COMMISSION OF THE EUROPEAN COMMUNITIES 
C0M(91) 275 final 
Brussels, 18 September 1991 
w COMPLETION OF THE CIVIL AVIATION POLICY IN THE EUROPEAN COMMUNITIES 
TOWARDS SINGLE MARKET CONDITIONS 
Proposal for a 
COUNCIL REGULATION (EEC) 
on licensing of air carriers 
Proposal for a 
COUNCIL REGULATION (EEC) 
on access for air carriers to intra-Community air routes 
Hsgjms.-SKSs; Proposal for a 
COUNCIL REGULATION (EEC) 
on fares and rates for air services 
(presented by the Commission) 
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EXPLANATORY MEMORANDUM 
I. INTRODUCTION 
The second phase of the air transport policy as approved in June 1990 
also made clear the steps which have to be taken before 1 January 1993 
in respect of further liberalisation. However, it must be recognised 
that liberalisation is only one element in the common air transport 
policy and it might therefore be useful shortly to situate 
liberalisation in the overall picture. 
II. OVERALL POLICY 
Objectives 
The ability of the air transport system to bring people from all parts 
of the Community and abroad quickly together is an indispensable 
element for the integration process within the Community and for the 
development of closer relations between the Community and other parts 
of the worId. 
Over longer distances air transport has to carry out an essential task 
for fulfilling consumer demand and for the economic and social 
integration process in the Community. 
It may serve to establish closer and quicker links not only between 
central regions but also between peripheral and central parts of the 
Community. The latter point is of particular importance because air 
links may help - in conjunction with improved telecommunications 
systems - to overcome disadvantages for peripheral regions and 
facilitate, thereby, regional economic development, in particular, in 
the field of services including tourism. The main importance of air 
transport in the Community relates to the transport of people but air 
cargo should not be forgotten. 
A more specific objective in this context is the need to establish air 
links serving less developed peripheral regions with low traffic demand 
where the actual and potential traffic volume on these routes would not 
Justify a commercial service. In such instances the air transport 
system may therefore have to fulfil occasional public service 
requirements. 
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The importance of regular air links between the major centres of the 
Community and all other parts of the world is self-explanatory in view 
of the close interrelationship between the existence of direct air 
links and economic cooperation. An extensive external network is to be 
considered as a prerequisite of developing good economic and other 
relations between the Community and the rest of the world. In this 
context air cargo assumes a much more important role. 
Apart from these basic transport aims, a number of further objectives 
exist and must be considered. 
It is clear that the transport function would suffer dramatically if 
the cost of transport is too high. This might not be critical when 
other modes of transport may serve but for distances over 1000 km air 
transport is of particular importance and fares must be kept reasonably 
low. 
In many areas of the Community tourism is dependent on air transport 
being available at low cost. 
It is also necessary to look at quality of services for passengers 
(safety, reliability, frequency, choice, flexibility). 
Air transport activities depend on sufficient infrastructure being 
available and the provision of such facilities is not without problems 
in particular taking the environmental effects into consideration. 
It is necessary to ensure that air transport is provided on a sound 
financial basis. This is necessary not only to ensure a reliable 
service to the passengers and shippers but also to ensure acceptable 
working conditions. 
It is important that the Community aviation industry is competitive at 
world-wide level in view of the important role air transport and air 
transport-related activities, for example, the aerospace industry play 
in creating highly qualified Jobs, in the development of new 
technologies, also in other sectors and - last but not least - for 
balance of payments considerations. 
As a consequence the common air transport policy must on the one hand 
ensure a financially healthy industry providing a certain economic 
stability and reasonable conditions for employment and on the other 
hand ensure a market structure where air carriers can adapt their 
operations according to the growth and shifts in the market and provide 
sufficient choice of services to the consumer at reasonable prices. 
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Experience has shown that competition is desirable in order to achieve 
these objectives. However, a completely unregulated market may lead to 
abuse, and indeed to anticompetitive behaviour and a certain regulation 
is therefore necessary to guard against such practices and to protect 
consumers. 
However, there should be no need to intervene unless things go wrong. 
At any rate the regulatory framework which is to remain or which will 
be created, should create a situation where unfair advantages to 
individual air carriers will be banned in particular if they would be 
at the expense of safety. 
These objectives 
policy : have led to the development of four main areas of 
A. Liberalisat ion 
B. Harmonisation 
C. Infrastructure 
D. External policy. 
A. LIBERALISATION 
1. Air transport policy 
Four different elements are covered, namely: air fares, market access, 
capacity control and licensing of air carriers. The aim of this policy 
is to ensure the creation of a market structure which will encourage 
competition and provide flexibility in the market so that air carriers 
can pursue their operations on a commercial basis and so that choice 
will be available to the consumer. The policy Implements the Treaty 
principles of freedom to provide services and the right of 
establishment. The present proposals aim to complete the policy in 
this area and further details are presented on page 13 et seq. 
2. Protection against anticompetitive behaviour 
The Commission has adequate means to intervene against anticompetitive 
conduct. Competition regulations are in place and recently 
possibilities have been added to intervene immediately against 
predatory behaviour. At the same time the Commission has been given the 
possibility to exempt co-operation between air carriers which leads to 
a more efficient air transport system to the benefit of users. 
The Commission has also power to control State aids in order to avoid 
distortion of competition. 
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3. Protection against unfair behaviour 
The Commission has already been given a very direct role to control 
unfair behaviour. It has power of decision concerning too high or too 
low fares, discriminatory traffic restrictions at airports, excessive 
protection of new air services, too restrictive public service 
obligations and the freezing of or reduction in capacity growth in the 
case of economic hardship. 
B. HARMONISATION 
The very fact that the liberalisation really will create one air 
transport market within the Community has created the need to ensure 
that norms and standards In a number of areas are harmonised in order 
to ensure a level playing field for competition among EEC air carriers 
irrespective of where in the EEC they are established. 
It has therefore been agreed that harmonisation must take place in a 
great many areas amongst which the most important are the following. 
1. Safety 
For accident Investigation, cooperation and exchange of expertise a 
directive already exists. Improvements are under consideration. 
Common airworthiness requirements (JARs) will soon be approved by the 
CouncI I. 
Common requirements for I icences are under development. 
The same is true for flight-time limitations. 
The need for proposals for the last three subjects has been confirmed 
by the CouncI I. 
2. Fair competition 
A code of conduct for Computer reservation systems (CRS) is in force 
which ensures unbiased competition and to some extent consumer 
protect ion. 
A code of conduct for al locat ion of slots has been proposed with the 
purpose of ensuring transparency, non-discrimination and a certain 
movement in the market. This proposal is also a response to a need 
expressed by the Council. 
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Regular consultation between airports and users has been proposed. 
These rules seek to ensure the best possible use of scarce facilities 
but the proposals also introduce the principle of cost-re Iatedness for 
airport charges. In addition, it is proposed that airports as part 
and parcel of the consultation process must be entitled to participate 
in slot allocation procedures. This whole initiative should be seen as 
a first step towards coming to terms with the capacity problem at 
airports. 
3. Consumer protection 
Denied boarding compensation rules have been adopted. 
A code of conduct for travel agents is under development. 
Common rules for IiabiIity (Warsaw Convention) are being developed. 
4. Env i ronment 
Noise limitations in the form of non-operation rules for aircraft not 
conforming to chapter 2 were adopted already 10 years ago. Non-addition 
rules for aircraft not conforming to chapter 3 are also in force. Non-
operation rules for aircraft not conforming to chapter 3 has recently 
been proposed. The Council is expected to agree quickly. 
Airport environmental rules are under development. 
C. INFRASTRUCTURE 
Serious capacity problems exist in the European aviation system. 
These capacity problems derive both from an unsatisfactory air traffic 
control system and from insufficient runway capacity at important 
economic centers of the Community. Legislation will be necessary in 
both of these areas. 
In fact the Council has itself called for legislation on common 
specifications for ATC equipment. 
The Commission is also studying the situation at all major airports in 
the Community with a view in particular to investigate whether a kind 
of environmental contract could be established which would allow 
capacity increases at airports on condition that certain environmental 
action is taken. The study should be finished by July and immediately 
afterwards preparation of legislative action will be commenced. 
These problems will continue well beyond 1992. 
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D. EXTERNAL RELATIONS 
Community legislation already exists for air fares, capacity control 
and market access and for a great many other areas. These first three 
matters are traditionally the backbone of any bilateral agreement. 
External relations and the discussion of Community competence is 
therefore not only an intellectually amusing question. The fact is 
that an agreement between a Member State and a third country in nearly 
all instances will affect the commercial situation inside the Community 
for air carriers from the other Member States. 
There are thus important reasons for the Community to deal with the 
matter of external competence with urgency. The procedural problems 
are dealt with in a specific proposal COM (90) but action must soon be 
taken in order to avoid squandering Community assets. 
III. PROPOSALS FOR LIBERALISATION 
Three proposals are to be found in the annex namely : 
a. Licensing of air carriers 
b. Market access 
c. Air fares and rates 
In order to establish a clear legal situation these three proposals 
will cover all types of civil aviation. This means for example that 
air cargo has been incorporated in these texts. 
