance is environmentally friendly and rapid transport to airports, especially those permitting check-in on direct trains, thus enhancing airport efficiency.

21.       Many airports become congested even below their runway or access capacity levels, due to less efficient operational procedures, late-hour curfews, inadequate navigation facilities, or physical constraints on aircraft taxiways and turn-offs. It is the larger airports, i.e. those with more than 5 million passengers a years, which have to take the main strain. In addition to managing the most heavily travelled routes within Europe, they are also the destination or departure points for more than 60 % of all the traffic of the small and medium sized airports. Moreover, they are the overwhelming choice of intercontinental flights.

22.       Airport congestion each year costs up toward 5 billion dollars in the ECAC area. These have to be covered somehow, mostly through higher passenger fares, resulting in an aviation industry which is less competitive when compared to other modes of transport.

23.       Airlines have three potential means of dealing with growing congestion. The first is to operate larger aircraft, capable of carrying two or three times as many passengers as today's models and therefore requiring fewer take-offs and landing slots. The European Airbus Industrie, which a delegation of the Committee on Economic Affairs and Development visited in November 1994, is planning a "Super Jumbo" - the A3XX - that would seat 656 passengers. And Boeing foresees a 747-600X aircraft with space for 555 passengers. Planners see two possible uses for such an aircraft: either on busy long haul routes which currently require several aircraft, or densely packed short or medium haul routes. The problem will be, however, to increase passenger capacity without exceeding the dimensions of the largest aircraft today, since the new planes will have to use existing airport gates.

24.       Slot allocation is a major bottleneck. It is essentially a 'zero-sum-game' in that only so many parkings are possible in a given day: what A gets B does not. 'Secondary trading' in slots could become more intensive in the future but it is questionable whether national parliaments should legislate in the matter (even though some public oversight seems necessary). The market is likely partly to take care of the problem, but unless airport capacity rises rapidly, which is unlikely, the outcome will be short of satisfactory.

25.       A second way out is to develop more direct links between regional airports. Many members of the Committee on Economic Affairs and Development have called for a greater role for regional airports, better suited to the needs of local passengers. Indeed, Europe's highly developed rail network could give many regional airports a wide service area, permitting passengers to fly to a quieter secondary airport and complete their journey by train. Local airports that are experiencing a resurgence include Birmingham, Lyon, Bologna, Stuttgart, Hamburg, Basle, Barcelona, Nice and Cannes. A third solution lies in enhancing the efficiency of "hub and spoke" operations, a subject to which we shall return later. (A hub airport is a central terminal, while the spokes are the secondary routes radiating from it.)

      d. Overcoming the problem of crowded skies

26.       If airport congestion has to be tackled at many levels, that in the air can be met mainly through improved air traffic control. ECAC's strategy for better European air traffic control, as described in the Assembly's last report on European air transport policies, is laid down in the report "ECAC strategy for the 1990s". ECACs proposal for a Europe-wide system to monitor delays, in co-operation with airlines and airports, merits strong support by the Parliamentary Assembly. It is also to be welcomed that the International Civil Aviation Organisation has formed a high-level task force to advise on the best means to assist countries in introducing the new CNS/ATM systems (Communications Navigation and Surveillance/Air Traffic Management systems).

27.       From a European perspective, the Rapporteur is pleased to note that the European Space Agency, Eurocontrol3 and the European Commission are pursuing an initiative for a European component (European Global Navigation Overlay System) of the initial global navigation satellite system.

28.       The task of managing the so-called EATCHIP programme has been entrusted to Eurocontrol, a 25-member state organisation whose mission is to streamline air traffic flow management in Europe. EATCHIP stands for European Air Traffic Control Harmonisation and Integration Programme and has as its ultimate goal the complete integration of ATC (Air Traffic Control) systems. Considerable progress has been made since the programme was launched five years ago. Overall delays caused by air traffic control have been halved in duration since 1990 — and this in spite of an average 5% annual growth in traffic. Delays did, however, show signs of increasing again in 1995. There is, therefore, no scope for complacency.

29.       Measurement of delays and their causes has been a source of difficulty, which we are glad to note are being remedied by the establishment under Eurocontrol auspices of a Central Office for Delay Analysis (CODA). Drawing on information from airlines, airports and Eurocontrol's own flow management data, CODA should help in identifying the causes of delays and lead towards remedial action. Eurocontrol membership continues to grow, even if it still falls short of the full membership of ECAC. The Rapporteur encourages all ECAC states to become members of Eurocontrol. As previously mentioned, a delegation from the Committee on Economic Affairs and Development visited the headquarters of Eurocontrol outside Brussels in November 1996. We were impressed with the overall view of air traffic movements in the membership area afforded through that Organisation. The Eurocontrol nerve centre is not, as one might have believed, fancy, wall-wide electronic maps recalling the NASA Houston Space Centre, but instead a series of normal computer screens with operators hunched over them in an unspectacular fashion. Still, all of aviation Europe depends on them critically.

30.       The bringing into operation of Eurocontrol's Central Flow Management Unit (CFMU) is a noteworthy event. The activities of the Paris, Frankfurt, London, Rome and Madrid units have all now been transferred to Brussels and from now on the responsibility for managing the flows of air traffic within European airspace is centralised in the CFMU.

