No C 77/26 Official Journal of the European Communities 21. 3. 83 
1.2.4. The proposal can help to bring about a balance between the airlines on the one hand and 
users on the other.' 
Reasons 
See above. 
Voting 
For: 13, Against: 60, Abstentions: 9. 
Pages 6, 7 and 8 - points 2.1.2, 2.1.4, 2.1.5, 2.1.6, 2.1.7 and 2.1.8 
Delete all the above points and replace them by the following: 
'2.1.2. Having regard to the remarks made under point 2.1.1, the Committee endorses the 
scope of the proposal for a Regulation.' 
Reasons 
So many conditions and objections are listed in the original text that the end result is maintenance of the 
status quo. The text now proposed endorses the Commission's proposal. 
Voting 
For: 3, Against: majority, Abstentions: 0. 
2. The following passage in the Section opinion was replaced in the course of the discussions: 
Page 3, .point 1.1.3 
'As regards the proposed legal basis for the rules applying Articles 85 and 86 to air transport, the 
Section considers that the proposed Regulation should be based solely on Article 84 (2) in view of 
its importance for this sector.' 
Voting 
For: 16, Against: 84, Abstentions: 9. 
Opinion on the proposal for a Council Directive on tariffs for scheduled air transport between 
Member States 
The text referred to the Committee has been published in Official Journal of the European 
Communities No C 78 of 30 March 1982, page 6. 
A. LEGAL BASIS FOR THE OPINION 
On 11 November 1981 the Council referred the abovementioned proposal to the Economic 
and Social Committee in accordance with Article 84 of the Treaty establishing the European 
Economic Community. 
21. 3. 83 Official Journal of the European Communities No C 11 111 
B. OPINION OF THE ECONOMIC AND SOCIAL COMMITTEE 
The Economic and Social Committee prepared its opinion on the above matter at its 
204th plenary session held in Brussels on 26 and 27 January 1983. 
The full text of the opinion is as follows: 
THE ECONOMIC AND SOCIAL COMMITTEE, 
Having regard to the Treaty establishing the European 
Economic Community, and in particular Article 84 (2) 
thereof, 
Having regard to the Council's decision of 11 November 
1981 for an opinion on the aforementioned 
proposal ('), 
Having regard to the legal framework for setting fares 
consisting of national civil aviation laws and regulations, 
bilateral agreements and, particularly, multilateral 
agreements, i.e. the 1967 European Civil Aviation 
Conference (ECAC), 
Having regard to the priority programme for air transport 
approved in June 1978 by the Council of Ministers, in 
which the possibility of applying the rules of competition 
to air transport is examined, 
Having regard to the memorandum published in July 
1979 by the Commission on air transport: 'Contributions 
of the European Communities to the development of air 
transport services' and its opinion adopted on 3/4 July 
1980 on this matter (2), 
Having regard to the Commission's proposal for a 
Council Regulation concerning the authorization of 
scheduled inter-regional air services for the transport of 
passengers, mail and cargo between Member States and 
its opinion of 28/29 October 1981 (3) on this 
proposal, 
Having regard to the report published by the Commission 
in July 1981 concerning scheduled passenger air fares in 
the Community, 
Having regard to the decision taken by its chairman on 
18 November 1981 instructing the Section for Transport 
and Communications to prepare an opinion and a report 
on the matter under Article 22 of the Rules of 
Procedure, 
Having regard to the opinion issued by the Section for 
Transport and Communications at its 147th meeting, 
held on 8 December 1982, 
Having regard to the report of the rapporteur, Mr 
Kenna, 
(') OJ NoC 78, 30. 3. 1982, p. 6. 
(2) OJ No C 230, 8. 9. 1980, p. 30. 
(3) OJ No C 343, 31. 12. 1981, p. 13. Having regard to the discussions on 27 January 1983 
during the 204th plenary session held on 26 and 
27 January 1983, 
HAS ADOPTED THE FOLLOWING OPINION 
with one vote against: 
1.1. The opinions already presented by the 
Committee on air transport topics reflect the Committee's 
interest in the development of air transport as part of the 
common transport policy. 
