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17 March 1994
Doc. 7041
1403-15/3/94-2-E
REPORT
on European air transport policies —
civil aviation at a crossroads
(Rapporteur: Mr FLÜCKIGER,
Switzerland, Liberal, Democratic and Reformers Group)
Summary
Major changes lie in store for world aviation in general and for European aviation in particular. Competition has become much fiercer in recent years and it may become difficult for Europe to retain all of its existing national airlines. Alliances, mergers or acquisitions are already occurring and can be expected to increase in number in the future.
It is essential that European air transport policies focus on the need to create a European air transport system that is economically healthy, consumer-oriented and environmentally friendly and functioning according to market principles.
The European Civil Aviation Conference (ECAC) has an important role to play in ensuring adequate European co-operation in air transport questions, together with the European Union and other specialised bodies.
The report also calls for the speediest possible integration of the countries of central and eastern Europe into a "Common European Aviation Area" and the avoidance of any division between the European Union and countries not belonging to it. ECAC should also pay due attention to environmental concerns and the need to further improve air traffic control systems in the 1990s in order to avoid congestion and delays.
I. Draft resolution
1. The Assembly warmly welcomes the continuing enlargement of the European Civil Aviation Conference (ECAC), through the recent inclusion of a further number of countries in central and eastern Europe (Bulgaria, Croatia, Czech Republic, Latvia, Lithuania, Romania, Slovakia and Slovenia). This will enhance ECAC's ability to take up the challenge of creating a "One Air Europe" of harmonised, and eventually integrated, European civil aviation management. The Assembly looks forward to assisting ECAC in this process, in its capacity as the organisation's parliamentary forum.
2. The situation of many European airlines is difficult, with record losses caused not only by the recession, but also by an often slow adaptation to new market conditions, as well as to heavy charges and taxes imposed on the industry. During a process of rapid globalisation and ever fiercer competition, European civil aviation stands before painful choices as regards the extent and orientation of operations, the future pace of liberalisation, and the forging of mergers and alliances.
3. European air transport policies need to take into account the continent's special characteristics and should draw on the experiences, both negative and positive, gained from deregulation in the United States. It is particularly important to maintain the highest standards of air safety, and to ensure adequate and affordable services, including to peripheral regions.
4. The Assembly, in conclusion, invites the member states of the Council of Europe and of ECAC:
i. to make the fullest possible use of ECAC in order to achieve a European air transport system which is competitive, consumer-oriented, environmentally sound, economically healthy, functioning according to market principles and conducive to the continent's development, and to provide ECAC with the resources necessary to accomplish this task;
ii. not to consider the present temporary slackening of demand — due essentially to the recession — as a case for inaction, but to push ahead in all areas of civil aviation so as to be able to meet future traffic increases;
iii. to devote the highest priority to the integration of the countries in central and eastern Europe into a "Common European Aviation Area", and in particular to avoid any division between member states of the European Union, or of the European Economic Area, and other countries;
iv. to make greater use of ECAC as an instrument for multilateral discussions with the United States on a future Europe-North America regulatory regime;
v. to reflect jointly, preferably within ECAC, on the broader question of the desired future structure of Europe's airline industry, and the implications thereof for competition, consumer service and profitability;
vi. to examine, with the airline industry, whether the present charges and taxes imposed on it for en route navigation or at airports are reasonable, or whether they can be reduced;
vii. to ensure, in an era of continued liberalisation and reduced profitability, the highest air safety standards, and to strengthen the role of the Joint Aviation Authorities entrusted with the setting of European standards in this domain.
5. The Assembly particularly calls on the European Union to intensify its co-operation with ECAC in all fields of civil aviation, in order to realise the goal of a "Common European Aviation Area" referred to in paragraph 4.iii above.