The Council requested in art. 3 of Regulation 2343 that proposals 
should be put forward concerning licensing of air carriers and route 
licensing. A specific proposal has been put forward on licensing of 
air carriers but with regard to route licenses it was felt that it 
would be inappropriate to discriminate between air carriers operating 
into a Member State and air carriers established in the Member State, 
I.e. reverse discrimination should not take place. The proposal on 
route licensing has therefore been incorporated in the proposal on 
market access which ensures that air carriers are treated in the same 
way independently of In which Member State they are licensed. 
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a. Licensing of air carriers 
At present no specific Community rules governing the relationship 
between the competent national authorities and carriers established or 
to be established in the Member States exist. However, the Council 
has, in its decision on the second phase, stipulated that it is 
necessary to base policy in this area on harmonised Community criteria 
to be implemented from 1.7.1992 onwards. 
The Commission's proposals for the second aviation package already 
contained a first set of rules for governing decisions on operating and 
route licensing. The basic aim at that time was adoption of the 
principle that when an applicant company is considered as economically 
and technically fit then it is entitled to be licensed as an air 
carr1er. 
The Council, while recognizing the need for Community action, reached 
the conclusion that common rules concerning the requirements for 
economic and technical fitness must be adopted prior to the 
implementation of specific commitments in this area. 
The Commission always considered the lack of a coherent policy in the 
area of issuing (or confirming) operating licences for air carriers as 
a major outstanding policy question in the area of market access and 
market entry. It has therefore, in close cooperation with experts from 
Member States and interested parties (AEA, ACE, ERA and consumer 
organisations) thoroughly examined this issue. It has, in this context, 
carefully analysed existing systems in Member States and other parts of 
the world (U.S.A.). 
All interested parties and experts agreed that a high degree of safety 
and a sufficient degree of stability of air services have to be 
considered as the main objectives to be achieved. 
The Commission, accordingly, identified five key questions to be 
addressed : 
1. Which are the requirements in relation to ownership and 
location ? 
2. How can reasonable and meaningful economic and financial 
standards be defined? 
3. Is it necessary or useful to establish different requirements 
for different types of air carriers (or operations) ? 
(2) 
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4. Should the market situation in general be taken into account 
when deciding on an application? 
5. Which standards for the assessment of the technical fitness 
should apply? 
The Commission, after having carefully analysed basic options related 
to these questions, arrived at the following conclusions : 
ad 1 : (see Art icle 4) 
Due to basic characteristics of the international aviation 
system, requirements on Community ownership, control and 
location are required. An air carrier must be owned and 
effectively controlled by a majority of Community nationals 
and the majority of the board must consist of such 
nat ionals. 
It is, however, clear that the ownership limitations may 
hinder a normal business development in the interests of 
Community air carriers. It is, therefore, desirable to 
introduce a possibility to conclude more liberal agreements 
with third countries on a mutually beneficial basis, 
without prejudice to international commitments. 
ad 2 ; (see Art icle 5) 
Financial and economic requirements need to be defined in 
order to fulfil the underlying political objective of 
achieving a sufficient degree of stability of air services 
(i.e. only financially sound carriers shall operate). The 
rules need to be well-balanced in order, on the one hand, 
to implement in all Member States effective and clear-cut 
rules and, on the other hand, to avoid too rigid and too 
bureaucratic standards which would damage the air carriers 
possibilities in terms of market developments. The 
principle of non-discrimination must be ensured in all 
instances. 
The Commission has opted for a set of simple but clear 
economic and financial standards defining acceptable levels 
below which a licence should not be granted or maintained. 
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They differ between new entrants and already established 
carriers only to the extent necessary for ensuring that new 
entrants start operations on a sound financial and 
econom i ca i bas i s. 
The standards concern financial liquidity, monitoring of 
financial developments, the overall financial structure, 
insurance requirements and duration of the license. 
ad 3 (see Art icle 5) 
ad 4 : The Commission has very carefully examined the need for 
linking operating licences to different types or scopes of 
economic activity (i.e. scheduled, non-scheduled, regional, 
etc.) 
These studies have led the Commission to the conclusion to 
abstain, apart from somewhat less strict rules for carriers 
operating with very small aircraft, from proposing specific 
rules for specific types of air carriers. 
Apart from the more general objective to avoid too complex 
rules this conclusion is based on the need not to establish 
a regulatory segmentation between very often overlapping 
markets and thereby create barriers for air carriers to 
react quickly following rapidly changing business 
opportunities. 
Secondly, however, the Commission feels that the 
requirement of a business plan to be provided by the 
applicant carriers allows in a flex ible way to take into 
consideration the financial potential of a company in 
relation to the scope and type of the envisaged activities 
as well as the economic consequences of changes in the 
pattern of operation. 
Certain Member States and airline organizations feel that 
the impact of a newly licensed air carrier on the market in 
general and on the economics of already established 
carriers needs to be, in one way or another, explicitly 
taken into account when deciding on an individual 
application for an operating licence. 
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The Commission recognizes the potential importance of this 
argument and has, therefore, undertaken a thorough 
examination of ail elements related to this problem. It has 
reached the conclusion that these aspects can to the degree 
necessary be taken into account by requesting the applicant 
carrier to present a business plan. 
In their assessment of these business plans the authorities 
will have a reasonable possibility to evaluate the 
soundness of the underlying assumptions on market 
developments and to identify completely unrealistic plans. 
The Commission, however, does not share the concerns of 
certain parties to provide, apart from checking to a 
reasonable extent the economic feasibility of a business 
plan for a new air carrier, for a specific protection of 
the interests of already established carriers. In view of 
a number of economic barriers to market entry which exist 
anyway such an additional protection would imply the risk 
of creating rigid market structures which, at the end, will 
work against the global competitiveness of the Community's 
air Iine industry. 
Finally, the highly useful role which new operators can 
play for completing the network and for identifying unused 
market opportunities needs to be recognized by an 
appropriate regulatory framework on operating licences. 
ad 5 : (see Art icle 9) 
Technical standards cannot be compromised because of the 
safety objectives underlying the standards. Therefore, a 
license should not be granted or maintained for an air 
carrier (or applicant company) not meeting these standards. 
In the long run technical standards should refer to JAA-
requirements for air operators certificates (AOCs) 
currently under development. Until these rules come into 
effect Member States shall continue to decide on the basis 
of current national requirements. 
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b. Market access 
3rd, 4th and 5th freedom traffic rights have been created by the second 
package between all airports in one Member State to all airports in 
another Member State. The 5th freedom traffic rights are somewhat 
limited at present. From the 1st of January 1993 the Council has agreed 
that 5th freedom will be fully implemented and cabotage will be 
introduced. 
This opening of market access possibilities will naturally open the way 
for more competition. On the one hand this is positive but on the other 
hand it may make life more difficult for new entrants and it does not 
ensure the establishment of air services from some regions where they 
should exist for regional policy reasons. 
In order to address these problems a possibility already exists to 
protect an airline on a new route for up to 2 years and to introduce a 
public service obligation for a limited period. These provisions should 
be retained and, where necessary, developed further. 
5th freedom traffic rights are still limited but the restrictions 
should in accordance with Council commitments be removed for both 
passenger flights and air cargo. 
In two other main areas the Commission has had to analyse basic policy 
options and alternatives when preparing its proposals on market access. 
In addition to the rules concerning air carrier licences (see above) 
the Council has also asked the Commission to put forward proposals for 
rules on route Iicences. It would seem clear that any air carrier which 
has been licensed by a Member State must have an equal opportunity to 
be given a route licence and it would be illogical that multiple 
designation thresholds (if they are retained) would only be used for 
incoming air carriers and not also with respect to the country of 
or ig in as we I I. 
It may be argued, however, that air carriers operating on routes not 
covered by public service requirements or rules on the protection of 
new services operated with small aircraft need to some extent to be 
protected against new entrants. 
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Such an approach would have, if any, some kind of Justification only 
for "not so busy"-routes which would not Justify the operation by more 
than 2 or 3 carriers. The Commission has carefully and without any 
pre-concei ved ideas examined the need for some kind of a non­
discriminatory selection procedure to be applied for thinner routes not 
falling within the scope of the public service requirements. It has 
reached the conclusion that further safeguards in addition to already 
protected areas would - at the end - most probably turn out to be 
counter-productive because it would stifle the normal competitive 
effects of market forces. This conclusion is based on the following 
considerations : 
new legal barriers to market access, in addition to existing 
factual barriers resulting from infrastructure bottlenecks and 
grandfather rights, could largely undermine the room for 
creating and maintaining the necessary degree of competition 
which is essential for efficiency improvements in the airline 
industry; 
additional selection procedures aiming for transparent and non­
discriminatory decisions on the basis of objective criteria 
cannot be established without creating new administrative 
machinery. The direct and indirect costs related to such 
bureaucratic procedures outweigh possible benefits which would 
materialize only in very specific situations. 
Instead of proposing separate rules to protect these services the 
Commission has decided to propose a redefinition of the rules related 
to public services requirements. It is proposed to use the threshold 
on traffic volume (i.e. 30.000 seats per year) only for the possibility 
of limiting access to one carrier and for the temporary protection for 
new services operated with smaller aircraft. It shall not apply, 
however, for the possibility to define more permanent public service 
requirements. 
