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European Commission

[Check Against Delivery]

Siim Kallas

Vice President of the European Commission

EU-ASEAN aviation: challenges, cooperation and the way ahead

EU-ASEAN Aviation Summit

Singapore, 11 February 2014

Ministers, Excellences, Ladies and Gentlemen

Introduction

It is a real pleasure to be here in Singapore today on my second visit as EU Transport Commissioner. I say this not only because I know what the weather is like back home in Brussels.

This time is a double pleasure, because I can not only catch up with all our transport friends in Singapore, but also because it is the occasion of this very important EU-ASEAN Aviation Summit which I have looked very much forward to. I would therefore like to start by warmly thanking everyone in ASEAN for co-organising the summit with us and Singapore for kindly having accepted to host it here in this wonderful city and vibrant gateway to Asia. I am very proud that we have managed to attract so many aviation leaders from governments and executives from the air transport industry, both from Europe and ASEAN.

The weather is not the only reason why we envy you. The economic growth and aviation development in this dynamic region are other good reasons.

Half of the world's traffic growth over the next 20 years will be to, from, or within the Asia-Pacific region. By 2030, it will be world leader in air traffic, with a market share of 38%. ASEAN will be at the very centre of this exciting development. It will contribute to this growth and also be able take advantage of it.

But we are not just going to look on in envy. We are also here to engage with you, to share experiences and ideas, and to learn from you.

As the two major regional integration initiatives in the world, ASEAN and the EU are natural partners with a long history of strong commercial and cultural ties.

The single EU aviation market

Let me a say a word about the European aviation situation.

The EU has a large, very competitive and strong home market as a basis for engaging with our external partners. Over the past 25 years, we have completely transformed what used to be fragmented and protected national markets into the world’s largest liberalised and integrated regional aviation market. It now encompasses 28 EU Member States, with a total population of more than 500 million.

Who has benefitted from this seismic change? Answer: the consumer and that’s the whole point. Europe’s consumers and economy have reaped remarkable benefits from the creation of the single EU aviation market. Passengers have more choice. Market behaviour, travel opportunities and customer expectations for intra-EU flights have changed dramatically.

Airlines also have a lot more freedom to operate. Low-cost carriers have contributed considerably to the change, as they have here in Southeast Asia.

We have also liberalised ownership and control of our airlines. Based on EU-wide licensing rules we have moved away from the concept of national carriers to one of EU carriers. The concept of EU designation is now widely accepted around the world, including – I am pleased to say – by our ASEAN partners. I am aware that the ASEAN member states are also discussing the question of liberalising restrictions on ownership and control of airlines which are, in my view, outdated and harmful. They are also exploring a possible ASEAN Community Carrier concept. This makes a lot of sense – especially if it is underpinned by a common safety framework within ASEAN. If ASEAN moves forward on this, it will add to our similarities.

I believe that together, ASEAN and the EU could become a critical mass that could influence the global debate and efforts aimed at modernising ownership and control requirements in this most global of all industries. And as such, it is high time we took action to remove these artificial restrictions.

We are following with great interest ASEAN's discussions and progress towards a single regional aviation market by 2015. And it goes without saying that we are ready to share with you our experiences in integrating and liberalising a regional aviation market. I am pleased that the EU is able to support ASEAN in the creation of the ASEAN single aviation market through the "ASEAN Air Transport Integration Project".

Integrating and liberalising regional markets can generate significant economic benefits, both for consumers and overall economies. Airlines, airports and other service providers also get many new business opportunities.

Europe’s experience has shown that creating a single aviation market is much more than just market liberalisation and "open skies" – because a truly sustainable regional or global aviation industry cannot be based on "open skies" alone. We have learned that without gradual regulatory convergence and without common rules, certainly in Europe’s case, liberalisation would not have worked.

The regulatory environment for civil aviation has traditionally been based on national sovereignty. But the challenges facing aviation today cannot be addressed solely within national boundaries. They require cooperation and integration within regions as well as between regions.

We are also working hard in many other areas, such as integrating our fragmented national air spaces and air traffic control systems. We are redesigning Europe’s airspace architecture and developing a more functional, cost-efficient and better performing Single European Sky. This will help us to fight congestion, modernise our ATM framework and reduce costs, which will benefit airlines and, ultimately, consumers.

