WRITTEN QUESTION E-2802/01

by Erik Meijer (GUE/NGL) to the Commission

(9 October 2001)

Subject: The disconnect between the necessary elimination of overcapacity in air transport and measures to support airline companies

1. Can the Commission confirm that the growth of air traffic, and therewith the profit-making capacity of airline companies, was already in decline before 11 September 2001, resulting in a large number of empty seats on aircraft and the cancellation of scheduled flights?

2. Can the Commission confirm that the currently prevailing system of a worldwide free market and the resultant competition between companies, who with variations in quality and fares partially cover the same links and where the allocation of landing rights is the only check on the expansion of air transport, leads undertakings to generate overcapacity and precipitous growth so that they are compelled to seek new customers and create new needs?

3. Does the Commission share my concern that state support for airlines, for which there have been renewed calls since 11 September 2001 and which can be provided by the Member States in the form of risk insurance from 22 September 2001 for a period of four weeks, contributes to the maintenance of overcapacity in air transport and to a delay in its necessary elimination?

4. Given the increasing encroachment of airports, the nuisance of aircraft noise and the discharge of greenhouse gases, does the Commission take the view that in future we should make sure that aircraft and airline capacity should not greatly exceed existing needs?

5. Does the Commission agree that current airline problems must not be used to justify giving up the drive against an improper competitive advantage for air transport over other forms of transport, from not having to pay tax on aircraft fuel?

6. Is the Commission prepared to remove all obstacles to agreements between governments and airlines to regulate and share passenger flows, so that capacity overshoots may be dealt with effectively?

Answer given by Mrs de Palacio on behalf of the Commission

(3 December 2001)

1. Before 11 September 2001, there were already signs that growth in demand for air transport was softening after several years of strong expansion and some airlines were facing a downturn in profits. However, other airlines, particularly in the low-cost sector, were continuing to expand and post higher profits.

2. Community aviation policy is based on the principle of freedom to provide services in an open and competitive market. Since airlines were still successfully filling most of the seats available before 11 September 2001, it appears that the expansion of the industry was broadly in line with the general public's demand for air transport.

3. The Commission agrees that state aid in the air transport sector is undesirable. It prevents the development of an efficient industry by exempting companies from normal commercial pressures, by removing incentives for airlines to control their costs and capacity, and by enabling them to mount unfair competition to unsubsidised airlines. Relevant proposals adopted by the Commission on the 10 October 2001 respond to the specific situation derived from the events of 11 September 2001 and are compatible with these principles.

4. The Commission stated in its recently published White Paper on Transport Policy(1) that the transport system as a whole should be sustainable from an economic, social and environmental point of view. Air transport poses some specific environmental problems and these should be addressed at European and international level, however absolute capacity limitations on airlines may not be appropriate. The objective should be to give airlines freedom to operate efficiently within a broader framework of general rules designed to promote higher environmental standards.

5. Taxation of aviation fuel and other market based measures with similar effect must be examined through the International Civil Aviation Organisation (ICAO) since the current exemption for kerosene is long-established policy, agreed at international level. These policies have been incorporated into some 3 000 bilateral air services agreements. In the shorter term the Commission is looking at how emission related levies or voluntary mechanisms might be used to reduce the environmental impact of aviation. For the longer term, it is studying how it could be part of an emissions trading programme under the Kyoto protocol.

6. Community legislation provides for capacity to be handled through competitive forces in the air transport market. Returning to a policy of regulating passenger shares between airlines by government intervention would remove incentives for airlines to improve their services or to compete with one another on price. This would not be in the interest of European consumers or the European economy.

(1) COM(2001) 574 final.