Cabotage 
The second basic question refers to the introduction of cabotage 
rights. The Council of Transport Ministers already confirmed that 
these rights belong to the internal market concept. This would 
basically mean that it is necessary to introduce these rights to the 
full extent from 1 January 1993. 
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The Commission has carefully examined whether there is a need to 
introduce these rights gradually in order to prevent market 
disruptions. This examination has led to the conclusion that the 
exercise of cabotage rights would only be of limited economic interest 
for air carriers, in particular, If the operation would be unrelated to 
the air carrier's normal network i.e. "stand-aloneM-cabotage. 
The start up of a cabotage service will need a very careful preparation 
and there would clearly, at least for a time, exist a handicap in the 
competition with a "native" air carrier. 
Under these circumstances the Commission does not see a case to 
establish specific rules delaying the full achievement of the internal 
market in this specific area. 
The Commission also feels that specific situations can be dealt with 
by having recourse to public service requirements. 
Therefore, the Commission has reached the conclusion, that it would not 
make much sense to establish transitional rules to be applied to the 
availibility of these rights. 
c. Air Fares and rates 
Considerable pricing freedom has already been created in particular for 
non-fully flexible fares in the second package approved in 1990<1). 
However, it has been agreed by the Council of Ministers that from the 
1st of January 1993 the Community system will be a fully developed 
system of double disapproval for all air fares. 
However, the normal situation in the internal market Is for the 
Undertakings to be able to conduct their business in a normal 
commercial environment. This means that where competition exists 
Undertakings should be able to set their pricing policy freely. This 
has so far not been the case in civil aviation except for certain 
promotional fares and It Is not the case with the double disapproval 
system. The Commission therefore proposes that when normal competitive 
conditions have been established in civil aviation then pricing must be 
free. The present set of proposals needs a certain time to take effect 
but after three years this should be the case except where special 
conditions exist such as congestion and it is therefore proposed that 
free pricing should be introduced in 1996 for scheduled air services. 
The present situation of free pricing for non scheduled air services 
and air cargo should not be modified. 
(1) Council Regulation No. 2342/90 of 24 July 1990; O.J. L 217 of 
11.8.1990 
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The double disapproval system already exists in the second package and 
has been overtaken with only a few technical changes. 
However, one question needs to be faced. 
It concerns the existing system of safeguards which calls upon the 
Commission to examine fares if requested by a Member State. This can be 
quite cumbersome if not limited in one way or another. 
A move to the double disapproval system where today automatic approval 
already exists may also be questioned. 
The issue has been discussed with national experts and interested 
parties (airline industry, consumers) and to a great extent agreement 
was reached that : 
a) The principle of cost relatedness should be maintained. 
b) Safeguards should be maintained but limited to situations where 
consumer interests would be in particular at risk i.e. the most 
used fully flexible fares on routes where competition is limited. 
On the basis of these principles the Commission proposes to redefine 
slightly the procedures to be applied in the case of a dispute whether 
air fares need to be disapproved or not (Article 7). It is proposed to 
restrict the possibility of submitting an air fare for examination by 
the Commission to fully flexible fares being charged on routes on 
which, for one reason or another, competition is limited. This will 
restrict the use of safeguards to be added to a double-disapproval 
system to situations where this system would not work well because of 
insufficient competition. 
It is also proposed that an air fare which has been submitted for 
examination by the Commission shall not be suspended but will remain 
in force during the examination. This approach will avoid building a 
new complex fare examination machinery at Community level and 
undermining the philosophy of the double-disapproval system by moving 
back to an over-regulated approach. 
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The question remains as to whether the application of a double 
disapproval system would be a setback in areas where today automatic 
approval is given. The Commission, while recognizing that such a change 
cou id be seen as moving backwards to re-regulating liberalized areas 
has carefully studied, in close cooperation with experts from Member 
States, options aimed at avoiding useless re-regulatory developments. 
It has reached the conclusion that by setting aside certain fare-types 
from the use of complex safeguard procedures combined with an 
automatic approval regime for fares charged in conjunction with 
Inclusive Tour arrangements (IT fares) or group travels (Article 4) 
the risk of re-regulating by moving towards double-disapproval as the 
general principle would be avoided. 
d. A specific Issue - Non-scheduled air services 
The massive presence of air services carried out by non-scheduled air 
carriers Is one of the most specific features of the intra-European 
transport market. In terms of passenger-km's non-scheduled airlines are 
carrying out 65 X of all transportation by air within the Community. 
Community legislation has until now only dealt with scheduled air 
transport ai 1 not non-scheduled (except for air cargo). The scheduled 
airlines consequently have been complaining that they are subject to an 
increasing number of Community rules while the non-scheduled air 
carriers are not. 
On the other hand market access liberalisation for scheduled air 
services is now to some extent more advanced than the possibilities 
open to non-scheduled air carriers so these air carriers are also 
beginning to complain. In addition, liberal rules on fares allow 
scheduled air carriers to compete directly with non-scheduled in the 
leisure travel market segment. At the same time, non-scheduled air 
carriers are increasingly competing directly with the scheduled air 
carriers by selling seat only without any accommodation. 
The non-scheduled air services are very important for the tourism 
industry in many regions of the Community. A policy which would 
endanger these services would therefore be unwise . In this context it 
is important to recall the experience in the USA and on the North 
Atlantic when competition opened up. The result was a drastic 
reduction in the market share of non-scheduled services. The reason 
was to a large extent that air carriers could only offer certain types 
of air transport on non-scheduled air services while everything could 
be offered on the scheduled air services. There was also a certain 
preference among the travelling public to choose a scheduled air 
service, when it was available at the same price, over a non-scheduled. 
3) 
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In the Community the opportunities of scheduled air services have been 
substantially increased already and the present package will further 
increase these possibilities. The situation is therefore that 
scheduled air services can offer virtually anything in the market while 
non-scheduled air services are only allowed officially to offer certain 
products. It is difficult to say whether it is this difference in 
market opportunities or whether it is the effect of a certain recession 
but the fact is that the charter market has been suffering. There is 
basically it seems a danger that the non-scheduled air services are 
being given the same handicap as in the USA and on the North Atlantic 
market. 
It has been suggested to the Commission that the best policy would be 
to protect the non-scheduled air services. This is, however, not a 
satisfactory long term solution. 
One possible solution would be a specific set of Community rules for 
non-scheduled operations. These could parallel the market access rules 
for scheduled operations and stipulate, subject to competition rules, 
free pricing, However, if the rules should differ from those for the 
scheduled operations, the danger would exist for a number of difficult 
discussions and complaints. The risk through regulation of artificially 
creating new market fragmentation meeting no consumer needs at all 
should not be underestimated. 
Therefore, a straightforward approach would be to propose that non-
scheduled air carriers should meet exactly the same obligations as a 
scheduled air carrier in areas where they compete directly. But then, 
they should also have the same opportunities in terms of having access 
to routes. 
The Commission has received mixed signals from Member States and 
airline organizations on this issue. It is obvious that opinions on how 
to deal with this problem differ even inside the relevant 
organizations. Under these circumstances the Commission's conclusions 
are mainly based on its own internal assessment of this problem. 
The Commission has carefully analysed and compared the pros and cons of 
these two basic alternative options. This examination was carried out 
under the assumption that convincing and Important reasons must be 
given if different rules for basically the same product be 
established. 
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The Commission is of the opinion that a strong case for establishing 
two sets of rules does not exist. It has therefore decided to propose 
to integrate the different air transport modes. This means in 
particular to attach basically the same rules on fares (with specific 
provisions for IT-fares), market access and operating licences to all 
air carriers. 
This policy will allow air carriers to decide on commercial grounds 
whether a market should be served by non-scheduled or scheduled air 
services. It would also allow an air carrier to develop a market with 
non-scheduled services and then gradually Introduce scheduled air 
services. This policy approach also fits logically with the new market 
opening represented by the proposal on licensing of air carriers. 
The inclusion of charter services has been achieved by removing 
reference to scheduled air services in Regulations Nos 2342 and 2343/90 
and only refer to air services. This has necessitated an article on 
prices for charter products as well as a definition in Regulation No. 
2342/90. It would mean that market access provisions will apply to air 
carriers whether they operate in scheduled or charter mode. They would 
be able to offer "seat only" If they can comply with the Community 
rules on air fares and on allocation of route rights. However, "seat 
only" might also be allowed in general on routes open for multiple 
désignât ion. 
