A communication to the Member States concerning the effects of the hostilities in the Gulfon Community airlines was adopted by the Commission in Strasbourg on 20 February. The communication, which has been sent to transport ministers, sets out the measures to be taken by the Commission and recommends other measures to the Member States to enable airlines to adjust their operations in response to the effects of the hostilities without setting back the liberalization and harmonization policies pursued with a view to completion of the single market. These measures are temporary measures, directly linked to the effects of the Gulf conflict. After a meeting with representatives of scheduled, charter and regional airlines called by Mr Karel van Miert, the Member of the Commission with special responsibility for transport, Sir Leon Brittain, Vice-President with special responsibility for competition, and Mr Van Miert assessed the direct effects of the conflict on airline companies and announced possible solutions to help them adjust their operations to present circumstances. The conflict is adversely affecting all companies and has led to a slump in demand (down 25% for scheduled carriers, 10% to 20% for regional carriers in recent weeks and down 50% in the case of reservations for charter flights this summer) and a big increase in some costs (fuel, insurance, security). This situation has forced companies to adjust (cuts in the number of flights, crisis management, staff lay-offs). Against this background the Commission agrees that some temporary measures are needed to mitigate the effects of the crisis on a sector that is vital to the Community economy. These measures encompass both the Commission's administrative powers under the transport and competition policies and initiatives that fall within the purview of the Member States, for which the Commission makes recommendations. --------------- (*) COM(91) 59 These special measures, which in no way call into question Community civil aviation policy and the current programme of opening up Community markets, expire on 31 May. If on this date the Commission was asked by the airlines to renew the measures, it would examine the grounds of the request. Commission initiatives The Commission's powers in the air transport sector derive from the articles of the Treaty concerning transport (Articles 74 to 84) and competition rules (Articles 85 to 94). In this context it proposes the following measures: - tariffs: costs and earnings trends resulting from the crisis will be taken into account in the examination of tariff changes provided for in Regulation No 2342/90; - state aids: sympathetic consideration will be given to state aids aimed at compensating for cost increases directly linked to the conflict (insurance, security) and staggering the collection of high charges (air traffic control); - competition: possibility of authorizing joint reduced capacity agreements, joint services and retention of slots (freed because of the crisis) by the carriers owning them, even though not fully used. The Commission does not intend to give the airlines carte blanche. It will examine notifications and requests submitted to it on a case-by-case basis and will try to exercise its powers with the necessary flexibility in order to deal with the direct effects of the Gulf hostilities, while at the same time avoiding disruption of competition that would be prejudicial to companies and users. It goes without saying that the measures adopted must apply without discrimination to all the carriers concerned. Recommendations to the Member States The Commission believes that the Member Sates could usefully take complementary steps by: - speeding up tariff examination procedures; - applying more flexible rules for non-scheduled services (e.g. freight, transport of passengers travelling under different arrangements, such as different categories of charter trip); - applying a VAT rate of no more than 9% on internal flights (upper end of the range proposed by the Commission to the Council) - the Member States currently apply rates of between 0% and 19%; - adopting the Commission's proposals on anti-competitive practices assoon as possible.