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21 November 2017

Results of AACO 50th AGM

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Fair Competition

A number of Arab airlines have become globally competitive which is helping in expanding the economic benefits of air transport, creating more jobs, and contributing massively in the national and regional sustainable economic development. This global expansion is providing the customers choices and options for travel which did not exist before. However, the competitiveness of those airlines is sometimes being challenged by protectionism in some parts of the world.

New EU Regulation 712/2019 Repealing EU Regulation 868/2004

A. Early Consultations

As one of the major pillars that constituted the updated EU external aviation policy which was published in September 2012 and adopted by the EU Council and Parliament, the European Commission issued (in October 2013) a consultation paper preparing for a possible proposal to “better protect EU carriers against unfair practices from non-EU air carriers” through revising or replacing regulation 868/2004.
As a response to the consultation, AACO submitted a position paper to the European Commission in January 2014 after work conducted at the level of AACO’s Aeropolitical Watch Group. In AACO’s position paper, the following was highlighted:
  • The content and nature of the questions and the suggested answers/options assume that there's injury caused to EU carriers as a result of unfair practices, without any proof of such injury or unfair practices.
    Questions seem to be inclined towards securing the interest of EU carriers.
  • The consultation could be envisioned by some EU carriers as a tool to try and secure unnecessary protectionist treatment via regulation 868/2004.
  • Any new regulation should not intend to introduce restrictions on development of air services between the EU and the world at large.
  • Any new legislation should include definitions that are fair and balanced, and in line with international conventions and standards.
  • Any changes to the regulation need to be studied extensively so as to avoid undermining the sovereignty of a third country hence being deemed extraterritorial under international law.
  • Any investigation under the regulation should be supported by evidence and dealing with complaints should follow legal norms.
  • Any fair competition clause proposed by the Commission needs to be mutually agreed with the partner country and should not be imposed.
  • AACO also expressed concern that the Commission is considering widening the scope of Regulation 868 to cover a wider range of alleged unfair practices e.g. levels of airport charges.

To view the official response of AACO to the EC Consultation on the Revision of Reg. 868/2004, please click here.

 

B. EC Proposal for a Regulation on safeguarding competition in air transport, repealing Regulation (EC) No 868/2004

In June 2017, the European Commission published a proposal repealing EU regulation 868/2004 on safeguarding competition in air transport in relations with non-EU countries. 

To view the proposal, please click here.

AACO, under the umbrella of the Aeropolitical Watch Group, formulated observations on the proposal and communicated those observations with the European Commission and the European Parliament. 
 

C. New EU Regulation 712/2019

REGULATION (EU) 2019/712 of 17 April 2019 on safeguarding competition in air transport, and repealing Regulation (EC) No 868/2004 was published in the Official Journal of the European Union and it entered into force on 30 May 2019.

 

D. Advocacy Campaign

AACO embarked on an advocacy campaign since the start of the earlier consultations in 2012 and till the adoption of the final text of the new regulation. The campaign, conducted under the umbrella of the Aeropolitical Watch Group, with the directives of AACO's Executive Committee and the support of AACO's Annual General Meetings, has had a positive result in limiting the exposure to potential disputes as a result of future implementation of the new 712/2019 EU regulation. The new regulation, although not ideal, has introduced safeguards as to the misuse of the regulation by EU entities. The advocacy campaign also involved relevant stakeholders in the region such as the League of Arab States, the Arab Parliament, the Arab Civil Aviation Organization, and Arab Civil Aviation Authorities.
The safeguards referred to above include the following:

  • More certainty and clarity in evidence is required before initiating an investigation by the European Commission regarding practices of third country entities that allegedly distort competition in air transport and bring injury or threat of injury to EU carriers.
  • Dispute settlement procedures in the air services agreements were given higher weight in a way that an EU state can require to suspend an investigation and trigger the dispute settlement procedures instead. (certain conditions apply)
  • Measures adopted under the scope of the regulation should not violate air services agreements between EU member states and non-EU states.
  • Protecting consumers’ interest and maintaining a high level of connectivity for passengers were given priority when deciding whether to apply redressive measures.
  • Economic studies would be conducted as to whether redressive measures would hurt connectivity and consumers’ interest where all stakeholders could give input to that study.
  • Third countries can now object to having investigations conducted in their territory. (although that’s a given under international law, however it is stated clearly now in the regulation)

 

Work at ICAO Related to Competition Issues in Air Transport

ICAO 39th Assembly that was held in 2016 urged Member States to:
  1. take into consideration that fair competition is an important general principle in the operation of international air transport services;
  2. develop competition laws and policies that apply to air transport, taking into account national sovereignty and to consider ICAO guidance on competition;
  3. encourage cooperation among regional and/or national competition authorities when dealing with matters relating to international air transport, including in the context of approval of alliances and mergers;
  4. incorporate the basic principles of fair and equal opportunity to compete, non-discrimination, transparency, harmonization, compatibility and cooperation set out in the Convention and embodied in ICAO’s policies and guidance in national legislation, rules and regulations, and in air services agreements;

and requested the Council to:

  1. develop tools such as an exchange forum to enhance cooperation, dialogue and exchange of information on fair competition between States with a view to promoting compatible regulatory approaches towards international air transport; and
  2. continue to monitor developments in the area of competition in international air transport and update, as necessary, its policies and guidance on fair competition.

 

Last updated in June 2019

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