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Proposal for a 
COUNCIL REGULATION (EEC) 
on licensing of air carriers 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Economic 
Community, and in particular Article 84(2) thereof, 
Having regard to the proposal from the Commission^1), 
Having regard to the opinion of the European Par Iiament^2), 
Having regard to the opinion of the Economic and Social Committee^3^, 
Whereas it is important to establish an air transport policy for the 
internal market over a period expiring on 31 December 1992 as provided 
for in Article 8a of the Treaty; 
Whereas the internal market shall comprise an area without internal 
frontiers in which the free movement of goods, persons, services and 
capital is ensured; 
Whereas the application in the air transport sector of the principle of 
the freedom to provide services needs to take into account the specific 
characteristics of the sector; 
(1) 
(2) 
(3) 
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Whereas in Regulation (EEC) No 2343/90(1) the Council decided to adopt 
for implementation not later than 1 July 1992 rules governing the 
requirements in relation to the licensing of air carriers; 
Whereas it is important to define non-discriminatory requirements in 
relation to the location and the control of the undertaking applying for 
a licence; whereas it is also necessary to take into account the need 
to provide flexibility in relation to third countries; 
Whereas in order to ensure stability of service it is necessary to 
ensure that an air carrier is at all times operating at sound economical 
and high safety levels; 
Whereas for consumer protection reasons it is important to ensure that 
air carriers are sufficiently insured in respect of liability risks; 
Whereas within the internal market air carriers should be able to lease 
aircraft registered anywhere in the Community; 
Whereas a sound and effective management structure, where individuals 
appointed to senior posts have suitable experience and proven competency 
in aviation, is essential for ensuring the safe conduct of air 
operations; 
Whereas procedures for the granting of licences to air carriers should 
be transparent and non-discriminatory, 
(1) OJ No L 217, 11.8.1990, p.8 
- 21 -
HAS ADOPTED THIS REGULATION 
Article 1 
1. This Regulation concerns the economic and technical competency 
requirements for the grant and retention of operational licences 
and air operators' certificates. 
2. An air carrier must at all times operate at sound economical and 
high safety levels. 
Art icle 2 
For the purposes of this Regulation: 
(a) "undertaking" means any natural person, any legal person, whether 
profit-making or not, or any official body, whether having its own 
legal personality or being dependent upon an authority having such 
personali ty; 
(b) "air carrier" means an air transport undertaking with a valid 
operat ing I icence; 
(c) "operating licence" means an authorisation granted by the State 
responsible to an undertaking permitting it to carry out carriage 
by air of passengers, mail and/or cargo, as stated in the licence, 
for remuneration and/or hire; 
- 22 -
(d) "air operator's certificate (AOC)" means a document issued by the 
competent authorities of a State which affirms that the operator in 
question is competent to secure the safe operation of his aircraft 
for the aviation activities specified in the certificate; 
(e) "business plan" means a detailed description of the air carrier's 
intended commercial activities for the period in question, in 
particular in relation to the market developments and investments 
to be carried out, including the financial and economical 
implications of these activities; 
(f) "management account" means a detailed statement of income and costs 
for the period in question including a breakdown between air 
transport-related and other activities as well as between pecuniary 
and non-pecuniary elements. 
Art icle 3 
1. No undertaking shall be permitted within the territory of the 
Community to carry by air passengers, mail and/or cargo for 
remuneration and/or hire unless the undertaking has been granted 
the appropriate operating licence and AOC. 
2. No operating licence shall be granted by a Member State unless the 
undertaking concerned has a valid AOC. 
3. Member States shall not issue or maintain in force such licences or 
certificates when the requirements of this Regulation are not 
complied with. 
- 23 -
An undertaking meeting the requirements of this Regulation shall be 
entitled to receive such a licence and certificate. 
OPERATING LICENCE 
Art icle 4 
1. No undertaking shall be granted an operating licence by a Member 
State unless air transport is its main occupation and the 
registered office and principal place of business is located in 
that Member State. 
2. The undertaking must be owned and continue to be owned directly or 
through a majority shareholding by Member States and/or nationals 
of Member States. It must at all times be effectively controlled 
by such States or nationals. The majority of the board must be 
representatives of such States or nationals. 
3. Notwithstanding paragraph 2 air carriers which have already been 
recognised in Annex I to Council Regulations (EEC) Nos 2343/90 and 
294/9l(1) retain their rights under this and associated 
Regulations as long as they meet the other obligations in the 
present Regulation. 
4. Derogation from paragraph 2 may be agreed bilaterally or 
multilaterally between third countries and the Commnity. 
5. Any undertaking which has a controlling shareholding in an air 
carrier must meet the requirements of paragraph 2. 
6. An air carrier must on request at any time be able to demonstrate 
to the State responsible for the operating licence and the 
Commission that it meets the requirements of this Article. 
(1) OJ No L 36, 8.2.1991, p. 1 
- 24 -
Where a Member State is not convinced that an air carrier meets the 
requirements of this Article it may ask the Commission to verify 
the situation. 
Article 5 
1. An air carrier to which an operating licence is granted for the 
f irst t ime must : 
(a) have a net start up capital of at least ECU 100 000, 
(b) be able to meet normal costs for a period of three months 
according to its business plans and taking into account only 
income secured by contract, 
(c) be able to demonstrate to the reasonable satisfaction of the 
competent authorities of the licensing Member State that it can 
meet its actual and potential obligations for a period of 24 
months, and 
(d) demonstrate to the reasonable satisfaction of the competent 
authorities that its debt and leasing liabilities will be at 
most twice the size of its equity capital at the end of the 
first year of operation. 
Points (b), (c) and (d) shall not apply to air carriers which intend to 
operate aircraft with less than 20 seats and/or 10 tonnes MTOW. 
2. (a) An air carrier operating aircraft with less than 20 seats 
and/or 10 tonnes MTOW shall at all times be able to 
demonstrate that its net capital is at least ECU 100 000. 
(4) 
- 25 -
(b) Any other air carrier must at all times and in particular after 
12 months of operation be able to demonstrate to the 
reasonable satisfaction of the licensing authorities that it 
can meet its actual and potential obligations for a period of 
12 months. 
3. For the purposes of this Article an air carrier shall provide all 
relevant information and, in particular for the purpose of 
paragraph 2(b), it shall, at the beginning of each financial year 
and when substantial changes in operation, such as the operation 
of a new scheduled service or a non-scheduled service to a new 
region, have been decided, submit: 
(a) audited accounts as soon as they are available and not later 
than 6 months after the expiry of the financial year in 
quest ion, 
(b) 3-year business plans including a 1-year budget, 
(c) quarterly management accounts, unless the licensing authorities 
require monthly accounts, to be provided no more than 4 weeks 
after the period to which they refer, and 
(d) documentation concerning insurance coverage. 
4. The licensing authority shall review the financial and economic 
situation of any air carrier at least every 12 months. 
- 26 
The value of ECU 100 000 referred to in paragraphs 1(a) and 2(a) is 
based on the EEC consumer price index at the date of the entry into 
force of this Regulation. When the price index moves so that the 
value would increase or decrease by ECU 10 000 then the value 
referred to in paragraphs 1(a) and 2(a) shall be increased or 
decreased accordingly. In such a case the Commission shall inform 
the Member States and publish the new value in the Official Journal 
of the European Communities. 
Art icle 6 
An air carrier must be insured to cover statutory liability risks in 
case of accidents, in particular in respect of passengers, cargo and 
th i rd part ies. 
Art icle 7 
A condition to own aircraft shall not be required for granting or 
maintaining a licence but a Member State may require the aircraft to be 
used by an air carrier to be registered within the Community. 
AIR OPERATOR'S CERTIFICATE 
Art icle 8 
An undertaking which carries out commercial aviation activities must be 
in possession of an AOC. The AOC or an accompanying document shall 
clearly set out the technical organisation and expertise required in 
order to ensure the safe operation of the specified aviation activities. 
- 27 -
(a) An undertaking shall not operate an aircraft for the purpose of 
commercial aviation activities otherwise than under and in 
accordance with the terms and conditions of an AOC. Annex 1 sets 
out the terms and format of an AOC. 
(b) An undertaking shall allow the licensing authority to examine all 
aspects of its intended or actual operations connected with an AOC. 
Art icle 9 
1. An AOC shall be issued or maintained only if the licensing 
authority is satisfied that the undertaking can ensure safe 
operations, if not, the AOC shall be varied, suspended or revoked 
as appropriate. For this purpose the undertaking shall demonstrate 
to the licensing authority: 
(a) the ability to maintain an adequate organisation, 
(b) an adequate method of control and supervision of the operation, 
including flight operations, 
(c) the necessary training programmes, and 
(d) adequate maintenance arrangements, 
consistent with the nature and extent of the operations specified and 
as set out in paragraphs 2-10. 
2. The undertaking shall have a management organisation which, as a 
whole, possesses the background and experience necessary for 
exercising satisfactory operational control and supervision of the 
kind of operations specified in the AOC. 
- 28 -
3. The undertaking shall have appointed post holders, acceptable to 
the licensing authority, who are responsible for, at least, the 
following functions: 
- fIight operat ions, 
- maintenance arrangements, 
- crew training, 
- ground operations. 
4. The undertaking shall have an operations manual and ail flights 
shall be conducted in accordance with it. The manual shall be 
provided for approval to the licensing authority. 
5. The undertaking shall arrange for ground handling facilities, not 
necessarily its own, to ensure the safe handling of its flights. 
6. The undertaking shall establish procedures for releasing its 
fIights. 
7. The undertaking shall ensure that its aircraft are equipped and its 
crews qualified as required for the area and type of operation. 
8. The undertaking shall provide appropriate maintenance arrangements 
for all aircraft operated under the terms of its AOC. 
9. The undertaking shall maintain accomodation and administrative 
support facilities at the main operating base, appropriate to the 
area and type of operation. 