6. Furthermore, the Assembly invites ECAC:
i. to pursue its programme of progressive harmonisation and integration of European air traffic control systems in the 1990s, in order to enhance traffic capacity while maintaining a high level of safety;
ii. more specifically, to speed up the development of a European satellite-aided air navigation system capable of radically enhancing the capacity and safety of air traffic control;
iii. vigorously to pursue its policy of enhanced security against terrorism, through such measures as closer co-operation between governments, investment in human resources and the adaptation of airports; it is vital to maintain the watchfulness of staff also in the absence of tangible threats;
iv. to pay due attention to environmental concerns, such as pollution of the atmosphere and stratosphere, and air traffic congestion as well as noise around airports;
v. to encourage co-operation between air transport and other forms of transport, in particular railways, so as to bring about better co-ordination of passenger traffic over shorter distances and to and from airports.
7. Finally, the Assembly calls on the governments of those European countries which have not yet done so to join ECAC.
II. Explanatory memorandum
by Mr FLÜCKIGER
Page
I. Introduction. ECAC's expanding membership
in eastern Europe 5
II. The present situation in Europe 6
III. Deregulation in the United States 8
IV. Is Europe the United States? 9
V. The "open skies" liberalisation programme of
the European Union 10
VI. European Union liberalisation and the rest of Europe 12
VII. ECAC's strategy on air traffic control 14
VIII. Air security and air safety. The environment 15
IX. Concluding remarks 16
I. Introduction. ECAC's expanding membership
in eastern Europe
1. The present memorandum aims to review the main developments in European air transport since the 14th triennial session of the European Civil Aviation conference (ECAC) held in Strasbourg in June 1991. ECAC, it will be remembered, owes its existence to an initiative of the Parliamentary Assembly of the Council of Europe over thirty years ago, and our Assembly since that time serves as ECAC's parliamentary forum. The Rapporteur wishes to thank ECAC for all the assistance it has given him in the preparation of the present report. He also wants to thank the International Air Transport Association (IATA) for the most helpful comments given on an earlier draft of the present report, when the Sub-Committee on International Economic Relations visited its headquarters in Geneva in December 1993. Naturally, he has also maintained contact with the European Commission, and has received valuable comments from the AEA (Association of European Airlines).
2. ECAC represents the civil aviation administrations of its member states. It is not a regulator as such, but rather a coordinating body with substantial expertise and influence, whose work has helped shape the development of postwar European air transport.
3. ECAC today has thirty-two member states, up from twenty-five at the time of the Assembly's last report on European Air Transport policies (Resolution 964 (1991) and Doc. 6450).1 Thus, the membership of ECAC and the Council of Europe is roughly the same, and the organisation is faced, as is the Council, with the task of defining how far Europe should be considered to stretch geographically when considering fresh applications for membership.
4. The expanding membership in central and eastern Europe partly changes the mission of ECAC. Many of ECAC's traditional activities in economic areas such as tariffs and capacity sharing are now matters of European Union competence, involving not only the twelve European Union member states, but to an extent also the members of the European Economic Area. ECAC is, however, in the meantime being entrusted with new missions.
5. ECAC's expansion to the east brings a new dimension to its work. The main challenge will be to match, gradually but as quickly as possible, the hopes, ambitions and possibilities of its new member states with the reality of the present pace of change in European aviation. The advantages of a thus expanded ECAC includes the enhanced negotiating power of a larger grouping, a new impetus and different ideas on tackling aviation problems and, on a practical level, the possibility of using the airspace of newcomers to relieve congestion in Europe's skies.
6. It is heartening to note in this context the dramatic capacity increase of European airlines in flights to central and eastern Europe.
Figure 1: Capacity increase of AEA (Association of European Airlines) airlines on central and eastern Europe (Number of weekly roundtrips, in 1988 (left in boxes) and 1992 (right in boxes)); Source: AEA 1993 Yearbook
7. Another task of ECAC's will continue to be to help member states cope with congestion at airports and in the airspace, a problem dealt with in Assembly Resolution 939 (1990). All in all, ECAC remains, with its near pan-European membership the natural instrument for bringing the larger Europe of civil aviation closer together — and for helping to shape policies in the technical, safety, facilitation, security and economic areas of European civil aviation. This being said, the growing role of the European Union should be recognised, as exemplified by its Internal Market (the "1992 project"), the European Economic Area and the Treaty on European Union (the Maastricht Treaty). Thus, any future "Common European Aviation Area" is likely to come about largely through an extension of existing European Union principles (the acquis communautaire) to the air transport sector.
