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   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  as
soon as possible.

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