- 29 -
10. If the licensing authority is not satisfied with the demonstrated 
ability as required under this Article, it may require additional 
demonstration which may include the conduct of one or more 
demonstration flights operated as if these were commercial air 
transport fIights. 
Art icle 10 
1. The application for the initial issue and variation of an AOC shall 
include the information specified in Annex 2. 
2. The application shall be accompanied by the required fee, if any. 
3. The application for a variation of an AOC shall be submitted at 
least 30 days, or, as otherwise agreed, before the date of intended 
operat ion. 
4. Other than in exceptional circumstances, the undertaking shall give 
ten days prior notice to the licensing authority of proposed 
changes to appointed post holders. 
Article 11 
1. An undertaking providing an aircraft and complete crew to an air 
carrier and retaining the functions and responsibility for the 
operation of the aircraft shall itself be subject to the safety 
requirements of this Regulation. 
2. Except in cases under paragraph 1, an air carrier utilizing an 
aircraft from or providing it to another undertaking shall obtain 
prior approval for the operation from the appropriate licensing 
authority. The conditions of the approval shall be part of the 
lease agreement between the parties. 
- 30 -
GENERAL PROVISIONS 
Article 12 
1. An operating licence and an AOC shall be valid as long as the air 
carrier meets the obligations of this Regulation. That 
notwithstanding, a Member State may make provision for a review one 
year after a new licence or AOC has been issued and every five 
years thereafter. 
2. An air carrier which ceases operations for any reason shall not 
resume operations until the licensing authorities have reaffirmed 
the financial and technical competency. 
3. An operating licence or AOC which has not been used for 6 months 
shall be resubmitted for approval. 
4. In case of a merger or a takeover the relevant licence and AOC 
shall be resubmitted for approval in accordance with Article 14. 
The air carrier in question may continue its operations unless the 
licensing authorities consider that safety is at risk. 
Art icle 13 
1. An air carrier which does not meet the requirements of this 
Regulation shall have its operational licence withdrawn. 
2. Notwithstanding paragraph 1, a Member State may grant a temporary 
operating licence to an air carrier when safety is not at risk in 
order to avoid a cessation of business during a high season. 
However, an air carrier which has been declared insolvent shall not 
be granted a temporary licence except in situations where realistic 
financial reorganisation is underway. 
- 31 -
Art icle 14 
1. Any application by an undertaking to be granted an operating 
licence and/or an AOC shall forthwith be made public by the 
Member State concerned and the Commission shall be informed. 
2. The Member State concerned shall take a decision on the application 
as soon as possible, and not later than one month after all the 
necessary information has been submitted, taking into account all 
available evidence. The decision shall be communicated to the 
applicant undertaking. A refusal shall indicate the reasons 
therefore. 
3. Notwithstanding paragraph 2, a period of 3 months shall elapse 
after the day of publication before any decision is taken in order 
to permit interested parties to submit evidence. 
4. An undertaking whose application for a licence has been refused may 
ask the Commission to review the case with respect to the 
requirements of this Regulation and decide whether a licence should 
have been granted. 
Art icle 15 
1. In order to carry out its duties under this Regulation the 
Commission may obtain all necessary information from the Member 
States and air carriers concerned. 
- 32 -
2. When an air carrier does not supply the information requested 
within the time limit fixed by the Commission or supplies 
incomplete information, the Commission shall by decision require 
the information to be supplied. The decision shall specify what 
information is required, fix an appropriate time limit within 
which it is to be supplied and indicate the penalties provided for 
in paragraph 4 as well as the right to have the decision reviewed 
by the Court of Justice. 
3. At the same time the Commission shall send a copy of its decision 
to the competent authority of the Member State in the territory of 
which the registered office of the air carrier is situated. 
4. The Commission may, by decision, impose fines on air carriers from 
ECU 1 000 to 50 000 where, intentionally or negligently: 
(a) they supply incorrect information in response to a request made 
pursuant to paragraph 2 or do not supply information within the 
time Iimit fixed; 
(b) they produce the required information in incomplete form. 
5. Decisions taken pursuant to paragraph 4 shall not be of a penal 
nature. 
6. The Court of Justice shall have unlimited jurisdiction within the 
meaning of Article 172 of the Treaty to review decisions whereby 
the Commission has imposed a fine; it may cancel, reduce or 
increase the fine. 
(5) 
- 33 -
Art icle 16 
In addition to the rules of this Regulation the air carrier must also 
respect the requirements of national corporate law. 
Article 17 
1. The Commission shall publish a report on the application of this 
Regulation by 1 January 1994 and every second year thereafter. 
2. Member States and the Commission shall cooperate in implementing 
this Regulation, particularly as regards collection of information 
for the report referred to in paragraph 1. 
3. Confidential information obtained in application of this Regulation 
shall be covered by professional secrecy. 
Article 18 
This Regulation shall enter into force on 1 July 1992. 
This Regulation shall be binding in its entirety and directly applicable 
in alI Member States. 
Done at Brussels, For the Council 
The President 
34 -
ANNEX 1 
TERMS AND FORMAT OF THE AIR OPERATORS CERTIFICATE 
An AOC will indicate the: 
(1) Name and location of the Undertaking; 
(2) Date of issue; 
(3) Description of the type of operations authorised; 
(4) Type(s) of aeroplane authorised for use; 
(5) Registration marks of the authorised aeroplanes except that an 
air carrier may obtain approval for an alternative system to 
inform the authority about the aeroplanes operated under its 
AOC; 
(6) Authorised areas of operation-, 
(7) Names of post holders; 
(8) Special limitations; 
(9) Special authorisations/approvals. 
The format of the AOC is in appendix A. 
- 35 -
APPENDIX A 
PART 1 
NR . . . 
National heading 
AIR OPERATOR CERTIFICATE 
(Statement of Issuing Authority) 
It is hereby certified that following an inspection of the 
operational and technical provisions, the undermentioned operator is 
competent to conduct commercial air transport safely in accordance 
with ICAO Annex 6 part I and (JAROPS 1) within the indicated 
Iimi tat ions. 
Name Operator 
Locat ion Operator 
Type of operat ions Type(s) of aeroplanes 
This certificate consists of three parts 
date of issue 
(Place) (date) 
(signature) 
(Author ity) 
Registrat ion marks 
Post Holders 
FIight operat ions 
Maintenance arrangements 
Crew training 
Ground operat ions 
Area's of operations - 36 -
PART I I 
Nr 
- 37 -
Special I imitât ions 
(VFR only, etc) PART I 
NR . . . 
Special authorisations/approvals 
CAT I I 
CAT I I I 
MNPS 
ETOPS 
etc + Carriage of dangerous goods 
38 -
ANNEX 2 
INFORMATION IN INITIAL APPLICATION FOR AN AOC 
The following information shall be attached to the application for the 
initial issue of an AOC: 
(1) A description of the management organisation; 
(2) The names of the major post holders, including those 
responsible for flight operations, maintenance arrangements, 
crew training and ground operations together with their 
qualifications and experience; 
(3) Maintenance arrangements; 
(4) Procedures for the release of flights; 
(5) The operations manual, inclusive of the approval of the 
designated parts. 
39 -
Proposal for a 
COUNCIL REGULATION (EEC) 
on access for air carriers to intra-Community air routes 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Economic 
Community, and in particular Article 84(2) thereof, 
Having regard to the proposal from the Commission^1), 
Having regard to the opinion of the European Par Iiament^2), 
Having regard to the opinion of the Economic and Social Committee^3^, 
Whereas it is important to establish an air transport policy for the 
internal market over a period expiring on 31 December 1992 as provided 
for in Article 8a of the Treaty; 
Whereas the internal market shall comprise an area without internal 
frontiers in which the free movement of goods, persons, services and 
capital is ensured; 
(1) 
(2) 
(3) 
- 40 -
Whereas Council Decision 87/602/EEC^1 ) and Council Regulation (EEC) No 
2343/90^2) constitute the first steps in respect of access for air 
carriers to scheduled intra-Community air routes to ensure the internal 
market ; 
Whereas Regulation (EEC) No 2343/90 provides that the Council shall 
decide on the revision of the Regulation by 30 June 1992 at the latest; 
Whereas in Regulation (EEC) No 2343/90 the Council decided to adopt 
rules governing route licensing for implementation not later than 1 July 
1992; 
Whereas in Regulation (EEC) No 2343/90 the Council decided to abolish 
capacity restrictions between Member States by 1 January 1993; 
Whereas in Regulation (EEC) No 2343/90 the Council confirmed that 
cabotage traffic rights are an integral part of the internal market; 
Whereas arrangements for greater cooperation over the use of Gibraltar 
airport were agreed in London on 2 December 1987 by the Kingdom of Spain 
and the United Kingdom in a joint declaration by the Ministers of 
Foreign Affairs of the two countries, and such arrangements have yet to 
come into operation; 
Whereas the development of the air traffic system in the Greek Islands 
and in the Atlantic Islands comprising the autonomous region of the 
Azores is at present inadequate and for this reason airports situated on 
these islands should be temporarily exempted from the application of 
this Régulât ion; 
(1) OJ No L 374, 31.12.1987, p. 19. 