31.       While all of these operational aspects must be pursued with urgency, there is also a major debate underway on the institutional arrangements that are needed for Europe's Air Traffic Management (ATM). Steps are underway to strengthen the Eurocontrol Convention. In March 1996, the European Commission issued its White Paper "Freeing Europe's Airspace". In parallel with this and arising from a decision from the ECAC Transport Ministers' meeting of 1994, major work, known as the INSTAR Study, is underway in ECAC.

      e. Aircraft manufacturing

32.       The condition of airlines and airport infrastructure inevitably affects the aircraft manufacturing industry. If, for example, congestion at airports leads to increased difficulties to obtain landing rights (so-called "slots"), this could cause airlines to opt for an increasing number of bigger aircraft, such as "super-jumbos" in their fleet. However, many experts believe that there are few routes in Europe where larger aircraft may adequately compensate for the need for more frequent flights, the latter being a major argument of airlines in attracting passengers. While a few years ago airlines tended to order fewer planes due to financial pressure, in 1996 the situation began to turn around, with several major orders being placed.

33.       Airlines are nevertheless likely to want to extend the lifetime of their current fleet due to financial constraints. Even profitable airlines are having difficulties financing the purchase of new planes. In the present difficult economic environment, in which privatisation and deregulation no longer guarantee future profits, aircraft replacement or an expansion of fleets are no longer evident.

34.       The interdependence among aircraft manufacturers, airports and airlines extends to technical issues. Flight management techniques have been improved thanks to new electronic components and integration among systems. However, the latter's compatibility with the various air traffic control systems is far from complete. It will be many years before advanced flight management systems can be fully operational.

III.       Deregulation in air transport

      a. General

35.       When discussing deregulation, we need to distinguish between two different aspects. The first has to do with the deregulation of the air traffic itself, that is, the granting by countries of various rights to foreign carriers on a bilateral basis - in part based on reciprocity but essentially trying to ensure fair and equal opportunity to operate and compete. This increases the chances that those who will stand to gain from liberalisation will be more efficient, technologically-advanced and consumer-oriented than those who are then forced to drop out of market, thereby creating an incentive for politicians to overcome damaging protectionist pressures. Through deregulation more operators can take part in different routes, and pave the way for a more competitive market which benefits the consumer, especially in so-called Fifth Freedom and Cabotage Rights are granted on a larger scale4.

36.       A second part of deregulation concerns the airline industry itself. It involves privatisation, as well as facilitating the restructuring of existing airlines and the establishment of new ones. Finally, it includes the debate about whether also air navigation operations should be privatised.

      b. Deregulation within the European Community

37.       Ten years ago, before the liberalisation process was started in the European Union, traffic movements between the different EU member states were subject to a complex array of national rules on bilateral national agreements. The EU's aim was to oversee a transition from a history of state-owned dependent, highly regulated protected "flag carriers" into a future of independent, commercially operated competitors in a liberalised market.

38.       At the time there was substantial potential demand for air travel. However, travellers were generally faced with little choice, indifferent service, and high fares. Operators were confronted with a myriad of restrictions, not least the influence of governments on the strategy and management of so-called national carriers. As a result, many airlines were inefficiently run, planes were usually not very full, and despite high air fares, profits were rare except in the few new independent and price-cutting airlines that were starting to make their competitive presence felt.

39.       It was in this situation that European Union in 1987 adopted its first phase of liberalisation, leading to the Single European Market which entered into force in January 1993 (as part of the so-called "1992" programme). Liberalisation concerned three main areas: fares, capacity sharing and market access. The first series of measures reduced existing constraints on airlines, for example by allowing them freedom within tariff zones to use their own commercial judgment as to tariff levels, and by breaking up the rigid 50/50 division of capacity.

40.       The second phase, started in 1990, took the 1987 measures a degree further, for example by refining the tariff zones and allowing airlines much greater freedom to offer whatever capacity requirements were best adapted to the marketing decisions. In addition, market access to busy routes was made easier, "Fifth Freedom" traffic rights were expanded, and the block exemption from the competition rules of the treaty for some inter-airline agreements and concerted practices was to disappear by 1993.

41.       The European Union's "third package", in principle in force since the beginning of 1993, is even more far-reaching. It includes:

      —Fr       ee pricing. European Union member states and/or the European Commission may, however, intervene against "excessive normal economy fare" and "fare dumping". (This is in reaction to the experiences from deregulation in the United States, where big carriers have offered unrealistically low fares on routes which they want to dominate, driving out competitors and undermining the aim of the reform.) —

      —Fu       ll access to routes, even in countries other than that of the air carrier in question.—

      —Fu       ll freedom to start an airline (provided that it has "European Union ownership" and meets other licensing requirements). The European Union's support in favour of competition can further be seen in the provision which states that "slots" freed at airports should as a rule be given to new entrants.42

42.       A practically liberated market is supposed to be in place by April 1997, when "cabotage" - or the right of an airline from one European Union country to operate a domestic route in another European Union country — will be possible. However, various safeguard clauses exist which could limit competition. Thus, countries are allowed to restrict competition due to congestion or for reasons of environmental protection. Such safeguards fan the fears of some observers that liberalisation may be undermined "by the back door".

