Single European Sky – can the vested interests be overcome

Article published on February 2014 in Legal Eye and reproduced by courtesy of Stephenson Harwood

Following the failure of the first Single European Sky initiative (called SES I, launched in 2004), the European Commission launched a second package of legislation in 2009 called SES II, which was designed to remove the fragmentation caused by the inefficient use of 27 national airspaces, through the introduction of what are called "Functional Airspace Blocks" or FABs. These nine designated FABs were supposed to be operational by the end of 2012, but EU Member States have delayed dismantling their domestic air traffic monopolies in order to form these regional blocks, for political reasons. In early 2012, the EU Transport Commissioner Siim Kallas announced further new legislation proposals which he called "SES II plus", with the objective of accelerating implementation of the SES II reforms, and enabling enforcement measures to be taken against non-compliant EU Member States. Then, in June 2013 the European Commission laid out its proposals to update the four regulations creating the Single European Sky. The key proposals are as follows:

The Commission's June 2013 updated proposals

Better safety and oversight

The Commission is proposing full organisational and budgetary separation of national supervising authorities from the air traffic control organisations they oversee, in order to improve oversight and safety. Many supervisory authorities are currently under-resourced and dependent on the support of the entities they are supposed to oversee. Airlines will also have a new role in signing off air traffic control organisations' investment plans to ensure they are better focused in meeting customer needs.

Better air traffic management performance

The reform of Europe's air traffic management is driven by four key performance targets: safety, cost-efficiency, capacity and environment. Under the current system EU Member States can set their own performance targets and decide which corrective measures to apply if targets are not met. The Commission is proposing to strengthen the performance scheme by making the target-setting more independent, transparent and enforceable, by strengthening their own role in setting more ambitious targets and increasing the independence of the Performance Review Body as the key technical advisor, so as to enable sanctions to be applied when the performance targets are not met by Member States.

New business opportunities in support services

The Commission is proposing to open up business opportunities for more companies to provide support services to air traffic control organisations. Support services such as meteorology, aeronautical information, communication, navigation and surveillance services will have to be separated out under the new draft regulations, so they can be put out to competitive tender in an open and transparent way in accordance with normal EU procurement rules. Support services are the biggest driver of cost in air traffic management and these costs could be cut by 20% if they are put out to competitive tender.

Enabling industry partnerships

None of the nine Functional Airspace Blocks or FABs are fully operational, in spite of a deadline set in December 2012 for EU Member States to establish them. The Commission is currently examining infringement cases against all Member States, particularly where no progress towards reform is made in the next few months. However the Commission has recognised that the FABs are rather inflexible political constructs, so is proposing that service providers co-operate more flexibly by allowing the creation of "industry partnerships" – which will allow service providers to participate in more than one FAB.

Strengthening the role of the Network Manager

The proposed regulations seek to strengthen the role of the Network Manager, Eurocontrol, to ensure that co-ordination of air traffic flows between the national service provider, and tasks such as route design and co-ordination of radio frequencies are carried out more centrally. The proposals could also see the provision of a wider range of services by the Network Manager to air traffic control organisations, such as information networks, monitoring of technical systems, and airspace design. These services could be provided centrally or outsourced by the Network Manager.

The Commission's proposals to update the four regulations creating the Single European Sky will have to be approved by Member States and Parliament before they are passed into law, which could prove to be yet another stumbling block for the progress of these measures.

There has been considerable resistance to some of the measures proposed in the "SES II plus" package from some EU Member States, particularly France and Germany. The European Transport Workers Federation, which represents most of the air traffic controllers and air traffic management workers in Europe has rejected the "SES II plus" package, on the basis that it will only have negative effects on jobs and working conditions for their union members. French air traffic controllers went on strike at the beginning of October in protest at the proposed "SES II plus" package because they are concerned about losing their jobs if the Commission's proposals to deregulate the profession are passed into law. The Air Traffic Controllers European Unions' Co-ordination (ATCEUC) also called for a strike at the beginning of October across 26 European countries – the industrial action was only called off when the European Commission assured them they would take ATCEUC's views into consideration.

Although perhaps not the most exciting package of legislation being debated in Europe at the moment, it is nonetheless critically important for the industry. There are some nine million flights across European airspace annually, and EuroControl is forecasting a further 50% increase in flights over the next 10-20 years. The Commission has estimated that the EU's air traffic management inefficiencies caused by national airspace fragmentation add 42km to the average flight, waste fuel, increase emissions, and cost €4.6 billion per annum. The intransigence of EU Member States, which is rooted in the vested interests of labour protection, the revenue streams generated by national air traffic management bodies, and misplaced concerns over the protection of sovereignty over national airspace, is delaying critical progress in reforming what is a seriously inefficient system. The US controls a similar amount of airspace as Europe, with more traffic, at half the cost, and if and when the "SES II plus" measures are implemented, the European Commission says that safety will be improved by a factor of ten, airspace capacity will be tripled, the cost of air traffic management will be halved, and the impact on the environment of carbon emissions reduced by 10%.

IATA's Director General, Tony Tyler, said earlier this year that progress in the implementation of the "SES II plus" package of measures is critical to the competitiveness of the European aviation industry:

"The European Commission shares the industry's frustration with the failure of European states to progress the SES. Every year that SES languishes in limbo is a €5 billion knock to European competitiveness and costs the environment 8.1 million tonnes of wasted carbon emissions."