(2) OJ No L 217, 11.8.1990, p. 8. 
- 41 -
Whereas it is necessary to phase out restrictions concerning multiple 
designation, fifth-freedom and cabotage rights in order to stimulate the 
development of the Community air transport sector and improve services 
for users; 
Whereas it is necessary to make special provision, under limited 
circumstances, for public service obligations necessary for the 
maintenance of adequate air services to national development regions; 
Whereas it is necessary to make special provision for new air services 
between regional airports; 
Whereas for air transport planning purposes it is necessary to give 
Member States the right to establish non-discriminatory rules for the 
distribution of air traffic between airports within the same airport 
system; 
Whereas the exercise of traffic rights has to be consistent with rules 
relating to safety, protection of the environment and conditions 
concerning airport access and has to be treated without discrimination 
on grounds of nationality; 
Whereas taking into account problems relating to airport infrastructure 
and navigational aids it is necessary to include the possibility of 
imposing certain limitations concerning the exercise of traffic rights; 
Whereas, taking into account the competitive market situation, provision 
should be made to prevent unjustifiable economic effects on air 
carr iers; 
- 42 -
Whereas it is necessary to specify the duties of Member States and air 
carriers for the purpose of providing necessary information; 
Whereas it is appropriate to ensure identical assessment and evaluation 
of market access for the same types of air services; 
Whereas it is appropriate to deal with all matters of market access in 
the same Council regulation; 
Whereas any possibility for an air carrier from a third country to 
exercise traffic rights between Community airports shall be settled in 
an agreement between the third country concerned and the Community; 
Whereas this Regulation partially replaces Regulation (EEC) No 2343/90 
and Council Regulation (EEC) No 294/91<1>, 
HAS ADOPTED THIS REGULATION: 
Article 1 
1. This Regulation concerns access to routes between airports within 
the Community for scheduled and non-scheduled air services. 
(1) OJ No L 36, 8.2.1991, p. 1. 
- 43 -
2. The application of this Regulation to the airport of Gibraltar is 
understood to be without prejudice to the respective legal 
positions of the Kingdom of Spain and the United Kingdom with 
regard to the dispute over sovereignty over the territory in which 
the airport is situated. 
3. Application of the provisions of this Regulation to Gibraltar 
airport shall be suspended until the arrangements in the joint 
declaration made by the Foreign Ministers of the Kingdom of Spain 
and the United Kingdom on 2 December 1987 have come into 
operation. The Governments of Spain and the United Kingdom will so 
inform the Council of that date. 
4. Airports in the Greek islands and in the Atlantic islands 
comprising the autonomous region of the Azores shall be exempted 
from the application of this Regulation until 30 June 1993. 
Unless otherwise decided by the Council, on a proposal of the 
Commission, this exemption shall apply for a further period of five 
years and may be continued for five years thereafter. 
Art icle 2 
For the purposes of this Regulation: 
(a) "air carrier" means an air transport undertaking with a valid 
operat ing Iicence; 
(b) "Community air carrier" means an air carrier with a valid operating 
licence issued by a Member State in accordance with Council 
Regulation (EEC) (1) [on licensing of air carriers); 
(1) OJ No L 
- 44 -
(c) "air service" means a flight or a series of flights carrying 
passengers, cargo and/or mail for remuneration and/or hire; 
(d) "scheduled air service" means a series of flights possessing all 
the following characteristics: 
(i) it is performed by aircraft for the transport of passengers, 
cargo and/or mail for remuneration, in such a manner that on 
each flight seats are available for individual purchase by 
members of the public (either directly from the air carrier or 
from its authorised agents); 
(ii) it is operated so as to serve traffic between the same two or 
more points, either: 
1. according to published timetable; or 
2. with flights so regular or frequent that they constitute a 
recognisably systematic series; 
(e) "flight" means a departure from a specified airport towards a 
specified destination airport; 
(f) "traffic right" means the right of an air carrier to carry 
passengers, cargo and/or mail on an air service between two 
Community airports; 
(g) "seat-only sales" means the sale of seats, without any other 
service bundled such as accommodation, directly to the public by 
the air carrier or its authorised agent; 
- 45 -
(h) "Member State(s) concerned" means the Member State(s) between or 
within which an air service is operated; 
(i) "State of registration" means the Member State in which the licence 
mentioned in paragraph (b) is issued; 
(J) "regional airport" means any airport other than one listed in the 
Annex as a category 1 airport; 
(k) "airport system" means two or more airports grouped together as 
serving the same city, as indicated in the Annex; 
(I) capacity shall be expressed as the number of seats offered to the 
general public on a scheduled air service over a given period; 
(m) "public service obligation" means any obligation imposed upon an 
aircarrier to take, in respect of any route which it is licensed to 
operate by a Member State, all necessary measures to ensure the 
provision of' a service satisfying fixed standards of continuity, 
regularity and capacity which standards the air carrier would not 
assume if it were solely considering its economic interest. 
Article 3 
Subject to this Regulation, Community air carriers shall be permitted by 
the State(s) concerned to exercise traffic rights between airports or 
airport systems within the Community when they are open for civil air 
services. 
- 46 -
Art icle 4 
(a) A Member State, following consultations with other States 
concerned and after having informed the Commission, may impose 
a public service obligation in respect of scheduled air 
services to a regional airport in its territory on a route 
which is considered vital for the economic development of the 
region in which the airport is located, to the extent necessary 
to ensure on that route the adequate provision of scheduled air 
services satisfying fixed standards of continuity, regularity, 
capacity and pricing and which standards air carriers would not 
assume if they were solely considering their commercial 
interest. 
(b) The adequacy of scheduled air services shall be assessed by the 
Member States having regard to: 
(i) the public interest; 
(ii) the possibility of having recourse to other forms of 
transport and the ability of such forms to meet the 
transport needs under consideration; 
(iii) the air fares and conditions which can be quoted to users; 
(iv) the combined effect of all air carriers operating or 
intending to operate on the route. 
47 -
(c) If no air carrier has commenced or is about to commence 
scheduled air services on a route for which a public service 
obligation has been imposed then the Member State may limit 
access ta that route to only one air carrier for a period of 
up to three years. The right to operate the service shall be 
offered by public tender to any Community air carrier entitled 
to operate such air services. The tender shall be published 
in the Official Journal of the European Communities and the 
date of submission for proposals cannot be earlier than one 
month after the day of publication. The submissions made by air 
carriers shall forthwith be communicated to other States 
concerned and to the Commission. 
(d) The selection among the submissions shall be made as soon as 
possible taking into consideration the quality of service 
offered and in particular the air fares and conditions which 
can be quoted to users. 
(e) Notwithstanding subparagraph (d), a period of two months shall 
elapse after the day of submission before any selection is made 
in order to permit other Member States to submit comments. 
(f) The Member States shall take the measures necessary to ensure 
that any decision taken under the provisions of this Article 
may be reviewed effectively and, in particular, as soon as 
possible on the grounds that such decisions have infringed 
Community law or national rules implementing that law. 
- 48 -
(g) When a public service obligation has been imposed in accordance 
with subparagraph (a) then air carriers shall be able to offer 
seat-only sales only if the air service in question meets all 
the requirements of the public service obligation. Consequently 
that air service shall be considered as a scheduled air 
service. 
(h) Subparagraph (c) shall not apply in any case in which another 
Member State concerned proposes a satisfactory alternative 
means of fulfilling the same public service obligation. 
2. Notwithstanding Article 3, a Member State, in a case where one of 
the air carriers licensed by it has started to operate a scheduled 
passenger air service on a new route between regional airports 
with aircraft of no more than 80 seats, may refuse a scheduled air 
service by another air carrier for a period of two years, unless it 
is operated with aircraft of no more than 80 seats, or it is 
operated in such a way that not more than 80 seats are available 
for sale between the two airports in question, on each flight. 
3. Paragraphs 1(c) and 2 shall not apply to routes when the capacity 
offered exceeds 30 000 seats per year. 
4. At the request of a Member State with a legitimate interest which 
considers that the development of a route is being unduly 
restricted by the terms of paragraphs 1 or 2, or on its own 
initiative or where disagreement arises regarding the application 
of paragraph 2, the Commission shall carry out an investigation 
and within two months of receipt of the request shall take a 
decision on the basis of all relevant factors on whether 
paragraph 1 or 2 shall continue to apply in respect of the route 
concerned. 
- 49 -
The Commission shall communicate its decision to the Council and to 
the Member States. Any Member State may refer the Commission's 
decision to the Council within a time limit of one month. The 
Council, acting by a qualified majority, may in exceptional 
circumstances take a different decision within a period of one 
month. 
Art icle 5 
In operating air services, a Community air carrier shall be permitted by 
the State(s) concerned to combine air services and use the same flight 
number. 
Art icle 6 
This Regulation shall not affect a Member State's right to regulate 
without discrimination on grounds of nationality or identity of the air 
carrier, the distribution of traffic between the airports within an 
airport system. 
Art icle 7 
1. The exercise of traffic rights is subject to published Community, 
national, regional or local rules relating to safety, the 
protection of the environment and the allocation of slots, and to 
the following conditions: 
- 50 -
(a) the airport or airport system concerned must have sufficient 
facilities to accommodate the air service; 
(b) navigational aids must be sufficient to accommodate the air 
service. 