43.       New harmonisation measures can be expected within the framework of the European Union's Common Transport Policy. Ultimately, a political decision is likely to conclude, unlike what was the case in the EEC Rome Treaty of 1957, that air transport should form part of an overall European transport policy, and that it is a global industry which cannot be examined in geographical isolation. Much effort will be needed in the coming years to develop a European Union external air transport policy which ought to be gradual and evolutionary. Moreover, as we have seen above (see section III, b), European Union policy as regards the application of state-aid rules will be important for any restructuring of the European airline industry.

44.       During the Committee's visit to IATA headquarters in Geneva in December 1996 it was informed about IATA's misgivings regarding the European Union refusal to allow continued so-called 'interlining' for air cargo. 'Interlining' stands for the ability to transport passengers and cargo using different airlines along the way, and IATA considers it vital for passengers and business convenience. In the cargo case, 'interlining' is particularly important, the Rapporteur was told, for smaller companies often using non-classical routes.

      c. Where is deregulation today?

45.       On the one hand, the market for air transport services in the Union is opening up. It is becoming increasingly competitive and much less subject to state intervention. The consumer receives better products and services at a lower price. There is an increased range of fares on scheduled flights which are discounted, subject to certain restrictions on travel times and flight modifications. As from 1997 we can expect a growing number of small, but determined new carriers to spring up in order to grab a piece of the busiest routes.

46.       If fares have come down only by about 5% overall since 1990, significant reductions have taken place on routes where competition is fierce. Lower fares are evident in a number of markets such as Barcelona/Madrid, between the United Kingdom and Ireland, between Paris and London, and on several domestic routes in Germany, France, Italy and the UK.

47.       There is, on the other hand, still some way to go before complete liberalisation will have taken place in practice. There has been no dramatic decrease in fares, no spectacular disappearances of major carriers, no substantial penetration of traditional domestic markets by foreign competitors. Furthermore, there are large differences in the quality of services provided for business and economy travellers. The consumer is often left in a state of bewilderment when faced with this array of conditions. Meanwhile, fares within Europe are roughly twice as high as those of comparable distances in the United States. In other words, effects of liberalisation in the EU are only appearing slowly. The goal must be to achieve continued deregulation, leading to healthy competition and lower prices while maintaining air safety.

48.       There has not been any reduction in the number of routes in Europe. In fact, a modest increase of 6% has been recorded since the beginning of 1993. 40% of those routes have two or more operators, 7% three or more and a significant number of domestic routes now have two operators. However, the situation is different as far as European routes that cross borders. Here, only 7% are served by more than two airlines.

49.       Over the period, Fifth Freedom routes have doubled from fourteen to thirty. Cabotage, which, in 1993 did not exist, is now evident on 20 routes. 80 new airlines have set up business in the EU, while 60 have ceased trading independently. The relatively high failure rate partly explains the slow growth in competitive pressure on the established carriers. Another reason are the strict requirements for new entrants to obtain a licence to operate, through which many applications are sifted out.

50.       Contrary to what was the case in the United States in the 1980s, Europe is not expected to experience any "big bang", at most a "slow bang". Structures, relationships, ownership and markets are patently different on the two sides of the Atlantic and can be expected to remain so for some time. Indeed, pervading European Union policies is also a fear that a few strong non-European, and especially American, carriers will come to dominate the European market. A central thought of Europe's liberalisation policy is therefore that European airlines should first be faced with competition within Europe, before having fully to take on board world competition.

51.       Europe is of course different from the United States in many respects. If deregulation is on the whole working in the United States, one reason is that there is only one government and, in addition, a strong anti-trust tradition. The federal government is not concerned whether individual airlines leave the market or stay in it. Nor does it intervene when certain cities lose airlinks. Such events are left to the market. In Europe, however, there are numerous sovereign nations, many of which want to preserve their national carrier. There is also a much more extensive railway system and much shorter distances than in the United States.

52.       Further deregulation in Europe will needless to say form the subject of intensive negotiation. The United States became more open to foreign investment only in the early 1990s, in the wake of the financial crisis of its airline industry. The same could hold true for Europe. Deregulation will probably never mean the absence of a political monitoring framework, since this could enhance or create monopolies originally meant to disappear. Fair competition must remain the overriding goal.

53.       The present civil aviation system rests mainly on bilateral agreement among countries. While any rapid abandonment of "bilateralism" in favour of "multilateralism" seems unlikely, the air transport industry is increasingly seen as no longer very different from other industries. As a consequence, the call grows for "normal" rules of trade to apply also to international air services, to be negotiated, say, under the new World Trade Organisation's General Agreement of Trade and Services (GATS).

      d. Deregulation in the wider Europe

54.       The Third Package builds on the reciprocity principle. It covers not only the European Union but also the non-EU countries included in the European Economic Area (Island, Norway and Liechtenstein). Air carriers holding an operating licence from any of the EEA countries have free access to virtually all international routes within the Third Package area and are, on the whole, free to charge the fares they wish. Only cabotage rights are still restricted. Indeed, the need to remain competitive has spread to adjacent markets and there is a noticeable trend amongst non-Union states to seek agreements with the Union. Norway has already reached such an agreement, while Switzerland is in the process of doing so.