II. The present situation in Europe
8. All over Europe, the situation of all but a few airlines is worrisome. According to OECD the losses of European airlines in the first three years of the 1990s are expected to exceed the combined profits during the boom years of the 1980s. Nor is Europe alone in its predicament. IATA figures show that the losses of the world's airlines in the 1990-92 period — about 11,5 thousand million US Dollars — exceed all the profits reaped since 1945. And this despite a steady increase in passenger traffic of about 5% yearly up until the present recession. What went wrong?
9. One answer is that the airline/travel industry, like most other industries, was hit hard by a long, deep world-wide recession. A second answer may well be that airlines were slow to adapt their capacity on offer to market demand, too many services remaining unsold. Aside from contributing to airlines' own poor trading results, this did not help the already over-stretched air traffic control situation. The ambitious fleet renewal programmes which many airlines embarked upon prior to the onset of the world recession aggravated the financial difficulties.
10. More fundamentally, and as identified by the Comité des Sages set up by the European Commission, the European airline industry suffers from major structural problems, the most important of which are high costs and low levels of productivity by comparison with United States and other major competitors. A central theme in the report of the Comité des Sages is that the many measures which the European airlines have to take in order to reduce cost and improve productivity must be complemented by firm regulatory action on a range of issues outside the control of airline management. For the airlines it is of vital important that such regulatory action be taken rapidly and with minimum bureaucratic constraints, and will produce tangible results both in the short and longer term.
11. The poor financial performance of airlines is accompanied by hectic negotiations on mergers, acquisitions or alliances — a reminder that the industry is undergoing its most fundamental transformation since the second world war. The airline industry is in a stage of transition from a form of planned to an at least "semi-free" market economy, characterised by liberalisation and increasingly fierce competition, both at European and at world level.
12. Analyses vary as to the causes behind the present situation, and as to the cures available. Airlines complain that they are overburdened with a plethora of charges and taxes. In 1992 alone charges for en route navigation and airport use amounted to $ 8 500 million.
13. General agreement also seems to prevail that the management of Europe's airports and airspace can be made more efficient. The present state of European Air Traffic Control (ATC) has been singled out for particular criticism, with airlines and their organisations pointing to the fifty-one air traffic centres in Europe, using thirty-one different systems. This diversity often leads to delays at departures, during flights and at landings — in themselves causes of fuel wastage and congestion. In an 1989 study prepared by the Association of European Airlines, delays in the air and on the ground were estimated to have cost the airline industry approximatively $ 5 000 million in Europe alone in 1988.
14. The present system may not be able to cope for long when demand for air transport again picks up at the end of the current recession. Over the past six years the number of flights using the European airspace has increased by over 40%, but the supporting infrastructure has failed to keep pace. ECAC, with its ATC Strategy for the 1990s adopted in April 1990 by ECAC Ministers for Transport, is implementing reform aiming to make different ATC systems compatible, and then to see whether it may be possible ultimately to introduce an integrated, unified system. Measures taken already to improve the air traffic flows have reduced delays significantly, despite a large increase in the number of aircraft movements. There is, however, no room for complacency, since any imperfections in the system mean higher costs for airlines and their passengers. Passenger growth should not be impeded by infrastructure shortcomings.
15. A second area of agreement about the causes behind the current situation concerns customer composition. The number of business travellers has fallen rapidly during the present recession and is expected to diminish further, while the number of tourist class passengers has increased in relative terms. New means of communication, reduced company profits causing more and more businessmen to travel on less expensive fares or to use alternative transport — for example the (high-speed) train — have contributed to a situation of fewer passengers paying less. (A business traveller may pay up to ten times as much as a passenger in the economy class.) Airlines are left with few options but to try to cut costs even further, or to increase the number of business passengers on each flight.