2. When the conditions in paragraph 1 are not met, a Member State may, 
without discrimination on grounds of nationality or identity of the 
air carrier, impose conditions on, limit or refuse the exercise of 
those traffic rights. Before taking such a measure, a Member State 
shall inform the Commission and provide it with all the necessary 
elements of information. 
3. At the request of a Member State or on its own initiative the 
Commission shall examine the application of paragraph 2 in any 
particular case and within one month of the date of receipt of 
the request decide whether the Member State may continue to apply 
the measure. 
4. The Commission shall communicate its decision to the Council and to 
the Member States. Any Member State may refer the Commission's 
decision to the Council within a time limit of one month. The 
Council, acting by a qualified majority, may in exceptional 
circumstances take a different decision within a period of one 
month. 
Art icle 8 
1. Capacity limitations shall not apply to air services covered by 
this Regulation except as set out in Articles 6 and 7 and in this 
Art icle. 
- 51 -
2. At the request of any Member State for which the application of 
paragraph 1 has led to serious financial damage for the scheduled 
air carrier(s) licensed by that Member State, the Commission shall 
carry out a review and, on the basis of all relevant factors, 
including the market situation and in particular whether a 
situation exists whereby the opportunities of air carriers of 
that Member State to effectively compete in the market are unduly 
affected, the financial position of the air carrier(s) concerned 
and the capacity utilisation achieved, shall take a decision on 
whether the capacity for scheduled air services to and from that 
State should be stabilized for a limited period. 
3. The Commission shall communicate its decision to the Council and to 
the Member States. Any Member State may refer the Commission's 
decision to the Council within a time limit of one month. The 
Council, acting by a qualified majority, may in exceptional 
circumstances take a different decision within a period of one 
month. 
Art icle 9 
The periods referred to in Articles 4(4), 7(3) and 8(2) shall only start 
to run when all necessary information has been made available. 
- 52 
Art icle 10 
1. In order to carry out its duties under this Regulation the 
Commission may obtain all necessary information from the Member 
States and air carriers concerned. 
2. When an air carrier does not supply the information requested 
within the time limit fixed by the Commission or supplies 
incomplete information, the Commission shall by decision require 
the information to be supplied. The decision shall specify what 
information is required, fix an appropriate time limit within 
which it is to be supplied and indicate the penalties provided for 
in paragraph 4 as well as the right to have the decision reviewed 
by the Court of Justice. 
3. At the same time the Commission shall send a copy of its decision 
to the competent authority of the Member State in the territory of 
which the registered office of the air carrier is situated. 
4. The Commission may, by decision, impose fines on air carriers from 
ECU 1 000 to 50 000 where, intentionally or negligently: 
(a) they supply incorrect information in response to a request made 
pursuant to paragraph 2 or do not supply information within the 
t ime Iimit f ixed; 
(b) they produce the required information in incomplete form. 
5. Decisions taken pursuant to paragraph 4 shall not be of a penal 
nature. 
- 53 -
6. The Court of Justice shall have unlimited jurisdiction within the 
meaning of Article 172 of the Treaty to review decisions whereby 
the Commission has imposed a fine; it may cancel, reduce or 
increase the fine. 
Article 11 
1. The Commission shall publish a report on the application of this 
Regulation by 1 January 1994 and every second year thereafter. 
2. Member States and the Commission shall cooperate in implementing 
this Regulation, particularly as regards collection of information 
for the report referred to in paragraph 1. 
3. Confidential information obtained in application of this Regulation 
shall be covered by professional secrecy. 
Article 12 
Regulations (EEC) Nos 2343/90 and 294/91 are hereby revoked with the 
exceptions of point (e) of Article 2 and Annex I of Regulation (EEC) No 
2343/90, and of point (b) of Article 2 and the Annex of Regulation (EEC) 
No 294/91. 
Art icle 13 
This Regulation shall enter into force on 1 January 1993. 
This Regulation shall be binding in its entirety and directly applicable 
in alI Member States. 
Done at Brussels, For the Council 
The President 
- 54 -
ANNEX 
LIST OF GATEGORY 1 AIRPORTS 
BELGIUM : BrusseIs-Zaventem 
DENMARK : Copenhagen-Kastrup/RoskiI de 
FEDERAL REPUBLIC OF GERMANY Frankfurt-Rhein-Ma in 
DUsseI dor f-Lohausen 
Munich 
SPAIN : Palma-Mallorca 
Madr id-BaraJas 
Malaga 
Las Palmas 
GREECE Athens-He I I in ikon 
Salonica-Micra 
FRANCE Paris-Charles De Gaulle/Orly 
IRELAND : Dub I in 
ITALY : Rome-F i urn i c i no/C i amp i no 
M iIan-L i nate/MaI pensa 
THE NETHERLANDS : Amsterdam-Sch i pho 
PORTUGAL : L i sbon 
Faro 
UNITED KINGDOM London-
Heat hrow/Gatwick/S tans ted 
Luton 
- 55 -
Proposal for a 
COUNCIL REGULATION (EEC) 
on fares and rates for air services 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Economic 
Community, and in particular article 84(2) thereof, 
Having regard to the proposal from the Commission^1), 
Having regard to the opinion of the European Par Iiament^2), 
Having regard to the opinion of the Economic and Social Committee^3), 
Whereas it is important to establish an air transport policy for the 
internal market over a period expiring on 31 December 1992 as provided 
for in Article 8a of the Treaty-, 
Whereas the internal market shall comprise an area without internal 
frontiers in which the free movement of goods, persons, services and 
capital is ensured; 
(1) 
(2) 
(3) 
- 56 -
Whereas Council Directive 87/601/EEC<1) and Council Regulation (EEC) No 
2342/90(2) constitute the first steps in respect of air fares to ensure 
the internal market; 
Whereas in Regulation (EEC) No 2342/90 the Council decided to introduce 
a system of double disapproval for all air fares by 1 January 1993; 
Whereas air fares normally should be determined freely by market forces 
where competition exists; 
Whereas until the free access to the market takes full effect it is 
necessary to provide for a transitional period; 
Whereas it is necessary to establish clear criteria for the assessment 
of air fares-, 
Whereas it is appropriate to ensure identical assessment and evaluation 
of air fares for the same types of air services; 
Whereas in situations where competition is limited it is appropriate to 
provide for a transparent and objective procedure according to which 
Member States may ask the Commission to examine and decide on whether a 
proposed air fare conforms with the criteria laid down; 
Whereas it is necessary to specify the duties of Member States and air 
carriers for the purpose of providing necessary information; 
Whereas it is appropriate to deal with all matters of pricing in the 
same Council Regulation; 
(1) OJ No L 374, 31.12.1987, p. 12. 
(2) OJ No L 217, 11.8.1990, p. 1. 
- 57 -
Whereas possibilities for third country air carriers to charge air fares 
on routes within the Community should be settled in an agreement between 
the Community and the third country concerned; whereas in order for 
third country air carriers to participate normally in the market they 
should be able to charge the normal economy fare or its equivalent; 
Whereas this Regulation replaces Regulation (EEC) No 2342/90 and 
partially replaces Council Regulation (EEC) No 294/91(1), 
HAS ADOPTED THIS REGULATION: 
Article 1 
This Regulation shall apply to the criteria and procedures to be applied 
for the establishment of air fares and rates charged by air carriers on 
air services within the Community. 
Art icle 2 
For the purposes of this Regulation: 
(a) "air fares" means the prices to be paid in ECU for the carriage of 
passengers and baggage on air services and the conditions under 
which those prices apply, including remuneration and conditions 
offered to agency and other auxiliary services; 
(1) OJ No L 36, 8.2.1991, p.1. 
- 58 -
(b) "rates" means the prices to be paid in ECU for the carriage of air 
cargo and/or mail on air services and the conditions under which 
those prices apply, including remuneration and conditions offered 
to agency and other auxiliary services; 
(c) "standard rates" means the rates which the air carrier would 
normally quote including the availability of normal discounts; 
(d) "seat-only sales" means the sale of seats, without any other 
service bundled such as accomodation, directly to the public by 
the air carrier or its authorised agent; 
(e) "air service" means a flight or a series of flights carrying 
passengers, cargo and/or mail for remuneration and/or hire; 
(f) "scheduled air service" means a series of flights possessing all 
the following characteristics: 
(i) it is performed by aircraft for the transport of 
passengers, cargo and/or mail for remuneration, in such a 
manner that on each flight seats are available for 
individual purchase by members of the public (either 
directly from the air carrier or from its authorised 
agents) ; 
(ii) it is operated so as to serve traffic between the same two 
or more points, either: 
1. according to published timetable; or 
2. with fl ights so regular or frequent that they const i tute 
a recognisably systematic series; 
- 59 -
(g) "flight" means a departure from a specified airport towards a 
specified destination airport; 
(h) "air carrier" means an air transport enterprise with a valid 
operating license; 
(i) "Community air carrier" means an air carrier with a valid operating 
license issued by a Member State in accordance with Council 
Regulation (EEC) No C) [on licensing of air carriers]; 
(J) "Member State(s) concerned" means the Member State(s) between or 
within which an air service is operated; 
(k) "reference fare" means the lowest one way or return, as 
appropriate, fully flexible fare charged by a Community air carrier 
on the route in question; if more than one such fare exists, the 
arithmetic average of all such fares shall be taken, taking into 
account the number of seats offered at the fare by each Community 
air carrier on the route. 
