COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS

1.Introduction

1.1. A strong aviation sector for a stronger Union

Aviation is crucial for the European Union. It drives economic growth, creates jobs, facilitates trade and allows people to travel. Today European aviation represents 26% of the world market, contributing €510 billion annually to Europe's Gross Domestic Product, and supporting 9.3 million jobs in Europe.

Open and connected aviation markets offer better value flights to a greater choice of travel destinations worldwide. Air connectivity is relevant for the travelling public and for businesses and the economy at large as the better a city, region or country is connected by air to other destinations in Europe and other parts of the world, the more growth can be generated. Air travel has substantially increased since the creation of the EU's Single Aviation Market 25 years ago. The number of daily flights has increased from less than 10,000 in 1992 to around 23,000 in 2016. In addition passengers now have access to more destinations. Today there are around 7,400 routes compared to less than 2,700 in 1992. In 2015, over 1.45 billion passengers departed or arrived at EU airports.

European aviation must remain globally competitive and seize the opportunities offered by a fast-changing global economy, in a sustainable way. That is why in December 2015 the European Commission presented an "Aviation Strategy for Europe", setting out an ambitious vision for the future of European aviation. It aims at boosting Europe's economy, strengthening its industrial base and reinforcing its global leadership position in aviation whilst addressing environmental and climate challenges, thus contributing directly to the Commission's strategic priorities .

1.2. The Aviation Strategy for Europe is delivering

The Aviation Strategy for Europe laid out a series of policy actions to be taken in the coming years. The present Communication and the proposal and Guidelines referred to in it, presented simultaneously, contribute to this Strategy and more precisely action intended to achieve the following:

·Maintain leadership in international aviation, by safeguarding competition and by facilitating foreign investment into EU airlines.

·Tackle limits to growth in European skies, by improving connectivity and airspace efficiency.

2.A leader in international aviation

2.1. Safeguarding competition in aviation

The EU is improving market access and investment opportunities for European aviation in important overseas markets by helping it to increase its international presence and ensuring open market conditions for all EU airlines. Concluding EU aviation agreements with third countries supports an open and connected market. It offers more flights and destinations at cheaper prices. Some agreements are already in place, others are currently being negotiated or still need to be signed (Ukraine), and more are expected to be negotiated in the coming years based on the recommendations from the Commission to the Council to authorise the opening of further negotiations.

Today there are no international standards within the World Trade Organisation or the International Civil Aviation Organisation covering access to markets. That is why the EU sets out the conditions for market opening with third countries through its aviation agreements in order to create legal predictability and certainty for investors.

However in the absence of an EU aviation agreement with a third country concerned, or where existing agreements (EU or national) do not contain sufficient rules addressing practices negatively affecting competition, European connectivity may be harmed if EU airlines are subject to such practices from third countries or third country entities. In the longer run, if they are allowed to persist, such practices may have a negative impact on the competitive situation on the market and consequently lead to less choice, less connectivity and higher prices for EU citizens and businesses.

EU airlines are of course responsible for their own competitiveness and should continue to adapt their products and business models to market conditions. However, where the Union's connectivity and competitiveness in international air transport are put at risk through discriminatory practices, the EU should be able to take appropriate action.

Different actions are necessary to reduce the risk of practices affecting competition. Firstly, the EU and its Member States should pursue their efforts in the international context of the International Civil Aviation Organisation and the World Trade Organisation to actively support the development of multilateral rules guaranteeing the same market access conditions and a global level playing field for all airlines. Secondly, the EU and its Member States should continue engaging with third countries and address this issue in the context of aviation agreements. These remain the EU's preferred course of action.

Rules are also needed at EU level to allow the submission of complaints to the Commission. An investigation may then be conducted by the Commission to determine if EU airlines have been harmed by relevant practices from third countries, which could lead to compensatory measures being taken. The current Regulation concerning these matters has proven to be ill-adapted in its approach and needs to be replaced with a more effective instrument.

The Commission: ·Proposes a new Regulation to safeguard competition in air transport, replacing Regulation (EC) No 868/2004. ·Urges the Council to allow the opening of negotiations for further EU Comprehensive Aviation Agreements (Bahrain, China, Kuwait, Mexico, Oman and Saudi Arabia), and to swiftly decide on the signing of the EU Comprehensive Aviation Agreement with Ukraine.

2.2. Facilitating foreign investment into EU airlines