16. If everyone recognises that overcapacity is one of the main problems of the industry, the recipes for overcoming it vary. In the one camp are the advocates of as complete a liberalisation as possible. It is above all the United Kingdom and the Netherlands, but also Spain and Ireland, which support this view. Let the market rule, the argument goes, and a balance between demand and offer will result. As soon as the recession is over, things will look up. Any protectionist measure would only further add to present difficulties. The emphasis has to be on cost control and productivity, and not on subsidies. The "liberal" camp typically favours so-called "fifth freedom" rights (that is the right of an airline of Country A to carry passengers between Countries B and C on a route with its origin or destination in Country A). Complete "fifth freedom" exists already in the European Union; however, it is very little used by airlines.
17. In the other camp, which might be termed the "traditionalist", are those calling for protection in the present difficult situation. France, Germany, Italy and Belgium are among the strongest advocates of continued support to airlines. They fear that a much reduced number of airlines would soon control what would in fact no longer be a "free market", and that the latter would subsequently be in a capacity to build near-monopolies.
18. The "traditionalist" camp sees the European Union's "Third Package" as a threat, largely because of its coming into effect at a time when the industry is at the bottom of a recession. Demands are accordingly being made for some relaxation of the conditions under which the European Union competition rules are applied, notably as they relate to fares and schedule co-ordination.
III. Deregulation in the United States
19. The two sides draw largely different conclusions from the deregulation of civil aviation in the United States that started in the early 1980s, and which is now virtually complete. Some will point to the fact that certain airlines — foremost among them American, United and Delta — have managed sharply to increase their capacity and productivity through strict cost-control in particular. These now count among the biggest airlines in the world, and in 1992 controlled some 70% of United States-operated North Atlantic flights (up from 30% in 1990 and 45% in 1991).
20. Advocates of liberalisation in Europe argue that deregulation in the United States benefited many consumers, in the form of lower fares and in opening up many more destinations. Others will, however, maintain that these positive features were accompanied by the collapse of a large number of both big and small airlines, the most well-known examples being Pan Am and Trans World Airlines. President Clinton's initiative in April 1993 to set up a commission to study the new problems in the industry is in their view a sign that deregulation has not only had positive effects. They are concerned about the difficult financial situation of the large number of airlines that are too weak to participate successfully in merciless price-wars is cause for worry, and also worry about the entry obstacles for many small airlines at any other than the local level. The question is whether these problems result from too much, or too little, deregulation.
21. The barriers to competition remaining in the United States predominantly concern airports. The long-term leases that many airports demand from airlines for the use of their services are an example. Small and new airlines have to keep their costs low. The "competitive advantage" of the strongest airlines is thereby accentuated — an advantage directly linked to access to the "hub" in the "hub-and-spoke" system ("hub" standing for major airports, from which the "spokes" spread out in the form of regional flights to smaller destinations).
22. The bigger airlines for their part focus their criticism on insufficient deregulation as it relates to bankruptcy laws, and argue that too many small and uneconomic carriers are protected by it. There are also those who criticise an allegedly lax attitude on the part of United States authorities towards mergers. The United States Consumers' Association describes the refusal to apply and enforce anti-trust legislation as "the most important and fundamental failure of deregulation in the United States". This second argument has met with particular understanding in the European debate.
IV. Is Europe the United States?
23. Although some lessons could be learned from the American experience, some rather unique European market characteristics should be borne in mind when planning European air transport policies. One difference concerns the respective "hub-and-spoke" systems.
24. Deregulation in the United States has resulted in an even more pronounced "hub-and-spoke" system. According to the United States Department of Transport this has had two contrasting effects. Firstly, the number of carriers offering different routes over competing "hubs" has given rise to stronger competition between carriers offering travel between major "city pairs". Secondly, the "hub" domination at individual airports has led to a reduction in competition on connecting short-haul routes, where prices have in consequence risen.
25. In Europe on the other hand, the "hub-and-spoke" system is predominantly geared to long-distance, extra-European routes. A strong intra-European "hub-and-spoke" system is unlikely to develop. Firstly, European airlines, unlike their United States counterparts, do not have sufficient domination over "slots" at particular airports to build up a "hub-and-spoke" system of the American kind. Secondly, European business people travel mainly between major airports and use peripheral routes more rarely.