55.       The European Union, and in particular the European Commission, works closely with ECAC, not least for guidance in many technical aspects of policy formulation. In a two-way process, ECAC initiatives may be absorbed into European Union policy making machinery, while some European Union-originating measures may be taken up by ECAC for application in a broader European context. Recent such examples have included regulations on the phasing-out of noisy aircraft, a code of conduct for computer reservation systems, and rules on denied boarding compensation. ECAC has also been involved in a wide range of matters requiring a coordinated European dialogue with the United States. Finally, the deregulation undertaken within the EU sets the model for pan-European liberalisation at the level of the ECAC area, including the countries of central and eastern Europe.

56.       Since, as from 1997, domestic routes will be opened up to all carriers, it would seem natural for ECAC to promote similar action between the EU-EEA countries and those in central and eastern Europe, for the purpose of preventing a "two-speed Europe" in civil aviation. In the event that the European Commission is given the mandate to negotiate air transport agreements with the CEE countries, then ECAC should be authorised to monitor closely the negotiations, in order to achieve as liberal as possible a pan-European civil aviation convention. It is regrettable, in this context, that the Eus Third Package discriminates against carriers in ECAC member countries not belonging to the EU or the EEA. The Rapporteur would ask ECAC to intervene on behalf of all its member States to alter this state of affairs.

57.       It is understandable that countries in central and eastern Europe should look with caution at a rapid liberalisation of their as yet less developed civil aviation market, for fear that companies from western Europe, or beyond, may otherwise take control over their national carriers in the case of privatisation, or dominate national routes in the case of air traffic deregulation. In this situation, it becomes all the more important for all the ECAC countries to share their knowledge with each other.

58.       There can be no valid reason why the more recent ECAC member countries should be "forbidden territory" for joint ventures and foreign direct investment. Through co-operation, the CEE countries may also acquire a greater share of the international market. It is one of the peculiarities of the international air transport industry that especially small countries with a limited national market development potential on the whole favour international deregulation, even at the risk of foreign takeovers. These countries well realise that without an opening of the skies, their national carriers are unlikely to survive anyhow.


      e. The attitude of airlines

59.       In Europe, there are basically two types of airlines. In the first category are those which adapt to new developments, not least by reducing costs, often substantially. They tend to win market shares and expand. This group includes the profitable (or less unprofitable airlines as the case may be) such as British Airways, KLM and Lufthansa. Another group are those that suffer substantial losses and are more heavily subsidised via the state budget, such as Air France, Iberia and Alitalia.

60.       In the more competitive framework achieved through the European Union, the future can only belong to those that undergo timely change. The test will come when and if new subsidies are sought for ailing national carriers, and when the patience of the European Commission and that of other EU member states have been exhausted.

61.       Some analysts maintain that only four or so of the dozen biggest European carriers will survive in their current form once deregulation is completed, throwing state-owned airlines into the rough and tumble of the private sector. Lufthansa and British Airways lead the list of those likely to prosper, as both of them have already been privatised and are considered efficient by worldwide standards. Air France faces more of an uphill battle, as do Alitalia, and Iberia.

62.       Development of airline alliances (for example Sabena/Swissair/Austrian; Lufthansa/SAS) also enter into the picture, as does the increasingly popular concept of 'code-sharing' (with the consequence that the consumer has the impression that he is travelling on only one airline whereas he in fact may use different ones on departure and return).

63.       On the subject of code-sharing, the Rapporteur recognises that it can bring many benefits, particularly in helping smaller carriers to link with long-haul services. On a larger scale, code-sharing as practised for example by KLM and Northwest Airlines seems to be heading towards a situation of the two carriers selling a common product. For airports, code-sharing can mean a greater concentration of traffic at hub airports. This can have adverse effects on the operation of direct long-haul services from regional airports and can also aggravate congestion problems at the major hubs. Another point of concern as regards code-sharing is how well consumers are made aware of the products they are purchasing. In that regard, the Rapporteur welcomes the initiative taken by ECAC aimed at ensuring greater transparency in all transactions to do with code-sharing.

64.       Many major European airlines have, or are seeking, alliances with United States carriers in order to gain access to the lucrative United States market. While this has enabled United States airlines to increase their share of European traffic, they are still handicapped by their inability to negotiate general deals covering Europe as a whole. That is why the United States now plans a series of meetings with the European Union to open up transatlantic air services and improve reciprocal access to the United States and European airline markets. Some European governments may, however, be reluctant to concede greater access while their own airlines are in a relatively weaker financial position than their American counterparts.

65.       Of interest from the wider European perspective have been the responses of several European states to approaches from the United States for what have been termed "Open Skies" agreements. There are now nine such bilateral "Open Skies" agreements between the US and individual European countries. The most recent, and among the most significant, is one concluded with Germany: it opens up a huge market and eliminates many restrictions on access, pricing, etc. The "Open Skies" agreements provide an interesting backdrop for any negotiations that may follow at a multilateral level in the context of European Union/United States relations. The Rapporteur hopes that ECAC can be involved in negotiations with the United States and Canada, and also with the countries of East and South-East Asia, aiming at future multilateral regulatory regimes with these two regions, following the examples of the bilaterally concluded "open skies" agreements. The Committee on Economic Affairs and Development, at its adoption of this report, insisted, however, that any such régimes should be based on full reciprocity.

