IP/07/1831

Brussels, 30^th November 2007

Better safety and more price transparency: the EU strengthens the air transport sector for more competition and better quality.

The Commission welcomes the agreement, reached after less than one year between the Council and the European Parliament on the proposal to modernise the Single Market legislation for air transport. The new legislation foresees in particular to impose price transparency, to better control the airlines for more safety and quality for the passengers.

"The liberalisation of air transport is a European success story: citizens enjoy more travel opportunities and lower fares than ever before. Today, we consolidate this success by ensuring fair competition between airlines and strengthening safety control”, said Jacques Barrot, Vice-President of the European Commission responsible for transport. “From now on, passengers will enjoy the benefits of the Single Market and will receive complete information on the exact ticket prices, without any discrimination”, he added.

The liberalisation of air transport within the EU, initiated a decade ago, has been a great success. Air transport in Europe has experienced an unprecedented expansion at affordable fares. The number of airlines has risen, and there has been a general increase in the amount of traffic and competition on routes. Since the full liberalisation in 1997, the number of routes has increased by more than 60%: more cities are covered, including in remote regions. The emergence of new competitors made prices go down dramatically on many routes: today it is generally cheaper to travel by air, and more and more European citizens can afford it. These developments contributed widely to economic growth and the creation of jobs directly and indirectly.

This huge success must be consolidated. The new regulation improves substantially the current legislation.

1. Travellers will be better informed and able to compare the prices: from now on the price published will have to include all the taxes, fees, surcharges and other fees. This measure completes the directive on the unfair commercial practices^[1], which requires that information on the prices have to comprise the taxes as from December 2007. Passengers will benefit from the precise information on the actual price. This will allow comparing prices effectively and avoiding misleading advertisement. Moreover, any price discrimination between passengers solely on the basis of their place of residence within the European Union or their nationality will be prohibited.
2. The national authorities will control more the airlines in order to guarantee better quality of service, increased safety and to prevent bankruptcies. The regulation ensures stricter and harmonised application of the rules everywhere in the EU: operating licences of airlines shall be monitored with the same level of severity in all Member States. It streamlines the financial conditions that all EU airlines have to fulfil and the monitoring of these by Member States. It clarifies the criteria for the granting and validity of the licence to operate in the EU. The proposal eases the leasing of aircraft registered in the EU but introduces stricter requirements for the leasing of third country aircraft – especially when leased with crew - to ensure safety standards.
3. The rules applicable to public service obligations have been revised to diminish red tape. The new rules will avoid excessive recourse by Member States to public service obligations for closing certain markets from competition. The Commission may require an economic report explaining the context of the PSO and analysing its adequacy. The needs of the Outermost Regions (RUP) are taken into account by allowing, if necessary, a concession extended to 5 years.
4. The Regulation envisages more effective measures for traffic distribution between airports serving the same city or conurbation. Under the control of the Commission, traffic distribution rules will have to fulfil requirements such as non-discrimination. Airports will have to set up effective transport infrastructures for the passengers' benefit.
5. The Regulation will abolish the remaining restrictions in bilateral air service agreements between Member States with respect to intra-Community air services and code-sharing.

^[1] Directive 2005/29/EC of the European Parliament and of the Council, of 11 May 2005, relating to the unfair commercial practices of the companies with respect to the consumers in the internal market and amending Council Directive 84/450/EEC and Directives 97/7/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) n° 2006/2004 of the European Parliament and of the Council ("directive on the unfair commercial practices").