26. The above-mentioned differences caused a House of Commons report in 1991 to conclude that "if indirect competition over alternative 'hub-and-spoke' systems has protected the United States traveller from the worst effects of increasing concentration, its absence in Europe suggests that more attention should be given to merger policy".
27. A second important feature of the European market may act against a rapid emergence of monopolies in the event of liberalisation. This is the strong competition between scheduled carriers and charter airlines. (It is estimated that 30% to 50% of passengers in Europe are customers of charter airlines).
V. The "open skies" liberalisation programme
of the European Union
28. The European Union, then the European Community, in 1987 adopted its first phase of liberalisation, leading to the single internal 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.
29. The second phase, adopted in June 1990, took all 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 extended only until 1993.
30. The European Union's "third package", in principle in force since the beginning of 1993, is the most 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 offered unrealistically low fares on routes which they wanted to dominate, and from which competitors were indeed soon forced out.)—
—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.31
31. 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".
32. New harmonisation measures, however, can be expected by the European Union's Common Transport Policy. That policy should recognise that air transport is a global industry, and that European air transport, unlike other modes of intra-European transport, cannot be examined in geographical isolation. Therefore, 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, European Union policy as regards the application of state-aid rules will be very important for any restructuring of the European airline industry.
33. Pervading European Union policies may be 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. The size of the largest United States airlines is compared in figure 2 below to the biggest ones in Europe.
Figure 2: The four largest United States vs the four largest European airlines (million RPKs or Revenue Passenger Kilometres; Source: AEA 1993 Yearbook)
34. Thus, it is not so surprising that most of the 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. It is feared, however, that European governments will be reluctant to concede greater access while their own airlines are in a remarkably weak financial position.
35. 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.
36. 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.
VI. European Union liberalisation and the rest of Europe
37. European Union policies raise the question what will happen to the airlines of those European countries which do not belong to the Twelve. Will the European Union be able to remain open when it will have an aviation policy of its own, or will a sort of "European Union preference" develop, as in agriculture? Will indeed a policy restricted to the European Union make sense in a Europe which is so closely intertwined — in the economic field in general, and in aviation in particular?
38. Numerous developments would indicate that European Union countries are neither willing nor able to develop any "isolationist" European Union aviation policy. For instance, the European Economic Area, which came into force on 1 January 1994, will in essence enlarge the European Union's "Single Market" to include also six of the seven EFTA countries (Switzerland does not form part of the EEA). To this should be added the implications for air traffic of the so-called Schengen Agreement further harmonising border controls among a number of European Union countries.
39. The corollary in the aviation field are the efforts to form a "Common European Aviation Area", under which countries participating in the EEA would adopt the European Union's policy. Sweden and Norway already have agreements with the European Union due to their co-ownership of SAS together with European Union member Denmark — a fact which serves to illustrate the need to involve also non-European Union countries in any European policy framework.
40. The "Common European Aviation Area" is foreseen in due course to include other European countries as well: EFTA member Switzerland, Malta, Turkey, Cyprus and the countries of central and eastern Europe. All of these have shown keen interest in being associated with the project.
41. Thus, association agreements seem to be the most appropriate way to avoid a divided Europe of aviation. A "Common European Aviation Area" through a multilateral agreement may look like the most attractive avenue to reach the goal from a theoretical point of view. In practice, however, bilateral agreements are often found to be easier and quicker to enter into, and to adjust at a later stage if necessary.
42. Similarly, the best approach to integrate countries from central and eastern Europe seems to be by the above-mentioned association agreements. ECAC may also play a very helpful role in this respect, because airlines from these countries often need a certain adjustment and preparation period before they can be exposed to the rigours of liberalisation and the application of competition laws.