66.       All of these developments can have consequences for the wider Europe, and it must be hoped that both through bilateral agreements with the Union and through ECAC mechanisms, the interests of central and eastern European states will not be lost sight of.

67.       Deregulation does affect the behaviour of airlines. The record shows that under restricted regimes, the pursuit of market share is given priority over cost control. Airlines still place market share at the top of their priorities in a deregulated environment, but only if traffic is booming. In difficult times, however, airlines which cannot resort to government subsidies are more prone to try to reduce costs in order to maintain profits.

68.       In conclusion, deregulation is important in order to ensure competition, which in turn benefits the consumer in the form of lower prices and better service. Europe has for decades had too little competition owing to the protected statute of national carriers, leading to excessive prices. It is, for instance, difficult to justify why it should cost more to go from, say, Stockholm to Rome than from Stockholm to New York. Deregulation will inevitably come also in Europe. The important thing is to ensure that it does indeed lead to greater competition benefitting the consumer and not to any renewed monopoly. But even amongst airlines, and on board the same plane, prices differ widely - between one-to-four and one-to-five - as can be see from Appendix 2 (using Stockholm as the departure point).

69.       Deregulation is not only in the air; it is also down-to-earth, for instance as regards landing rights. For example, many members of the Parliamentary Assembly have deplored that Strasbourg has not been more opened up to foreign carriers for the benefit of the city itself and its role as a "European capital". Things have admittedly improved since the late Lord Finsberg made his first plea on behalf of better air services to Strasbourg in May 1988, saying that "a growing number of [his] colleagues" believed that "it [was] easier to fly to an underdeveloped country than to Strasbourg". But more can still be done, and the same can be said for many other cities in Europe waiting for action to be taken on practical ways of bringing Europeans closer together. What must be prevented is a situation where the restriction on landing rights will have the effect of obstructing competition.

70.       The Rapporteur is nevertheless grateful for various demarches made more recently, inter alia by Mr Jean Valleix, leader of the French delegation to the Parliamentary Assembly and Vice-Chairman of the Committee on Economic Affairs and Development (and a former Chairman), who has approached the French government on the matter. Mr Valleix in committee has stressed, however, that the appeal on Strasbourg's behalf concerns not only France but also other nearby countries, and that it would have to involve other modes of transport, such as better train connections.

71.       Deregulation must also concern ground handling at airports. Ground handling within the European Union today is worth $ 2.5 billion per year. For the air carriers this corresponds to 17% of total costs, or the biggest single expenditure category. At many airports ground handling is done through a monopoly, with costs between 30 and 50% higher than in airports where ground handling has been liberalised. It is particularly unfair when one airport abolishes monopoly and thereby reduces the costs to carriers, only to find that monopoly is kept at other airports.

IV.       The environment

      a. Pollution

72.       The issue of civil aviation and environment is both wide ranging and complex. It includes noise and emissions into the air, fuel consumption, land use and environmental consequences of congestion.

73.       IATA reports that air transport uses around 5% of the 62 billion barrels of oil consumed worldwide each year, and around 12% of the oil supplies taken by all transport. Aircraft contribute to approximately 3% of the total carbon dioxide from fossil fuel combustion.

74.       The overall effect of aircraft emissions of nitrogen oxides on climate change is believed to be of a similar magnitude. There remains considerable uncertainty about the atmospheric effects of air transport, especially in the upper troposphere. However, there is concern that it may increase in the future.

      b. Noise

75.       Aircraft noise is a "ground" issue, affecting the neighbourhood of airports but also other areas in the case of supersonic planes. If this problem is not solved, the much-needed future extension of airports previously referred to will become even more difficult.

76.       The sensitivity on the part of the general population as regards aircraft noise was demonstrated in the summer of 1996, when the city of Strasbourg, having at first accepted in principle the installation of a rapid mail service (DHL) to operate out of Strasbourg airport, then changed course under heavy popular pressure when it became clear that numerous flights would take place during the night, with loud propeller aircraft flying over several suburbs.

77.       The phase out of relatively noisy aircraft (so-called "Chapter 2" aircraft) will lead to a general decrease in noise at airports over the next decade. Over 17% of the jet aircraft registered in countries with noise regulations were of the more silent "Chapter 3" types.

      c. An environmental tax on aviation?

78.       No radical breakthrough is expected either in the quest for less polluting aircraft or in that for more silent jets. Today's technology standard will apply until the end of the decade and will characterise the average airline fleet up until at least the year 2015.

79.       The subject of environmental taxes and charges on airlines is one of intense debate, not least in the Committee on Economic Affairs and Development, where a proposal for a tax on kerosene on short-distance flights was rejected by a majority. While environmentalists and fiscal experts tend to agree on the general usefulness of such taxes or charges, it remains to be proved that they reduce or contain specific emissions, or speed up the introduction of the best available technology. The aviation industry insists that if they come about they should respect four principles. Firstly, there should be no ulterior fiscal aims behind them. Secondly, they should not be allowed to distort competition with other modes of transport. Thirdly, they should not prevent the efficient use of existing aircraft capacity. Finally, they should take into account the already high taxes on aviation.

