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Three main issues will be dealt with at this Council meeting: - civil aviation - intra-Community road haulage - transport infrastructure 1. Civil aviation Negotiations on a Community policy for civil aviation are expected to dominate this Council meeting. In June 1986 the European Council agreed on the need for a Community system which would provide a more competitive environment for intra-Community air services and accepted the principle of a three-year transitional period. Following this period, further measures would be agreed for the years up to 1992. The Council discussion will concentrate on the arrangements for the first three-year phase. The Commission's first proposals for civil aviation were sent to the Council in 1984 and were then spelled out in more detail in June and July 1986. In October the British Presidency presented its own outline proposals at the informal Council in London. Further discussions have since taken place within Council working groups and in COREPER which have helped to identify the different national positions, while at the same time indicating a willingness to seek agreement. Discussions will concentrate on air fares, capacity sharing, the chance for new companies to have access to air routes and on application of the competition rules. On air fares, one significant issue concerns the definition of costs to be taken into account in determining whether an airline fare is commercially reasonable. Half the Member States can accept a definition relating to the airline's own commercial figures, whereas the other six believe that the costs of competing airlines should be taken into account. There is a multiplicity of views on the conditions under which airlines can fix discount and deep discount fares without needing authorisation from governments. Several governments are resisting proposals which would give airlines the right to fix discount fares on all off-peak services. This issue is fundamental to the whole negotiations. As far as capacity is concerned, there is general agreement in the Council that the share of seats on a particular route could move to 45/55 per cent in the first two years of the new legislation; movement after that time is still a difficult issue. The Presidency has argued for a 40/60 split in the third year, whereas the Irish and Dutch governments argue for abandonment of such seat-sharing agreements. Access to the market takes on special importance to the Irish, who regard it essential for the peripheral regions of the Community to have "fifth freedom" rights, which entitle an airline to make intermediate stops en route to its final destination. Ministers will discuss the possibility of including in the basic regulation the right for airlines to provide flights between first and second category airports. This raises a subsidiary question over the size limit which should be set for the aircraft permitted to provide such services without affecting the capacity-sharing formula. On the group exemptions from the competition rules which would be applied to the aviation sector, the Irish, UK and Netherlands reserve their position to await the outcome of negotiations on tariffs and capacity. The Commission has reserved its own position on several aspects of the compromise ideas now being discussed, but will continue to make a contribution to the search for a satisfactory negotiated solution. 2. Intra-Community road haulage In June the Council of Ministers decided in principle on a 40 per cent annual increase in the number of Community quotas for road transport. With such an annual increase there should be enough Community quotas by the end of 1991 to meet demand from road hauliers and to allow the disappearance of the bilateral quotas which are applied by some Member States and which were declared illegal by the Court of Justice in 1985. The Commission has just presented comprehensive proposals, to be discussed in the forthcoming Council, which would put this 40 per cent annual increase into effect as from 1987, would provide for a safeguard mechanism allowing measures to be taken in the event of market disturbance and would lay down the conditions under which the licences could be granted. As from 1992 all quotas would disappear and licences for carrying loads to other Community countries would be based on qualitative criteria. The safeguard mechanism would continue to exist. 3. Transport infrastructure The Commission believes in the need for a medium-term programme for transport infrastructure. It has been pressing this case for some years and presented detailed proposals to the Council of Ministers in July 1986. It has therefore decided to seek a declaration from Ministers which would support the main lines of the programme before it will propose a regulation to allow 90m ECU from the 1985 budget to be spent on particular projects. There is likely to be some discussion in the Council on the desirability of a Community transport infrastructure fund (the UK, Germany and France are not convinced of the need) and some pressure for committing the funds during the current year.