43. All in all, it is vital to avoid a split in European aviation into two camps — European Union and non-European Union — and the main instrument for this is ECAC. May, therefore, the "open skies" project of the European Union be just that — open and not closed — and may it be but a transitory step on the road to a pan-European policy. Needless to say, the Rapporteur's own country, Switzerland, which in a referendum chose not to form part of the European Economic Area, needs ECAC particularly in the present situation.
44. The attention of ECAC and its member countries is not limited to Europe, but carefully follows developments in the rest of the world, and in particular the United States. Indeed, airlines belonging to the AEA (Association of European Airlines) derive 19% of their income from United States-European flights. An early agreement for an open and liberal United States-European market may appear as the most expedient way of escaping the present system of bilateral relations between each European country and the United States. However, the strength of some United States airlines renders any speedy opening of the two markets more difficult. Competition with American and other non-European airlines for the United States market is extremely fierce, and European airlines for the moment seem to be losing out. Their transatlantic flights generated 12% less revenue per kilometre in 1992 when compared to 1991. Consequently, calls for protection from the major United States carriers are on the rise.
45. The second main obstacle to a United States-European market — or, for that matter, a world market à la GATT — is the absence of a "spokesman" for European airlines in negotiations. While the European Commission is anxious to take on this role on behalf of the Union, European Union ministers seem reluctant to give such a mandate for the present. Bilateral talks between the United States Government and individual European countries therefore seem likely to continue for some time to come, unless of course European countries can overcome their differences and speak with one voice. ECAC, which has previous experience of multilateral discussions with United States could perhaps offer a forum for useful exploratory discussions on a future Europe-North America regulatory regime.
46. In conclusion, continued, though gradual, liberalisation of Europe's civil aviation industry seems certain to continue, and competition will become all the fiercer for it. Airlines try on the one hand to reduce costs, and on the other to enhance co-operation with other airlines through alliances, or even mergers or acquisitions. Cost control in 1992 led to an increase in traffic per employee of about 15% when compared to the previous year. However, cost cutting will not be able to guarantee success until the previously mentioned plethora of packages and infrastructure fees cease to place such a heavy burden on finances.
47. Mergers and acquisitions may open up a wider range of routes to customers if the airlines involved complement each other in this regard. Financial consolidation may also be easier with mergers or alliances, even though disputes may arise as to which side should pay for which loss. National interests may also clash with business priorities, such as when choosing the location of headquarters or when selecting a United States partner airline, which proved the stumbling block to the so-called Alcazar project among a number of European airlines. It would seem important for Europe's future multinational airlines not to let their international competitiveness be weakened by internal disagreements.
48. It must be ensured that liberalisation in Europe permit travellers to enjoy a wider choice of services. However, liberalisation should not be seen in isolation. Full enjoyment of the benefits of it depends upon the successful completion of priority tasks such as ECAC's strategy for redevelopment of air traffic management in Europe. Central and east European countries should also benefit from liberalisation, but how fast and in what way they may wish to do so is still for consideration. It is important that ECAC play its part in helping these countries redevelop their aviation system.
VII. ECAC's strategy on air traffic control
49. The ECAC strategy on air traffic control in Europe — adopted in April 1990 by the ministers in ECAC member states responsible for civil aviation — commits member states to a major rethinking of their previous civil aviation priorities. The plan, which is now well on the way to being implemented, envisages the progressive harmonisation and integration of European ATC systems over the 1990s. Harmonisation has as its goal to enable different national (or regional) systems to communicate effectively with each other with minimum delay. Through integration, the resulting system will appear to users (essentially the pilots) to be operating smoothly and without artificial geographical boundaries. The overall objective is to provide more airspace and control capacity, and to keep the increased traffic moving as efficiently as possible, while maintaining a high level of safety.
50. Indeed, the development of high-powered computer systems, allied to the satellite network, has made it possible to plan for a new generation of equipment. Of particular note is the Future Air Navigation System (FANS), known as CNS ATM (Communication Navigation Surveillance Air Traffic Management), and it is of great importance that a European satellite CNS ATM strategy is developed and implemented.
51. A related task is the integration of the countries of central and eastern Europe into the general European ATC system, and in particular the extension of ECAC's strategy for en route air traffic control to the new member countries in central and eastern Europe.