Author: Paul Phillips (Partner, Head of aviation litigation and regulation with Stephenson Harwood) / Publisher: SCMO

EU blacklist labelled absurd

Article published on October 2013 in Legal Eye and reproduced by courtesy of Stephenson Harwood

Following the publication of the latest update to the EU blacklist of foreign carriers in July of this year, which removed Philippine Airlines and Venezuelan carrier Conviasa from the list, Tony Tyler, the Director General of IATA, spoke out again about the lack of transparency in the decision-making process followed by the EU in adding and removing airlines or whole countries to or from the EU blacklist.

In June 2013, Tony Tyler called the EU’s list of banned airlines “absurd” when speaking at the IATA Annual General Meeting in Cape Town, South Africa. Of the 20 countries currently subject to a blanket ban on the EU blacklist, 15 of them are African, and Tyler has warned that the EU’s disproportionate focus on Africa has led many observers to conclude that its blacklist is a mercantile policy masquerading as a safety policy. He says “the point that all the African airlines make – and that we certainly agree with – is that if a government isn’t exercising sufficient regulatory oversight on aviation, then that applies equally to air navigation service, ground services and everything else. So if it’s not safe for the African carrier to operate into Europe, then why is it safe for the European carrier to operate to the African country?”

The EU’s disproportionate focus on Africa has led many observers to conclude that its blacklist is a mercantile policy masquerading as
a safety policy.

IATA takes a different approach, it says, to that taken by the European Commission, by working with countries to put in place IATA operational safety audits (IOSAs), and engage with countries and carriers on the implementation of IOSA training programmes, as opposed to penalising under-performing airlines. In calling for greater transparency, Tyler said “There are no clear guidelines on what you have to do to get off the banned list...or, indeed how exactly you got on it. In America, the FAA says you’re Category 2, then it identifies what
particular tests you have failed, or what you’re not doing properly, but in Europe there is no checklist. There are no specifications about what standards they want.”

In a thinly veiled reference to the EU’s unilateral imposition of its own emissions trading scheme on foreign carriers, Tyler said:

“ICAO does its own inspections of the regulatory authorities and helps them lift their game where necessary. But Europe is going off on its own again, as it seems to love doing in this industry.”

Author: Paul Phillips (Partner, Head of aviation litigation and regulation with Stephenson Harwood) / Publisher: SCMO

Holding pattern for EU Airports Package

Article published on October 2013 in Legal Eye and reproduced by courtesy of Stephenson Harwood

The progress of the European Commission’s EU Airports Package, which was published in December 2011 to address issues on slots, ground-handling, and noise, has stalled. The European Parliament has approved all three elements of the package of legislation, with some substantive amendments, at First Reading stage, but the European Council has not.

Slots

The slots proposal was amended and approved at first reading by the European Parliament on 12 December 2012. The Parliament made some changes to the Commission’s original proposal, maintaining the current ratio of the use it or lose it rule at 80:20, and reduced the Commission’s proposal for the qualifying length for a series of slots from 15 to 5 in Summer and 10 to 5 in Winter. The amendments are now with the European Council for consideration. The rumours coming out of Brussels are that the text of the proposed new Slot Regulation is
not agreed and that it is becoming increasingly uncertain whether a new Slot Regulation will be required at all.

One ongoing concern for airlines is that the European Commission and Parliament are resentful that airlines have control of their own slots, and that they (the EU legislature) may reserve the right to tackle the issue of who should own slots at a later date. This issue is of particular concern because airlines have capitalised the value of their slots as assets in their balance sheets, so any indication of an attempt by EU legislators to introduce measures to change slot ownership has to be monitored carefully.

Ground-handling

The proposed increase in the minimum number of ground handling companies given licences to operate at large airports is politically very sensitive, with the German ground-handlers’ unions, particularly at Frankfurt and Munich airports, exerting considerable lobbying pressure on MEPs.

The European Commission proposed an increase in groundhandlers at large airports from 2 to 3 at airports with more than 5 million passengers per annum. The Rapporteur for the TRAN Committee of the European Parliament, Polish MEP, Arthur Zasada, proposed in his working report to the TRAN Committee an increase in groundhandlers from 2 to 4 at qualifying airports. The TRAN Committee rejected this proposal, requiring the Rapporteur to significantly amend his report and find a compromise with the demands of the Employment Committee of the European Parliament. The text that was adopted by the TRAN Committee in March 2013 proposed a smaller increase in groundhandlers from 2-3 only at airports with over 15 million passengers per annum over a 10 year period. The TRAN Committee also proposed more stringent social terms and conditions and protection of employment conditions. These revised recommendations have been narrowly voted through the first reading of the European Parliament, but have not been voted on yet by the European Council – where there are reported to be significant differences of opinion. The timeline for the European Council to vote on this proposed new Regulation is unclear.

Noise

The proposed new noise Regulation is far less controversial than the proposed groundhandling Regulation. The European Parliament agreed on amendments on 12 December 2012 but approval by Council is still pending.

The current EU Lithuanian Presidency did not include the Airports Package in the European Council work plan for its six month Presidency of the EU, which expires in December 2013, which is why progress on the Airports Package has stalled at Council level. The EU Transport Commissioner, Vice President Siim Kallas, wants to have the Airports Package adopted in full, and there has been no move by the European Commission to disaggregate the three component parts of the Package, so the three draft Regulations in their current state look set to stagnate until the Greek Presidency takes over in January 2014.

The Greek Presidency has not yet said whether it is going to prioritise the Airports Package, but if it does, it will face political difficulties in pushing the proposed new groundhandling regulations through. It seems likely that it will not prioritise this package of regulations until after the European Parliament elections have taken place in May next year.

Author: Paul Phillips (Partner, Head of aviation litigation and regulation with Stephenson Harwood) / Publisher: SCMO