1.2. The Committee therefore welcomes action by the 
Community which contributes to the expansion of air 
transport, greater efficiency in the industry, and takes 
account of the interest of consumer and of social 
aspects. 
2. General comments 
2.1. The Committee agrees with the main objectives 
of the Commission's proposal as described in the 
explanatory memorandum of the draft Directive, 
namely: 
(a) to introduce a more flexible and speedy fare-fixing 
procedure; 
(b) to establish the principles on which pricing should be 
based; 
(c) to better represent consumer interest; 
(d) to give greater scope for airline initiative; 
(e) to maintain the present interlining facility; 
(f) to incorporate aspects of the present bilateral system 
in a Community framework; 
(g) to avoid disruptive results for airlines and their 
employees. 
2.1.2. The Committee notes that the Commission in 
its objectives is not advocating total freedom for airlines 
to establish tariffs but rather that the Community should 
be involved in setting criteria for tariffs. The Committee 
also notes that governments would continue to have 
control over the approval of tariffs proposed by the 
airlines. 
No C 77/28 Official Journal of the European Communities 21. 3. 83 
2.1.3. While supporting the main objectives of this 
Directive - greater efficiency and flexibility in tariff 
setting procedures - the Committee is not convinced that 
these objectives will be achieved by the provisions of the 
draft Directive in its present form. The definitive form of 
the Directive should therefore, in its opinion, take the 
following factors fully into account. 
2.2. Community intervention 
Community intervention must not result in another layer 
of bureaucracy. Changes in the tariff setting procedures 
should be a clearly identifiable improvement over the 
bilateral system. The changes in the Directive 
recommended below are aimed at achieving this 
objective. 
2.3. Effect on service and fare levels 
The Committee notes that the Commission's Report on 
Air Fares (COM(81) 398) found that European air fares 
in general were not excessive. Notwithstanding this, the 
Committee recommends that if the proposal is to result in 
improvements in efficiency and a more flexible tariff 
system and possibly cheaper fares on certain routes, the 
following points must be noted: 
(a) methods of ascertaining costs as proposed must be 
reviewed. This applies particularly to Article 3; 
(b) the policies of governments covering public service 
obligations, e.g. the retention of loss making services, 
must be taken into account in setting the criteria for 
establishing tariffs; 
(c) the proposed procedures could result in fares below 
economic cost at a time when a majority of airlines 
are losing money. Differences in cost structure 
between airlines and recent failures of airlines system 
should be taken into account; 
(d) if the proposal involves the allocation of all costs by 
individual routes, it would result in higher fares on 
the less dense routes and a reduction in fares on the 
prime routes. This is inconsistent with the objectives 
of the Directive. In addition air links between smaller 
Member States involving some of the weaker routes 
would be at a disadvantage; 
(e) an over-strict application of the criteria for 
establishing costs by individual route should be 
avoided because this could prevent airlines from 
taking commercial initiative on lower fares in certain 
cases. The Committee believes that ways must be found to solve 
these problems if the objectives are to be achieved. 
2.4. Implications for airlines and employees 
2.4.1. The Committee is concerned to ensure that all 
social aspects of air transport are taken into account in 
this Directive. The Committee wishes to see clarification 
of certain aspects of the role of IATA (and governments) 
in setting the tariffs. These aspects must be clarified 
because of the likely effects on airlines and employees. 
2.4.2. The Committee is concerned at the absence 
from Article 3 of social criteria in establishing tariffs. It 
points out that uncontrolled competition increases the 
risk of unemployment in the industry and also works 
against the best interests of the user in the long term. 
2.5. Public service in air transport 
The Committee suggests that greater attention must be 
given to the concept of public service in air transport and 
the extent to which national airlines have public service 
obligations. The Committee recognizes that specific 
subsidies for specific public service obligations might be 
required in certain circumstances. 
2.6. Role of IATA 
The Committee notes with approval that the proposal 
would not entirely eliminate the role of IATA or the rights 
of governments to propose and approve tariffs. The 
Commission acknowledges the role of multilateral tariffs 
coordination (as currently undertaken by the airlines 
through IATA) in interlining and simplification of 
conditions. The Committee agrees with the Commission 
that multilateral tariffs coordination must not be 
excluded. 