52. Other central and eastern European states now joining ECAC will be progressively associated with the project, the first aim being to establish a fully integrated air traffic control system in the core area of Europe (while the peripheral parts of the continent can be taken care of later). It will be necessary for western European countries to assist the central and eastern European countries concerned in all ways possible, as they try to adapt their national systems.
53. ECAC's strategy for en route air traffic control in Europe has never ruled out a totally new ATC system in the long term. Indeed, its strategy is specifically geared to the introduction of new technologies well before the end of this century, within the framework of the European Air Traffic Management System of the future.
54. Given the political, legal and technical complications, a radical restructuring of air traffic control in Europe appears to ECAC as an unrealistic solution in the short term. The Organisation rather sees the real question to be tackled as being, not the number of air traffic control centres, but rather the capacity of the whole system, and, on the efficiency with which aircraft are handed over from one centre to another.
55. This is why the ECAC strategy concentrates on harmonising and integrating the operation of already existing centres. This, it believes, is the fastest way to build a "seamless system" — one in which optimal separation between aircraft would be achieved as soon as possible from one end of Europe to the other.
56. The AEA (Association of European Airlines) for its part would like to go further than sheer harmonisation among existing ATC systems. It wishes to see established a single European air traffic management system, and regrets that ECAC member states have not yet created the necessary political and institutional framework for it. In a rapidly integrating Europe — with explicit European Union competence under the Treaty on European Union in the area of "trans-European networks" — the AEA believes that it is simply not convincing to continue rejecting a radical restructuring of ATC in Europe on political grounds.
57. It must be recognised that considerable progress has been made since the Assembly's Resolution 939 (1990) on the growing congestion of Europe's airports and skies. In that resolution, it will be remembered, the Assembly drew attention to the serious delays in the air and on the ground that then plagued Europe as a result of congestion and inadequate ATC. The Assembly also called for better ground facilities to guide aircraft and enhance airports' efficiency, and more air traffic controllers. There have since then been significant improvements in these fields.
VIII. Air security and air safety. The environment
58. ECAC is paying great attention to air security. Lockerbie still casts its long and tragic shadow. It will be recalled that the Assembly in its Recommendation 1099 (1989) made detailed proposals to ECAC regarding improved security policies.
59. ECAC harnesses the expertise of governments, consumer organisations, airlines, airports and pilot organisations in a working group which reports regularly to the Directors General of Civil Aviation of member countries. While making no assumptions that threats such as high-jackings will not be repeated in the future, ECAC is today focusing on detection of explosives, especially plastics, and on screening checked-in baggage. It has taken a policy decision to screen 100% of checked-in baggage, even though the technical and operational difficulties are daunting, as are the costs. For the time being, airports rely on a combination of traditional technologies and human screening methods. It is vital to maintain the alertness and watchfulness of staff even in the absence of tangible security threats.
60. Air safety — that is the airworthiness of aircraft as well as operational and maintenance requirements — is high on ECAC's agenda. In 1989 the organisation granted the Joint Aviation Authorities (JAA) the status of an associated body. Twenty-three ECAC member countries are members of the JAA.
61. It is essential that air safety standards be upheld also in a liberalised market, where there could be a temptation to relax standards in order to cut costs. Indeed, standards will, if anything, have to be higher to counteract any such tendency, and they must be separated from any economic considerations.
62. It is worth in this context to mention the issue of contractual liability of airlines in the event of accidents. It is generally acknowledged that the passenger liability limits are inadequate, based as they are on the decades-old so-called "Warsaw system". ECAC is aiming at an updated international legal instrument that would take into account modern conditions.
63. ECAC is seriously considering the issue of environment protection as it relates to aviation. Considerable progress is being made on noise, in particular through the replacement of so-called Chapter 2 aircraft by the much more silent Chapter 3 planes. ECAC has agreed that the replacement shall be complete by the year 2002 at the latest, and it is now finding that many airlines have achieved this goal already due to competitive pressures and consumer expectations.