Art icle 3 
(a) Member States shall not disapprove air fares and rates of 
Community air carriers if they are reasonably related to the 
applicant air carrier's long-term fully-allocated relevant 
costs, while taking into account the need for a satisfactory 
return on capital and for an adequate cost margin to ensure a 
satisfactory safety standard. 
(1) OJ No L 
- 60 
(b) In disapproving air fares pursuant to subparagraph (a), Member 
States shall also take into account other relevant factors, the 
needs of consumers and the competitive market situation, 
including the fares of other air carriers operating on the 
route and the need to prevent dumping. 
(c) The fact that a proposed air fare is lower than that offered by 
another Community air carrier operating on the route shall not 
be sufficient reason for withholding approval. 
2. Air carriers shall not charge air fares or rates that are, in 
relation to the criteria defined in paragraph 1(a) and (b), 
excessively high to the disadvantage of users or unjustifiably low 
in view of the competitive market situation. 
3. Only Community air carriers shall be entitled to introduce lower 
fares than the existing ones. 
Art icle 4 
1. Air fares offered to tour operators or offered to the public 
specifically combined with accomodation arrangements for the 
duration of the trip and air fares for groups larger than 6 persons 
shall be approved automatically. 
61 -
2. Air fares referred to in paragraph 1 shall be communicated to the 
authorities at the latest the day before the flight. 
3. Seat-only air fares on non-scheduled air services are to be treated 
in accordance with Articles 3, 6 and 7. 
Art icle 5 
1. Rates charged by Community air carriers shall be set by free 
agreement between the parties to the contract of carriage. 
2. Air carriers operating within the Community shall make available on 
request all standard rates to the general public. 
Art icle 6 
1. An air carrier shall submit its proposed air fares for scheduled 
air services in the form prescribed by the Member States concerned. 
2. Aeronautical authorities shall not require air carriers to submit 
air fares in respect of scheduled air services more than 45 days 
before they come into effect. 
3. An air fare for a scheduled air service shall be considered as 
approved unless, within 30 days of the day of submission, the 
Member State(s) concerned has(have) notified its(their) disapproval 
- 62 -
to the applicant air carrier and to any other Member State 
concerned, stating its(their) reasons or unless the procedure in 
Article 7 has been initiated. At the request of either Member 
State, consultations shall take place between the States 
concerned within the 30-day period. 
4. On the basis of the experience acquired since the entry into force 
of this Regulation and after consultation with the Member States 
the Commission may, when submitting on 1 January 1996 the report 
provided for in Article 11, decide that air fares which are not 
covered by Article 7 shall be approved automatically. 
5. A Member State may refer the Commission's decision to the Council 
within a time limit of one month. The Council acting by qualified 
majority may in exceptional circumstances take a different decision 
within a period of two months. 
6. A Member State shall permit a Community air carrier to match an air 
fare already approved for a scheduled air service between the same 
city-pair on the basis that this provision shall not apply to 
indirect air services which exceed the length of the shortest 
direct service, measured by the normal flight routing, by more than 
40%. Member States may also permit a Community air carrier 
operating a direct scheduled air service to match prices already 
accepted or published for a non-scheduled air service operated on 
the same route provided that both products are equivalent in terms 
of quality and conditions. 
7. Member States concerned may not limit their approval to less than a 
season unless requested by the applicant air carrier. 
- 63 
8. An air fare for a scheduled air service, once approved, shall 
remain in force until it expires or is replaced. It may, however, 
subject to Article 3(1), be prolonged by the air carrier concerned 
after its original date of expiry for a period not exceeding 12 
months. 
Art icle 7 
1. A Member State concerned may, for a scheduled air service on a 
route where competition is limited, request the Commission to 
examine whether an air fare, which is not covered by the Annex, 
complies with Article 3(1). The Member State shall at the same 
time inform the other Member State(s) concerned and the air 
carrier concerned. The Commission shall forthwith publish in the 
Official Journal of the European Communities that the air fares 
have been submitted for examination. 
2. For the purposes of this Regulation limited competition is said to 
ex ist on a route: 
where significant barriers to market entry are in force, e.g. 
at coordinated airports, and where there are not at least three 
air carriers with pricing freedom exercising traffic rights, 
each at least once per day, between the airports concerned, or 
where public service obligations exist, or 
where at most 30 000 seats offered for sale yearly by only one 
air carrier or two air carriers under a joint operation 
agreement. 
- 64 -
3. An air fare which has been submitted for examination in accordance 
with paragraph 1 within 21 days of its submission to the 
aeronautical author ities concerned shall not, unless the Commission 
within 21 days decides otherwise, enter into force during the 
examination by the Commission. 
4. The Commission shall give a decision on whether the air fare 
complies with Article 3(1) as soon as possible and in any event not 
later than two months after having received sufficient information 
from the air carrier concerned. The Commission shall take into 
account all information received from interested parties. 
5. Notwithstanding paragraph 1, the Commission may on its own 
initiative investigate whether an air fare conforms to the 
provisions of this Regulation. 
6. The Commission shall communicate its decision to the Member States 
concerned and to the air carrier concerned. 
7. A Member State concerned may refer the Commission's decision to the 
Council within a time limit of one month. The Council acting by 
qualified majority may in exceptional circumstances take a 
different decision within a period of one month. 
Art icle 8 
At least once a year the Commission shall consult on air fares for 
scheduled air fares and related matters with representatives of air 
transport user organisations in the Community, for which purpose the 
Commission shall supply appropriate information to participants. 
- 65 -
Art icle 9 
Air carriers from third countries with traffic rights between Community 
airports shall be able to match the normal economy air fare or its 
closest equivalent unless otherwise provided for in an agreement between 
the Community and a third country. 
Art icle 10 
1. In order to carry out its duties under this Regulation the 
Commission may obtain all necessary information from the Member 
States and air carriers concerned. 
2. When an air carrier does not supply the information requested 
within the time limit fixed by the Commission or supplies 
incomplete information, the Commission shall by decision require 
the information to be supplied. The decision shall specify what 
information is required, fix an appropriate time limit within 
which it is to be supplied and indicate the penalties provided 
for in paragraph 4 as well as the right to have the decision 
reviewed by the Court of Justice. 
3. At the same time the Commission shall send a copy of its decision 
to the competent authority of the Member State in the territory of 
which the registered office of the air carrier is situated. 
- 66 -
4. The Commission may, by decision, impose fines on air carriers from 
ECU 1 000 to 50 000 where, intentionally or negligently: 
(a) they supply incorrect information in response to a request made 
pursuant to paragraph 2 or do not supply information within the 
t ime Iimit fixed; 
(b) they produce the required information in incomplete form. 
5. The Commission may, by decision, impose fines on air carriers for 
infringements of this Regulation up to a maximum of 10% of the 
annual turnover for the relevant activity of the air carrier 
concerned. 
In fixing the amount of the fine, regard shall be had both to the 
seriousness and to the duration of the infringement. 
6. Decisions taken pursuant to paragraphs 4 and 5 shall not be of a 
penal nature. 
7. The Court of Justice shall have unlimited jurisdiction within the 
meaning of Article 172 of the Treaty to review decisions whereby 
the Commission has imposed a fine; it may cancel, reduce or 
increase the fine. 
Article 11 
1. The Commission shall publish a report on the application of this 
Regulation by 1 January 1994 and every second year thereafter. 
- 67 -
2. Member States and the Commission shall cooperate in implementing 
this Regulation, particularly as regards collection of information 
for the report referred to in paragraph 1. 
3. Confidential information obtained in application of this Regulation 
shall be covered by professional secrecy. 
Art icie 12 
Regulation (EEC) No 2342/90 is hereby revoked. 
Art icle 13 
This Regulation shall enter into force on 1 January 1993. 
This Regulation shall be binding in its entirety and directly applicable 
in alI Member States. 
Done at Brussels, For the Council 
The President 
- 68 -
ANNEX 
The Commission shall not be obliged to investigate air fares for which 
any of the following conditions apply: 
Minimum stay of at least six days; 
Sunday rule; 
Reservation for the entire trip, ticketing and payment to 
be made at the same time, except that reservation for the 
return trip may be made at a later time; cancellation only 
permissible prior to departure of outbound travel and at a 
fee of at least 20% of the price of the ticket; change of 
reservation only permissible at a fee; 
Passenger to be aged not more than 25 years or not less 
than 60 years or father and/or mother with children aged 
not more than 25 years travelling together (minimum three 
persons); 
specific combination with accommodation for the duration of 
the trip-, 
off-peak; 
Any equivalent or more stringent condition. 


- 69 
ISSN 0254-1475 
COM(91) 275 final 
DOCUMENTS 
EN 07 
Catalogue number : CB-CO-91-370-EN-C 
ISBN 92-77-75316-1 
Office for Official Publications of the European Communities 
L-2985 Luxembourg