2.7. International obligations 
The Committee appreciates that air transport is very 
much an international mode and that most of the 
European airlines have obligations outside the 
Community. In this context, the Committee notes that 
third country airlines, operating Fifth Freedom services 
within the Community, will be brought within the ambit 
of the Directive at the first opportunity (see 
Article 10). 
21. 3. 83 Official Journal of the European Communities No C 77/29 
2.8. Links with the common transport policy 
The Committee recommends that the proposal should be 
examined within the context of European integration and 
the development of the common transport policy. This is 
particularly important as air transport has become a 
significant part of the Community transport system. It is 
also important because of the inter-relationship between 
this proposal and the proposal on the application of the 
rules of competition to air transport. 
2.9. Consultation 
The Committee supports the recommendation that users 
should be consulted, and the call for clear and simple 
tariffs. It also stresses the need to consult representatives 
of workers on matters which would affect employment or 
other social conditions. 
3. Specific comments 
3.1. Article 1 
The Committee considers worth emphasizing that the 
Directive is addressed to governments and not to 
airlines. 
3.2.1. Article 2 (c) and (d) 
The Committee notes that it is intended (under 
Article 10) that fares between Member States offered by 
third country airlines will, in due course, be brought 
within the frame of the Directive. 
3.2.2. Article 2 (g) 
The Committee points out that a regular series of charter 
flights often has the characteristics of scheduled services 
as defined in the Article. It considers that the effects of this 
on the definition of schedules services as currently given 
needs to be examined and the necessary changes 
introduced to remove uncertainty or the possibility of 
confusion. 
3.3. Article 3 
3.3.1. This Article is the most important element in 
the Directive. The effectiveness of the Directive will 
depend on the application of the provisions of this Article. 
The Committee believes that changes in some of the provisions of this Article are necessary if the objectives are 
to be achieved. It suggests that the following points are 
important: 
3.3.2. The term 'an efficient carrier' (subparagraph 
(a)) should be redefined to take account of the 
following: 
— the fact that airlines operate a wide range of services 
within Europe which could affect the cost and revenue 
levels in establishing tariffs. Airlines usually establish 
costs and therefore tariffs on a network of routes and 
not on individual routes. 
In this connection, 
— there is a danger that since the intention may be to 
calculate fares in respect of individual routes only, 
networks covering large areas could be at a 
disadvantage. This possibility must be eliminated (cf. 
paragraph 3.3.3), 
— government-imposed conditions which require 
airlines to operate uneconomic services (or where 
airlines operate such services for commercial reasons) 
must affect how costs are established. Such factors do 
not appear to have been taken into account in the 
definition of the term 'an efficient carrier'. This should 
be rectified, 
— differences in cost structure between airlines and the 
different tasks which they perform, e.g. a mixture of 
short and long routes, should be taken into account in 
establishing the criteria, 
— the use made of the term 'efficient carrier' seems to 
suggest that the costs of one airline (the applicant 
carrier) could be the only criterion in establishing 
costs and tariffs. The Committee suggests that this 
should not be the case. The objective should be a 
balance between the cost structures and relative 
efficiency of a number of airlines operating a network 
of services. Attention is drawn to the report on the 
effect of this sort of provision on air fares (see 
paragraph 5.3.2.2 of the report), 
— reference should be made to the requirements of 
employees as well as users in paragraph (c). 
3.3.3. The Committee notes that 'costs' mentioned in 
Article 3.1 (b) refer to the 'direct operating costs' of the 
carrier on the route in question. This clarification 
removes one of the difficulties which the Committee felt 
made this criterion unrealistic. It recommends that this 
clarification should be incorporated in the Directive. 
3.3.4. The Committee agrees with the objective of an 
adequate return on investment and a reasonable amount 
No C 77/30 Official Journal of the European Communities 21. 3. 83 
of profit which should avoid dumping. At the same time 
there is some uncertainty about how this objective can be 
achieved because of: 
— the fact that air transport is to some extent financed 
from State funds to support uneconomic 
operations; 
— differences in operating costs, including the fact that 
for national reasons higher-cost carriers should 
continue to be viable; 
— the possibility that the absence of a precise definition 
could lead to inefficiencies and perhaps even greater 
State subvention. 