80.       Whatever the arguments for and against, environmental issues are becoming increasingly important in aviation. A number of airlines have established environmental policies setting out targets and environmental standards - for example, as regards energy conservation, waste minimisation, and ground water pollution. The Rapporteur considers that both the industry-wide and the airline-specific efforts must be encouraged, especially if the assured dramatic increase in air traffic in future is not to be accompanied by a run-away increase in environmental problems. After all, if it had not been for the considerable environmental pressure of the past, today's situation would have been considerably less satisfactory than it is.

81.       While it has not yet proved possible to establish an international environmental convention for air traffic, there are promising attempts. ECAC this year finalised an environmental policy statement aimed at promoting co-operation between countries on environmental issues, identifying areas for research, and reducing pollutants at source or in their detrimental effects. Although aircraft produce less than 5% of all-human related CO2 emissions, they take place in that very vulnerable environment which is the stratosphere, and so preoccupy policy makers and the general public alike. An ECAC/European Union Conference on "Civil Aviation and the Environment" was held in Stockholm in March 1997.

82.       The Rapporteur would encourage ECAC to introduce a "green aircraft" scheme, akin to the "green lorry" approach of the European Conference of Ministers of Transport. In practical terms, this could mean that countries give additional landing rights at airports only to airlines whose fleets do not exceed certain noise and emission levels. This could in turn induce airlines to invest in new, environmentally friendly aircraft. Any initiative of this kind must, however, be worldwide, a circumstance which does not absolve the richer and more advanced nation of the duty to take the first step.

83.       Another issue related to environment protection is that of a harmonious integration among different modes of transport. The time must surely be over when, for instance, high speed trains and road transport should be seen as rivals of air transport. In fact, they can most usefully complement each other. While aircraft will be the best means for longer distances, trains may be preferable for middle distances, and road transport for direct delivery. For this to take place, major investments will be necessary at several European airports, with obvious environmental consequences. However, in the long run, it may well serve national as well as world-wide environmental interests.

V.       Security and air safety

84.       The issues of civil aviation security (protection against terrorist attacks) and safety (the airworthiness of aircraft) have been thoroughly discussed in recent reports of the Parliamentary Assembly and they have lost none of their importance. Because of tragic recent events, ECAC is particularly concerned to ensure that the highest standards of safety of aircraft flying to and from its member states are maintained. It is taking concrete steps to ensure this, at the same time as similar moves are planned in the EU. These various initiatives are being taken within the framework of ICAO's worldwide Safety Oversight Programme, in respect of which a number of ECAC member states contribute both financial and manpower resources.

85.       In the field of civil aviation security, ECAC continues actively to pursue the policy of the screening of all baggage - both hand and checked-in luggage - and is at present working on the security of cargo. The ultimate aim is to ensure that all objects being put on board an aircraft are security-screened. The work involved is both technologically challenging and very expensive, but it must continue in the overall interest of security. The main emphasis for some time in ECAC's work on security has been to ensure that its policies and advice are implemented in practice. ECAC is also active (in partnership with ICAO) in organising security workshops in Europe, aimed in particular, but not exclusively, at assisting its newer member states. As a showcase for its policies and to bring together representatives from all sections of the industry with an interest in security, ECAC held its second security symposium in London in May 1996.

86.       Commercial flying is roughly three times safer today than in the 1960s. For international passengers, the odds against being on a commercial flight that ends with fatal casualties are better than 5 million to 1. However, this does not prevent certain regions, such as Africa, from being particularly accident-prone due to lacking air safety. The reason for, in particular West Africa's air transport safety are wellknown: cash-strapped governments, nearly bankrupt airlines and undeveloped consumer rights. The Rapporteur knows of the intensive work being undertaken by, in particular, IATA to share worldwide experiences to improve air safety.

87.       Voices warning of a creeping deterioration in air safety also in Europe (including an increasing number of "near misses") were, however, raised during the adoption of the present report by the Committee on Economic Affairs and Development. Indeed, the Committee decided to add a special sub-paragraph in the draft Resolution calling for a ban on aircraft or air carriers which do not meet agreed air safety standards from ECAC airspace. One may speculate as to the reasons for the reduced air safety that many believe has occurred. Cost-cutting by airlines in the face of stiffer competition is a fact. It is the task of the authorities to see to it through strict regulations and checks that such cost-cutting is not allowed to affect air safety.

88.       The European Commission has recently agreed on draft plans requiring EU countries to increase safety checks on commercial aircraft using their airports and to ground any found to be breaking international rules. The plans include draft rules for safety checks on third-country aircraft and a data-exchange system to alert other EU countries to the possible dangers posed by aircraft from any particular country or state. The text of the Commission's proposal states that "recent experience has shown that air carriers from third-countries do not always apply the minimum international safety standards while having access to Community airports".

VI.        The future prospects of civil aviation

      a. General

89.       European civil aviation is facing a host of new developments. These include:

-       enhanced competition through continued deregulation;

-       an uncertain pace of economic growth in western Europe, while that in central and eastern Europe is likely to be higher;

-       new communication technologies, which on the one hand promote the globalisation of business operations (and hence business travel) but which on the other hand may reduce the need for such travel;

-       increased competition from other types of transport, in particular high-speed trains;

-       airport capacity constraints, affecting eg service reliability;

-       technological developments affecting passenger handling, including the possibility of "ticketless" flights.