In Europe, the process of integration has also led us to pool resources and develop common programmes, institutions and agencies such as the European Aviation Safety Agency (EASA) as the single European safety regulator; the SESAR Joint Undertaking which is the Single European Sky's technology programme; and EUROCONTROL which supports the day-to-day air traffic management in Europe, provides centralised services, acts as the Network Manager for the implementation of the Single European Sky and also coordinates response to crisis situations in Europe.

So I think it is fair to say that today Europe has a very open and robust aviation market, with strong institutions working together to make it stronger.

At the same time, we cannot deny that European aviation is going through challenging times. The global economic recession hit Europe harder than other world regions. This had a very negative impact on the profitability of many of our airlines and we have seen some bankruptcies. We are now seeing signs of improvement - but recovery will still take time. We are also facing difficult challenges in implementing the Single European Sky and there is a lack of capacity at a number of increasingly congested key hub airports.

But Europe has also much to offer. It remains a leader in aircraft and engine manufacturing with companies like Airbus and Rolls Royce as well as in developing ATM solutions for the future through our SESAR programme.

The EU external aviation policy

The success of the single market has made the EU look outwards, bolstered by the need to survive, compete and flourish in a tough global environment. As for the single EU market, we consider open markets to be the best basis for developing our international aviation relations. It is becoming ever more important that competition is not only open, but also fair and transparent. This is especially true in such a global market as aviation, which is becoming increasingly liberalised and globalised. It is an important principle and goal in the EU’s new external aviation policy and is something for which we are keen to see ICAO support. But it is also something we pursue bilaterally, for example in a dialogue we have launched last year with countries in the Gulf.

Over the last 10 years, we have negotiated agreements with several of our neighbours to the East and to the South to create a wider Common Aviation Area largely based on EU aviation regulations. The EU has also concluded very ambitious air transport agreements with the US and Canada. These go beyond the standard template of air services agreements and cover all issues affecting air services so as to establish fair and equal conditions of competition.

We hope to finalise an agreement with Brazil before the end of this month and the Commission will soon propose EU-level negotiations with Russia.

Ladies and gentlemen – let me now ask you what could be an essential missing link? I put it to you that it could be aviation relations between ASEAN and the EU.

EU-ASEAN aviation relations

Air transport connectivity is essential for our overall relations, which are already strong between this region and the EU’s Member States. In terms of air transport, EU-ASEAN traffic is already significant, both for passenger and cargo services. In 2012, more than 10 million passengers travelled on direct non-stop flights between the EU and ASEAN. Passenger traffic between the EU and ASEAN is expected to increase by around 5% per year over the next 20 years. However, a very significant and growing part of the incremental market growth between the EU and ASEAN is being diverted through hubs in other regions.

I believe, therefore, that we should work together to remove obstacles between the EU and ASEAN so that our carriers can enjoy the best possible conditions to compete and grow in this market. I believe we should consider the prospect of a comprehensive air transport agreement between ASEAN and the EU – between two major blocs that each have an integrated single aviation market, with a combined population of more than 1.1 billion. I am pleased that the ASEAN Transport Ministers have welcomed this idea. So I intend to propose to the European Commission that we seek a mandate from the EU Council of Transport Ministers to start negotiations between the EU and ASEAN on a comprehensive air services agreement.

I believe it is logical for such important groups of States to work closely together. There is a wide scope for cooperation between Europe and ASEAN in civil aviation and significant potential economic benefits for both sides from creating a common aviation market between our two regions. If Europe works together with ASEAN to the fullest extent, we can extend the proven benefits of a single market to a much larger inter-regional one.

I hope that this Aviation Summit will help explore these potential benefits, generate new momentum for enhanced cooperation in a whole host of areas from air traffic management, airports and aeronautical manufacturing to safety to security, including cargo. Together we can - and must - make a strong and convincing case for moving towards a comprehensive agreement for a common EU-ASEAN aviation market.

I hope that this Summit will be the starting point for raising our aviation relations to the next level.

I look forward to the presentations and discussions over the next two days and I wish you all an interesting summit.

Thank you for your attention.


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