64. Efforts are also being made to reduce pollution of the atmosphere and stratosphere. Here, the work is rendered more complicated by a lack of knowledge about the exact effects of exhausts. Generally speaking, the protection of the environment is one of civil aviation's thorniest problems. As long as environment protection is not regarded as a necessary long-term investment — to be shared equitably between airlines and consumers — little concrete progress may be made. The Assembly, in its Resolution 939 (1990) on the growing congestion of Europe's airports and skies asked that "great attention be paid to environmental concerns such as noise, pollution and traffic congestion around airports, and to speed up the introduction of less noisy aircraft".
65. At the heart of environmental concerns as regards the atmosphere is the feared contribution of aircraft emissions to the "green-house effect". Carbon dioxide is seen as the main culprit. In order to stop CO2 emissions from aircraft, a totally new type of engine would have to be developed. Such an engine is not, however, yet on the drawing board and its design must await greater knowledge on the various pollutants and on how they interact. Since there is no alternative to the current type of jet fuel, emphasis has so far been placed on fuel efficiency where considerable progress has been achieved.
66. The energy efficiency of airlines has improved at an average annual rate of 3% to 4% since the mid 1970s, according to IATA figures. Put simply, the amount of fuel required to carry one passenger in 1976 now carries two people. World aviation produces just 3% of total CO2 emissions. In spite of this, it has to continue to develop technology which better protects the environment — especially in view of the expected doubling in air traffic by the year 2005 if current trends hold.
IX. Concluding remarks
67. Major changes lie in store for world aviation in general, and for European aviation in particular. An already global market is rapidly becoming even more so. Already fierce competition is becoming merciless, often favouring bigger airlines over the smaller. It seems unlikely that Europe will be able to retain all of its present national airlines. Alliances, mergers or acquisitions are already occurring, and can be expected to increase in coming years, even though their exact nature is difficult to predict — depending as they do on political considerations.
68. It would, however, seem essential for Europe to avoid the negative consequences of the deregulation in the United States, such as the rise in near-monopolies and the resulting temptation to form cartels within them. Europe must be able to offer customers a wide range of opportunities, including at regional level. Furthermore, any split of European aviation into two or more camps must be avoided. We must support ECAC efforts to create a "Common European Aviation Area".
69. A revolution in air traffic control is also under way. "Area navigation" through satellites will soon become possible, relieving authorities from the obligation to restrict aircraft to given "corridors" through instantaneous location of a limitless number of planes. All this will greatly enhance ATC capacity, and relieve congestion even with a vastly larger number of aircraft in the air.
Reporting committee: Committee on Economic Affairs and Development.
Budgetary implications for the Assembly: none.
Reference to committee: Doc. 6962 and Reference No. 1908 of 4 November 1993.
Draft resolution unanimously adopted by the committee on 23 February 1994.
Members of the committee: Mr Holtz (Chairman), Dame Peggy Fenner, Mr Lotz (Vice-Chairmen), MM. Andreoli, Gudmundur Bjarnason, Bloetzer, Bonnici, Borderas, Mrs Burbiené, MM. Buzatu, Colombo, Davis, Demiralp, Draguiev, Mrs Durrieu, MM. Fabra, Figel, Flückiger, Gjellerod, Goerens, Goop, Gregory, Hagård, Hellström, Kempinaire, Kilic, Kittelmann, Kolár, Albrecht Konecny, Le Grand (Alternate: Mignon), Leers, Malinowski, Mändmets, Mautner-Markhof (Alternate: Gusenbauer), Mesoraca (Alternate: Covi), Novak, Pahor, Paire (Alternate: Liberatori), Pavlides, Pinto, Pirinski, Radulescu Botica, Rehn, Rodrigues, Mrs Solberg, Mrs von Teichman, MM. Townend, Uczkiewicz, Valleix (Alternate: Hunault), Mrs Verspaget, MM. Vrettos, Wintgens.
N.B. The names of those members present at the meeting are printed in italics.
Secretaries to the committee: MM. Torbiörn and Mezei.
1 1ECAC member countries: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, 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.