WRITTEN QUESTION E-2531/96 by Amedeo Amadeo (NI) to the Commission (8 October 1996)

Subject: State aids in the air transport sector

Given that airlines are obliged to fight in order to gain and retain a sufficiently large share of a low-growth, highly competitive market, there is always a risk that the operators currently on the market will use unfair methods in order to protect their own interests. Stringent application of the competition rules - particularly those governing state aids and the prevention of unfair business practices - is therefore absolutely vital. State aids are considered to be counter-productive in that they tend to protect inefficient companies against those that are efficient and thus delay necessary restructuring processes.

What steps does the Commission intend to take with a view to ensuring that the current high level of concentration does not produce new barriers to access to routes and time slots to replace those removed by legislative means?

Answer given by Mr Van Miert on behalf of the Commission (20 November 1996)

The Commission is being careful to ensure that liberalization of air transport in the Community is not called into question by practices running counter to the competition rules.

It is in particular the increasing internationalization of air transport markets and heightened competition which are causing more and more airlines to have recourse to very broad cooperation agreements or to taking substantial capital holdings in a competing airline. The Commission is thus obliged to use its decision-making procedure to ensure that effective competition is maintained. The Commission does not wish to oppose this restructuring but it will be vigilant in seeing that this does not entail any unjustified restrictions on competition and that it does not prevent newcomers from competing effectively on the most important routes. Ensuring that third-country airlines have guaranteed access to airport time slots in order to ensure effective competition is therefore an essential part of Commission policy on the authorization of cooperation agreements between competing airlines. The following examples are proof of the great importance which the Commission attaches to the allocation of time slots.

On 20 July 1995 the Commission approved Swissair's acquisition of 49.5% of Sabena's capital, but only after these two companies and the Swiss and Belgian governments had given assurances that the necessary traffic rights and time slots for providing flights between Belgium and Switzerland would also be granted to other companies.

On 6 January 1996 the Commission took a second decision on the general cooperation agreement signed by Lufthansa and SAS. It established that this agreement restricted competition substantially, especially on routes between Scandinavia and Germany, but by imposing certain conditions, in particular that Lufthansa and SAS should relinquish certain time slots at high-traffic-density airports, it guaranteed market access to newcomers and thus ensured that an adequate level of competition would also be maintained in the future.

As far as State aids are concerned, the Commission has pursued a policy of authorizing aid for the restructuring of airlines, to help them to become viable in a more competitive environment, provided that strict conditions are met. In so doing, the Commission applies the provisions of the Treaty scrupulously; indeed the Commission has established guidelines ((Application of Articles 92 and 93 of the EC Treaty and Article 61 of the EEA Agreement to State aids in the aviation sector (OJ C 350, 10.12.1994). )) which explain its policy in more detail, to which the Honourable Member is referred.