90.       Competition will force airlines to become more efficient. It may also cause them to consider expanding operations. However, with too much overall capacity in the industry and a tenuous financial situation, it will become more difficult to persuade banks to put additional money into airlines. Privatisation will make it unnecessary for governments to take on the role of financial institutions. In this situation expansion will only occur where clearly justified - not in order to drive out competitors or operate subsidised services.

91.       Given the fact that the market for air travel has largely mirrored economic growth since the 1960s, the current recovery of European economies can be expected to lead to increased consumer demand. However, as has been pointed out, the 1991 recession marked a break with previous behaviour, as business travellers chose to stay at home or travel economy class, and airlines chose to cut costs rather than innovate in new products and services. The question is whether renewed economic growth will alter these new behaviour patterns.

92.       New information technologies will offer opportunities such as "tele-conferencing", rendering business flights less necessary. Time is a strategic factor not to be wasted on journeys when they can be avoided. Moreover, other means of transport will enhance competition, even on longer journeys - such as high-speed trains.

      b. A future of growing congestion

93.       Over the next ten years real world income is expected to grow at about 3.4% per year on average, practically unchanged from the previous two decades. Prudent forecasters anticipate an annual 5.2% increase in revenue per passenger miles (RPM). However, this includes the fast growing Asian and Pacific rim markets. In fact, the bulk of growth is expected to come from the development of international long haul markets linking western countries to the Asian-Pacific area.

94.       Owing to the long lead-times in many parts in the air transport system, the shape of civil aviation is in numerous respects unchangeable for the next ten to fifteen years. For example, it takes about ten years to train a pilot. The development and certification of a new type of aircraft necessitates five to six years, with seven years needed for an engine. The planning and building of a new airport takes more than a decade. Indeed, the building of a second runway at Düsseldorf airport took as much as 33 years! However, air traffic may well double within the next twelve years if passenger numbers grow at a rate of 6% annually and the number of aircraft movements at 5%. This will cause an increase in pollution and airport congestion.

95.       A greater reliance on a "hub-and-spoke" system could provide a partial, temporary solution. In other words, long distance flights could be concentrated to a few major airports, from which short-distance flights would take over to smaller airports. This could justify investment in "super-jumbos", thus keeping the number of flights in check. There may well be mainly "North Atlantic airports" "Asian airports" and "intercontinental charter airports" in tomorrow's Europe.

96.       The implementation of this system presupposes an adequate airport infrastructure. At present slot allocation is based on so-called "grandfather rights" that is, an airline retains the right to its existing slots and may use them for any route it chooses. New slot allocation rules will be necessary in order to facilitate the entrance of new airlines, and break up monopolies. ECAC appears to be the right body within which to reach political solutions in this field.

      c. The coming navigation technology breakthrough

97.       A combination of communication, computer and satellite technology has begun to change the way that airlines fly and conduct business with their customers. Within the next ten to fifteen years, most airlines will allow passengers to book and pay for a flight with an electronic "smart card" containing details of their seating and other preferences. Poker or blackjack on video monitors will also be available, where customers can play for cash or for flyer miles (more likely enriching the airlines than themselves).

98.       However, the real revolution is in navigation. The Future Air Navigation System, or FANS, has already been in use across the Pacific Ocean since 1995. This system, which takes information from global positioning satellites, allows pilots to know exactly where they are and permits controllers to keep a watch on aircraft well beyond radar range. Thanks to this system pilots will be able to set their own course independently of ground-based navigational beacons. They will be able to fly from point to point and use "dynamic rerouting" techniques. This system offers them the prospect of saving more than $ 6,000 in fuel and other costs on a transatlantic flight.

99.       The navigation system will also enable pilots to land at airports with poor visibility, which in turn will help airlines to maintain reliable schedules. The satellite data will permit pilots and controllers to establish the position of an aircraft to within 30 metres. Thereby, it will be possible to fit more planes onto a route. Satellite navigation is also expected to help stressed air traffic controllers by taking over the monitoring of routine operations.

VII.       Concluding remarks

100.       Europe's civil aviation industry is undergoing profound and rapid transformation. Numerous airlines face serious financial difficulties, while others are becoming profitable and increasingly efficient in increasingly liberalised markets. Governments are reconsidering their involvement in national flag carriers, as tax payers require a smaller public share in business undertakings overall. Furthermore, expansion of air services is hampered by congestion, especially on the ground. On the other hand, consumers stand to benefit from the development of a stable worldwide network of interlocking air services. Such a network is increasingly difficult to realise in a context of tightly protected bilateral agreements.

101.       In consequence, the industry is experiencing the forging of international alliances, mergers and acquisitions, especially in the airline sector. We politicians need to understand better the wider economic implications of the changes under way, and to focus attention on the problems confronting the industry.

102.       In order to maintain or regain profitability, it may be necessary to free prices and keep destination points unrestricted. This could encourage mass leisure travel, which in turn would compensate for any decline in business travel.

103.       Coping with the resulting congestion on the ground may require a modification of regulatory arrangements, so as to promote a more efficient use of existing facilities.

104.       ECAC for its part should continue to do everything in its power to avoid a "two-speed Europe" in civil aviation. Central and eastern European countries will probably follow the western development toward a more leisure-orientated society, but with a certain lag. This time should be used to permit these countries fully to catch up with western Europe.