33.5. The Committee also points out that dumping 
by third countries' carriers should be avoided. The 
machinery to achieve this is contained in Article 10. 
3.3.6. The Committee agrees with the intentions 
outlined in Article 3.1, subparagraphs (c) and (d) as 
already indicated above. 
3.3.7. Article 3 (paragraph 2) 
The Committee notes that this paragraph is in conflict 
with the principles outlined in paragraph 1 (b). However, 
it accepts that carriers must be allowed to match the 
tariffs of others. 
3.4. Article 4 
The Committee agrees that airline cooperation is essential 
for interlining and simplification of tariffs. The 
Committee suggests that the Commission should examine 
how airlines in consultation with governments and within 
the framework of the Directive could contribute to the 
coordination of tariffs other than for purposes of 
interlining and simplification. The Committee has 
reservations about the effectiveness of coordination on 
interlining without coordination of point-to-point tariffs. 
This matter should be examined in greater depth and the 
proposed Directive amended accordingly. 
3.5. Article 5 
The Committee notes that under the provisions of this 
Article and Article 11.2 tariffs, once approved, are obligatory and that deliberate deviations should be 
prevented. The Committee agrees that this should be the 
case. 
3.6. Article 6 
3.6.1. The Committee is concerned about the 
implications of one government alone being empowered 
to establish international tariffs as set out in paragraph 4. 
This is not in the interests of consumers, the industry or 
employees because it could be more restrictive than the 
present bilateral system. 
3.6.2. The Committee recommends that in the event 
of a dispute the States concerned should seek to resolve 
their disagreement through any method they choose 
(which could include arbitration). Any time limit set to 
reach agreement should not unduly restrict the State(s) 
concerned in attempting to reach the best solution. 
3.6.3. The Committee suggests that an arbitration 
system more broadly based than on the Commission itself 
should be permitted. In addition it sees some difficulty in 
the Commission collecting relevant information from 
Member States unless there is some degree of obligation 
imposed. 
3.7. Article 8 
The consultation referred to in Article 8.3 should give 
first priority to government views. The Committee 
recommends that the consultation of 'other interested 
parties' should specifically include workers' 
representatives. This consultation should be formalized 
in the framework of a quadripartite technical advisory-
body with representatives of national administrations, 
users, employers and personnel. This body should also 
express its opinion at least once a year on air fares: this 
form of consultation would replace the discussion with 
users alone provided for in Article 7 which should be 
modified in consequence. 
The Committee also feels that the phrase 'as the 
Commission thinks fit' should be deleted. 
3.8. Article 10 (see also comments on Article 1 
above) 
In view of the need to avoid dumping - either from 
Member States' airlines or those from third countries 
which enjoy Fifth Freedom rights within the Community 
- the Committee would endorse the speediest possible 
21. 3. 83 Official Journal of the European Communities No C 77/31 
possible to ensure compliance with the Directive by third 
countries' carriers. However, it is recognized that the 
Community cannot go beyond Article 234 of the Treaty 
as regards legislation on international agreements. 
The Chairman 
of the Economic and Social Committee 
Francois CEYRAC 
APPENDIX 
to the opinion of the Economic and Social Committee 
Rejected amendment 
The following amendment, tabled in accordance with the Rules of Procedures, was rejected by the 
Committee during plenary session discussions. 
Page 9, fourth indent 
The fourth indent should be replaced by the following: 
'With due regard for these factors, the Committee nevertheless considers that a suitable way must be 
found of aligning fares on the costs of an efficient airline. They must not be based on the cost price level 
of an airline operating with high costs. This would not be in the interests of consumers, would lead to a 
lower degree of capacity utilization, and would sooner or later entail a loss of jobs.' 
Reasons 
See above. 
Voting action to align agreements involving third countries on 
the terms of this Directive and to bring third country 
airlines within its scope. The Committee therefore 
suggests that Member States should do everything 
Done at Brussels, 27 January 1983. 
Rejected by a majority vote.