105.       ECAC would be well advised to widen its action on behalf of European civil aviation also to include freight, charter and executive flights. These represent a large and growing share of the market, and with major implications for competition, congestion and individual freedom. Furthermore, ECAC should be encouraged to start work on a European convention on environmental protection, one main element being more environmentally-friendly aircraft. In the meantime, the organisation should continue its work to harmonise air traffic control, and to improve air security and safety.

106.       Deregulation in the aviation industry and increased measures to protect the environment should be closely monitored by ECAC and the Parliamentary Assembly. We have to avoid the emergence of new monopolies in the airline industry, in the interest of the European consumer and taxpayer. Europe's civil aviation industry stands before difficult times, but with considerable potential for better and cheaper services. Both ECAC and the Parliamentary Assembly have it in their power to help this development along.

Appendix 1


State owned       Date       Amount of injection        Output       Number of       Turnover

      (MECU)       (ATK)(1)       employees(2)       (MECU)

SABENA (1991)*       24.7.91       1650       1516       10568       1062

AIR FRANCE (1991)       20.11.91       310       9950       39810       6447

IBERIA (1992)*       1.7.92       760       4925       31220       2647

AER LINGUS*       21.12.93       220       641       5000       1047

TAP*       6.7.94       1803       1444       9690       845

AIR FRANCE (1994)*       27.7.94       3030       12907       42093       6332

OLYMPIC*       7.10.94       2059       1798       10348       745

SABENA (1995)       25.7.95       245       1631       9549       1418

AOM       2.10.95       46       1100       1442       415

IBERIA (1995)       23.12.95       544       4308       28508       2681

Private Sector

BRITISH AIRWAYS       11.6.93       630       16592       49628       7415

KLM       1.3.94       568       9676       23591       4373

LUFTHANSA       4.10.94       650       15615       42268       8515

FINNAIR       1.2.95       73       1820       7132       1195

* Classified as state aid

(1)       ATK: Available Tonne Kilometres (industry measure of available capacity combining passengers and cargo)

(2)       Figures not directly comparable as some companies carry out ground handling or other activities

Data: Year of equity injection or latest available data      

Source: Secretariat

Appendix 2

Lowest and highest prices from Stockholm to a number of international destinations.

Prices in Swedish Crowns (Source: Stockholms Affärsresebyrå)

Destination Lowest price       Full price       Airline

London       2 075       9 095       Finnair

Paris       2 490       11 340       KLM

Amsterdam       2 590       9 285       KLM

Rome       3 290       13 630       Air France,

      British Airways

New York       2 920       19 250       Icelandair, KLM

Bangkok       5 995       28 560       Alitalia

Frankfurt       2 680       9 280       Air France

Oslo       915       3 840       Finnair

Copenhagen       960       4 560       TAP

Helsinki       800       4 070       British Airways

Reporting committee: Committee on Economic Affairs and Development

Budgetary implications for the Assembly: None

Reference to committee: Standing mandate

Draft resolution unanimously adopted by the committee on 17 February 1997.

Members of the committee: MM. Davis (Chairman), Mrs Degn (Vice-Chairperson), MM. Bloetzer, Valleix (Vice-Chairmen), Andreoli, Behrendt, Bilinski (Alternate: Wielowieyski), Billing, Mrs Blattmann, MM. Bogár, Mrs Bribosia-Picard, Mr Brunetti, Mrs Calner, MM. Cerqueda Gispert, Cusimano (Alternate: Turini), Mr Dumitrescu, Mrs Durrieu, MM. Elo, Eyskens, Dame Peggy Fenner, MM. Figel, Frey, Mrs Frimannsdottir, MM Galanos, Galváo Lucas, Gonzalez Laxe, Goop, Gusenbauer, Gylys, Jelenkovic, Kamhi, Kiratlioglu, Kirilov, Kiršteins, Kopliku, Koucky, Kuznetsov (Alternate: Masliukov), Leers, Le Grand (Alternate: Mignon), Liapis, Malinowski, Mautner-Markhof, Merkushov, Minkov, Muravschi, Pereira Coelho, Poppe, Puche, Rigo, Rippinger, Rutskoy, Sceberras Trigona, Siebert, Mrs Stepova, MM Szalay, Telgmaa, Thaler, Townend, Tribunovski, Vasile, Verivakis (Alternate: Koulouris), Mrs Verspaget (Alternate: Blaauw), MM. Wallace, Yavorivsky.

N.B. The names of those members present at the meeting are printed in italics.

Secretaries to the committee: MM. Torbiörn and Bertozzi.

1 1by the Committee on Economic Affairs and Development

2 2ECAC member countries: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Monaco, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, United Kingdom.

3 3Present members of Eurocontrol are: Austria, Belgium, Cyprus, the Czech Republic, Denmark, France, Germany, Greece, Hungary, Ireland, Italy, Luxembourg, Malta, the Netherlands, Norway, Portugal, the Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey and the United Kingdom. Croatia and Monaco are expected to join in the near future.

4 4Fifth freedom refers to the right of an airline to carry traffic between two countries outside its own country of registry as long as the flight originated or terminates in its own country of registry. Cabotage rights open up air transport services within the boundaries of a country to foreign carriers.